Metaverse: Why we need to understand Second Life to understand what’s next

Some of the cannier observers of the development of the ‘new’ or ‘next’ phase of the internet have noted that big virtual worlds are not new at all – Second Life has been around since the mid-2000s, it had good and bad elements, but if we don’t understand what happened there, we risk repeating those mistakes in the developing metaverse.

Why it matters

Core to all of this is the forthcoming battle between the “different visions for what digital life should and could be.” It may not be an advertising success story immediately, but virtual experience is likely to be central to our future internet.

What’s going on?

The Atlantic writer Charlie Warzel has spoken to Wagner James Au, a journalist who has been covering happenings in the massively multiplayer online game since 2003, has written a definitive book on the subject, and runs the world’s longest running news site about virtual worlds.

The whole interview is worth reading if you are interested in the possibilities of the metaverse or are about to start building or investing in the metaverse. Here are some highlights.

Takeaways

• This really is round 2. “This metaverse hype wave is so similar to 2008. Everything’s being repeated now – the same news stories, the same assumptions, the same mistakes. During the 2008 hype, the tech was not ready for a mass market. Today, it has become a mass-market phenomenon with Roblox and Fortnite”.
• Don’t just build stores in the metaverse. This happened between 2006-8. Key here is Au’s point that there is very little point in a car or a computer in a virtual world “where you can fly and instantiate things from nothingness”. This is the big brand mistake.
• It is inherently about user creativity. “If you give a user community powerful enough creator tools, what they create in these worlds will be far more interesting than anything a major company can officially create.”
• An in-game economy is not new. “There are 1,600 Second Life users who earn $10,000 or more a year selling virtual content. I know a few people on the high end who are making millions. And it’s not just Second Life; this is all happening now in Roblox and Fortnite and other places, too.”
• Virtual real estate might make headlines but it’s “destined to fail”. Look instead to what young people are doing: “What people don’t realize about younger metaverse users is that it’s not about re-creating a second space. The virtual space is real enough.”
• Just because you built it doesn’t mean they’ll stay. “It’s not the platform that matters as much as the community that is built around it. Rarely do communities have extreme loyalty to these platforms.”
• In a building phase, prepare for complex issues. Racism, discrimination, and misrepresentation have been “enduring” issues in Second Life, and like with social media’s rise, it remains with us.
• It’s bigger than Meta. “I don’t think that most of society has processed what it means that a huge percentage of all children in the U.S. are on Roblox. That they’re highly active in creating content for the company and trying to earn money.” The big issues are here, explains Au, both good and bad. 

Sourced from The Atlantic. [Image: Second Life]

WARC Awards for MENA Strategy 2022 launched

The WARC Awards for MENA Strategy are now open. The competition for the region’s best strategic marketing is now in its sixth year, and the jury will be chaired by Lianne Braganza, CMO, MEA at Cigna – here’s what you need to know.

The competition, which is free to enter, is open to agencies, brand owners and specialists in any marketing discipline from across MENA.

“The WARC Awards for MENA Strategy are a powerful means to give brands in the MENA region an opportunity to demonstrate how they're making a difference as they respond to the unique challenges they are facing”, says Lianne Braganza.

The jury will award a Grand Prix, Gold, Silver and Bronze accolades. With a straightforward process, entries can be submitted until 21 September 2022. More information about the Awards and how to enter is available here.

The WARC Awards for MENA Strategy are part of a suite of WARC Awards, which also include the global WARC Awards for Effectiveness, and two other regional competitions – the newly launched WARC Awards for Effectiveness, North America Edition and the WARC Awards for Asian Strategy. 

WARC Awards for Asian Strategy 2022 launched

The WARC Awards for Asian Strategy are now open for entries. The competition for the region’s best strategic marketing is now in its twelfth year, and the jury will be chaired by Dhiren Amin, CMO of NTUC Income – here’s what you need to know.

The competition, which is free to enter, is open to agencies, brand owners and specialists in any marketing discipline from across Asia.

“The WARC Awards for Asian Strategy provide us with an external benchmark to aspire to as marketers”, said Amin, who leads marketing across the board for the Singapore-based insurance company. He has featured on Campaign Asia’s Power List for Marketers for three years.

“We are in the business of commercial crafting and these Awards are a legitimate and solid benchmark of measuring that as a profession.”

The jury will award a Grand Prix as well as Gold, Silver and Bronze accolades. With a straightforward process, entries can be submitted until 21 September 2022. More information about the Awards and how to enter is available here.

The WARC Awards for Asian Strategy are part of a suite of WARC Awards, which also include the global WARC Awards for Effectiveness, and two other regional competitions – the newly launched WARC Awards for Effectiveness, North America Edition, and the WARC Awards for MENA Strategy.

E-commerce growth inverts the 60:40 rule

Multinational brand-owners are increasingly focused on e-commerce and are shifting their media spend away from brand towards performance.

That’s the conclusion of new research* from the World Federation of Advertisers and global marketing and ad agency network dentsu international.

Why it matters

The rapid growth in e-commerce (59% of WFA members claimed double-digit growth in e-commerce share of sales compared to 2019) is challenging many aspects of corporate behaviour and structure. One of those is that organisations attaching the highest importance to e-commerce are ditching the 60:40 ratio of brand to performance spending recommended in studies by marketing effectiveness experts Binet and Field.

Takeaways 

• Seventy-one percent of major multinationals say e-commerce is either ‘critical’ (51%) or ‘very important’ (20%) now, but the figure rises to 93% over the next two years.
• Brands that are most exposed to e-commerce are spending 59% of their media budgets on driving short-term sales. 
• Brands that regard e-commerce as important (or growing in importance) allocate just 37% on driving immediate sales. 
• Another consequence of growing e-commerce activity is the nature of KPIs used here, which are moving from activity and volume to commercial contribution.
• There are also structural challenges to be addressed as e-commerce is often managed in siloed teams. 
• Delivering integrated media planning that meets the needs of both short and long-term planning is one of the barriers to success (42%). 

*Developing a Successful Strategy for Global eCommerce and Marketing is based on responses from 41 major multinationals, across 13 sectors, with 46% in media roles and 48% in sales/e-commerce roles. Total combined global ad spending of respondent companies represents in excess of $50 billion.

Sourced from WFA [Image: Getty images]

Brand in action: How Lenovo sees the need for sustainability

Lenovo is the world’s top PC brand and the electronics giant’s senior manager brand strategy WW marketing, Abhishek Shah, speaks to WARC about the importance of sustainability to its consumers, as well as for its marketing and products.

Key insights

• Consumers have a high awareness of environmental issues, with high levels of purchase intent for a more sustainable product and the willingness to pay a premium for it.
• India is a price-sensitive and feature-driven market but there are opportunities for brands to own the space by making green marketing core to their business and communication.
• If marketers sensitise and create awareness of sustainability across their brands’ touchpoints, and if marketing strategy aligns with corporate strategy, customer success will follow.

Ongoing lockdowns cut online sales in China

Amid strict lockdowns as China seeks to keep coronavirus infections down to an absolute minimum, consumers are cutting even their e-commerce spending.

What’s driving it

Lockdowns have hit brands’ abilities to make, distribute, and deliver goods – a new piece in the South China Morning Post (which is owned by Alibaba) puts numbers to the trend.

Ultimately, consumers are wary of spending on non-essentials and luxury items. But by the same token, they are finding that they simply can’t spend money even if they wanted to. While this will look grim on e-commerce firms’ earnings calls, it doesn’t point to poor fundamentals.

The data

Sales of major brands on e-commerce platforms have plunged in April:

• Uniqlo on Alibaba’s Tmall is down 33% year-on year.
• Zara sales on the same platform are down 56%.
• Lancome, the luxury brand, sees sales dip 33%.
• Samsung has seen e-commerce sales drop 23%.
• Bulgari sales are down more than 90%.
• Hermes sales are down 53%.

Meanwhile total retail sales nationally have dropped 11% versus April 2021.

Sourced from SCMP

SEA sees strongest Ramadan retail sales boost in three years: survey

As community measures and travel restrictions eased, and more consumers in Southeast Asia hosted larger gatherings or planned trips to celebrate the Ramadan festive period, 2022 saw retailers enjoying their biggest sales lift in two years, according to adtech company Criteo.

Why it matters

Strong consumer appetite offers more opportunities for brands and retailers to encourage spending during the festive period through more targeted and differentiated sales campaigns.

Key insights

• This year’s 14% jump in retail sales compares with performance in the first two weeks of Ramadan each year, with 2020 as the baseline.
• Sales were at their peak since the very beginning of Ramadan this year, specifically on the month’s double day – 4th April 2022.
• In the region, this double date effect is most apparent in app sales (+76%), desktop sales (+36%) and mobile (+12%).
• Online retail sales in the region surged 73% in early April 2022 compared with the first four weeks of March this year.
• The top three product categories with sales surge on 5th May were health & beauty (+199%), furniture (+119%) and electronics (+107%).
• Travel bookings were up 28% year-on-year in SEA in March 2022 as border restrictions continue to loosen in the region

Background

Technology company Criteo analysed data from over 200 retailers in SEA, including around 664 million transactions over the period detailed, and surveyed 11,161 respondents across nine countries – Australia, France, Germany, Italy, Japan, South Korea, Spain, the UK and the US – with organic data from its 815 travel partners in over 20 countries.

Idea to know: Stagflation

The news is starting to mention a frightening economic term: stagflation – while marketers likely won’t have to grapple with the problem itself, it will be critical for the discipline to understand its effects.

Why it matters

The threat of stagflation is back in economies across the western world, with UK and US markets increasingly spooked. Bank of America Global Research finds that around 77% of investment fund managers are now expecting “below-trend growth and above-trend inflation” as the likeliest outcome for the next year.

The post-Covid economic recovery is stalling and, in some cases, dipping, at the same time as consumer prices are rising, mostly down to ongoing supply chain problems that have heavily restricted supply. Meanwhile, the price of oil, which has rocketed since Russia’s invasion of Ukraine in late February, has hit household spending on non-essential products.

A short explanation

The first time economists noticed such a phenomenon was during another oil crisis, this time an embargo on the sale of oil from Middle Eastern exporters against nations that had supported Israel during the Yom Kippur War during the 1970s. The effect on the economies involved was a surge in the price of oil, which triggered a period of high inflation that coincided with high unemployment, meaning that economic output declined or stagnated. 

Stagflation, otherwise known as recession-inflation, means a period of high inflation (i.e. rising prices) along with stagnation or decline in GDP, either through high unemployment or through stagnant GDP growth thanks to low productivity.

Both are contradictions in terms that spooked the economists that first observed the effect, as economic stagnation or unemployment shouldn’t, theoretically, lead to rises in prices.

A problem with no antidote

But the big trouble is that there is no definitive antidote for central banks to administer. In many ways, the tools they would use to combat inflation (raising interest rates) tend to raise unemployment while the tools to combat unemployment (fiscal stimulus or spending to boost growth) tend to spur inflation.

The problem is, therefore, very serious and difficult to solve without causing huge amounts of pain. In the 80s, inflation was brought to heel through extremely high interest rates (of around 20%), which triggered a recession and extensive unemployment. But external factors were also critical to ending stagflation, with the normalisation of oil prices coinciding with a normalisation in western economies.

Modern economists suggest a better path is to aim to raise productivity to spur more growth without causing inflation. Some even suggest that a way to fix the problem is to get people working less through four day work weeks or more public holidays, and spending more on sectors with lower-inflation such as culture and hospitality services and less on inflation-prone goods. 

What it means for marketing

These are big issues, far beyond most marketers’ (and even beyond most central bankers’) control but the big worry is that the perception of crisis, especially as companies start to worry about their profitability, causes firms to respond by cutting jobs.

At a time when fuel and therefore transportation costs remain high, a hit to employment means a hit to demand not only in high-inflation sectors like automobiles but across the economy. Ongoing problems with supply chains and the price of oil can’t be solved by cutting jobs alone.

This is a big issue, but it will eventually end as oil prices (hopefully) normalise or alternative sources of renewable energy are found or developed. Protecting the fundamentals of the business will be crucial for all brands in the meantime; investor jitters are a problem, but high unemployment is a far far bigger one.

Recessions are critical times for marketing where brands must adapt to reflect consumer necessities, as buyers need to be able to justify their purchases. Smart marketers also use them as opportunities to build brands more cheaply as competitors scale back their marketing to save money. Similarly, this is in many ways an oil crisis – it’s an obvious time for brands to press for sustainability, and to press for less reliance on oil across our societies at large.

Times of major economic trouble require collective solutions, which is a problem when our system values each individual and company looking out for themselves and their own profit. Marketers should care about pricing, not only to maximise profit but to keep customers onside at a time of fuel-induced poverty. For both humanitarian and macroeconomic reasons, brands should hope and strive for an end to Russian hostilities against Ukraine.

Sourced from the FT, Fox Business, New Statesman, WARC

Unilever’s marketing challenges in personal care

A shift in focus from hygiene to wellness, the need to address sustainability issues and the threat of strong local players are among the challenges outlined by Unilever's new Global Personal Care CMO.

Why it matters

Earlier this year, Unilever announced a re-organisation around five distinct business groups, one of which is Personal Care where Samir Singh took up the reins as global CMO at the start of this month. His assessment of the challenges he faces, given in an interview with Campaign Asia, and his response are indicative of how the broader market is likely to develop over the next couple of years.

Takeaways

• Behaviours are not the same across all markets: some, such as the US, are returning to pre-COVID patterns; others, such as APAC, are sticking with the new habits of the past two years. 
• Post-COVID, consumer focus is shifting from basic hand washing and sanitising to what Unilever calls “skinification” – taking specific facial care ingredients and adding them to general body care products.
• Innovation will drive sustainability initiatives and these will filter down from premium brands while not adding to the price of everyday brands.
• D2C brands are not as big a threat as strong local brands – especially in larger markets (think China, India, Indonesia) – that are able to compete on price, innovation, distribution and brand recall. 

Key quote

“I think going forward, what you will see is an evolution of the trends that started with hygiene, but will now get more into skin health, and actually evolve, finally, into wellness. And all three things will happen at the same time” – Samir Singh, CMO global personal care at Unilever.

Sourced from Campaign Asia [Image: Unilever]

Why you need to change your thinking about D&I

The advertising industry and its clients have generally responded positively to issues around diversity and inclusion and their approach is getting better, but, says Chris Kenna of Brand Advance – a company which connects brands with diverse audiences globally – it’s time to stop thinking about D&I separately and instead think in terms of “marketing done correctly”.

Why it matters

This echoes the arc of digital marketing, once seen as a speciality area and the province of particular agencies. As digital became more established, that view shifted to the point where it is now an integral – and huge – part of the marketing universe. Similarly with D&I, it shouldn’t sit separately from everyday processes: it’s simply about marketing to everyone.

Takeaways

Speaking during a session at Advertising Week Europe, Kenna’s advice included: 

• Make sure every community is thought of equally, no matter their size.
• Make sure there’s no keyword blocking that means potential consumers don’t get to see advertising (e.g. in black media).
• Agencies can always partner if they don’t have staff from relevant communities.
• Where such people do exist, it’s not their job to educate everyone else in the company about their community.
• On platforms like TikTok, there is a huge amount of content created by people from minority communities that is an untapped resource for brands.

Key quote

“We can get rid of some of the fear, make more understanding in the world, just through telling stories, through clever creative. And if we get that right, then maybe we can have a better world” – Chris Kenna, founder of Brand Advance.

[Image: Getty Images]

Brits aren’t impressed by influencers

A majority of Brits are sceptical of the claims made for brands by social media influencers – and the more followers the influencer has, the more cynical they become.

Mega-influencers, especially, aren’t trusted

A survey* commissioned by Emplifi finds that: 

• two in five (41%) Brits ‘never’ trust the products and services being promoted to them by influencers, particularly mega influencers with over one million followers; 
• more than half do not trust that both mega influencers (57%) and micro influencers (51%) are transparent and declare all advertisements; 
• more than half either ‘never’ (30%) or ‘rarely’ (21%) trust that mega influencers truly believe in the products or services they are promoting;
• two in five ‘never’ (26%) or ‘rarely’ (16%) trust that micro-influencers believe in the products or services they are promoting; 
• more than half (51%) do not think that mega-influencers with more than one million followers can understand or relate to the pressure of rising living costs;
• just 7% of UK consumers place most value in influencers with an inspirational lifestyle.

Social spending is up, engagement is down

Research from Emplifi last month suggested that UK brands spent 101% more on social media ads (an average of £5,235) in Q1 2022 compared to the global average of £2,598. At the same time, social media engagement is down, with UK click-through rates declining by 15% YoY.

Why it matters

The latest research was undertaken with one eye on the upcoming new series of TV reality show Love Island (59% do not believe that the mega-influencers emerging from that programme will be authentic and trustworthy). It’s clear that brands need to be smarter in their choice of influencers if they are to make their spending more effective. Reach and buzz are less important factors than authenticity and empathy.

* 2,503 UK consumers were polled by Google Surveys to assess the impact of an increasingly saturated influencer market on consumer trust

Sourced from Emplifi [Image: Getty Images]

Paramount sees marketing benefits in content franchises

Paramount, the media company rebranded from ViacomCBS earlier this year, believes its established content franchises are a major benefit with regards to the cost of marketing and attracting audiences.

Why it matters

One element of growing competition in the streaming industry is access to popular films and TV shows. This material is a draw for the existing fanbase, and also presents an opportunity to launch reboots, spinoffs and other content extensions.

Takeaways

• Naveen Chopra, Paramount’s chief financial officer, noted that marketing is one of the “biggest lines” on the profit-and-loss sheet for media owners.

• “A key question to ask in this area is, “What do you have to spend to acquire and retain customers?” he said at the MoffettNathanson Media & Communications Summit.
• “Being a “traditional media company” that has a growing business in the streaming category is an advantage here, according to Chopra.
• “We have a great stable of well known IP [and] big franchises that have built-in audiences,” he said.

Intellectual property has lasting value

• Paramount’s content assets include everything from the movie “Top Gun” to kids’ TV show “Paw Patrol”, hit drama series “Yellowstone” and sci-fi property “Star Trek”.
• “From a marketing perspective, we've got these built-in promotional platforms that are incredibly valuable,” Chopra said.
• He pointed to the recent “Sonic the Hedgehog” movie as an example of an established brand that retains an instant appeal in movie theatres and, then, on streaming platforms.
• “That audience will find that content. We don't have to go spend the tens of millions of dollars that you would if it's an entirely new piece of IP,” said Chopra.

The curious case of “Yellowstone”

• Another example is “1883”, an exclusive series launched on the Paramount+ streaming platform in late 2021, and a spinoff of “Yellowstone”, a huge cable TV hit for Paramount.

• Due to a licensing agreement, “Yellowstone” itself is exclusively available to stream in full on Peacock, a platform operated by NBCUniversal.

• But this deal helped the show further build its viewership, according to Chopra, and thus develop an audience hungry for related content like “1883”.

• “By the time we moved it over to Paramount+ as an exclusive,” Chopra said of the latter show, “it already had an audience that was going to follow it.”

Sourced from Seeking Alpha

Speed read: Meta’s vision for the metaverse in three minutes

We read Nick Clegg’s metaverse manifesto, so you don’t have to – Meta’s president of global affairs, and former UK deputy prime minister, has written a long and detailed essay/mission statement setting out the social media company’s vision for the metaverse with some early indications of the issues it sees coming down the track: here’s what you need to know.

Why it matters

For its next phase as a “metaverse company”, Meta wants to sketch out the principles, technical fundamentals and qualities it hopes an embodied internet will develop.

What he talks about: shared standards and protocols, possibilities and opportunities like in health and education, some thoughts on rules.

What he doesn’t talk about: in-depth discussions of privacy, how to launch a brand in the metaverse, anything about NFTs or Web3 (as understood as a blockchain-based internet). He also doesn’t say much about the economics of the metaverse, only that he expects it to trigger a deeper digital transformation. However, he suggests many jobs will be created servicing the metaverse.

The ideas:

What it is: “It’s the next generation of the internet — a more immersive, 3D experience”, Clegg writes. Its defining quality will be a feeling of presence, like you are right there with another person or in another place.”

Crucially, these identities remain fixed throughout the metaverse, understood as a “universal, virtual layer that everyone can experience on top of today’s physical world — one where you can have a consistent identity (or even set of identities) that people can recognize wherever they see you.”

Often, these experiences are described as VR, or perhaps even AR, but Clegg – and therefore Meta – is clear that “it stretches from using avatars or accessing metaverse spaces on your phone, through AR glasses that project computer-generated images onto the world around us, to mixed reality experiences that blend both physical and virtual environments.”

But if you’re looking for a neat list of elements to show clients or managers, these are the three key aspects defining the metaverse, per Clegg:

• Ephemerality: “The metaverse will constitute a shift towards live, speech-based communication that will often feel as transient as face-to-face conversations.”
• Embodiment: communicating through physicality and gesture. “This real-time, 3D synchronicity is a crucial difference with the way we interact in today’s internet.”
• Immersion: the eventual experience of interpersonal interaction should “feel as if we are actually in a specific space with other people — shared environments where social interaction feels natural”.

Interoperability and the core of digital items

Without shared protocols (like HTML or even shared formats like the GIF image file) the metaverse will sputter as a collection of VR platforms and games; it needs to connect. But for that, you need agreement.

“There’s nothing inevitable about individual companies adopting industry-wide standards, but they will have a strong incentive to align on ways for consumers to take digital goods such as clothing for avatars from one platform to another.”

Clegg here borrows an idea that the VCs Matthew Ball and Jacob Navok sketched out in a now foundational essay: To aid platforms and technologies’ development – while also checking the rentier tendencies of the dominant platforms – they suggest an ecosystem of ‘interchange’ solutions “that interconnect, translate, and exchange information/users/assets across and between myriad different and competing platforms.”

This is vital to transferable digital items – critical to the idea of metaverse fashion that has so fascinated the industry. And no, he doesn’t mention NFTs. They will likely be much simpler, more “like GIF or JPEG image files in today’s internet.”

Rules and governance

Keen metaverse watchers will be aware of Meta’s introduction of a personal space boundary, having emerged as a problem. This points to the additional layers of complexity that a 3D internet platform supposes. As ever, it’s not about policing what is illegal, it’s what to do about bad-but-not-illegal behaviour.

Rules are more likely to be like the customs of a bar rather than the rules of a forum. “In fact, the immediacy of metaverse spaces makes it more likely that this sort of synchronous, ephemeral communication will be far more prevalent than the tangible, text-based communication that dominates much of today’s internet.”

Bars have responsibility, but in a metaverse so might the platform. Meta has partially prepared for this with features like a “rolling buffer” currently available for Meta Quest users in horizon worlds which holds onto audio data for a short period on the user’s device so that a record is kept that can evidence reports of abusive or harmful content.

A sense of the inevitable

“The metaverse is coming, one way or another”, Clegg concludes.

Sourced from Meta, Matthew Ball, WARC. 

- S.P.T

Brand in action: How Zomato delivers sustainability with food

Zomato is arguably India’s leading food delivery and dining and restaurant discovery service: head of branding Chandan Mendiratta, chief sustainability officer Anjalli Kumar, and chief people officer and co-founder Akriti Chopra speak to WARC about how sustainable and responsible marketing found a key place in its initiatives.

Key insights

• Zomato prioritises both social and environmental sustainability to do right by its stakeholders.
• It believes that becoming a sustainable company is a necessity if a business has to thrive in the long run.
• Viewing sustainability as a “campaign” undermines the intent, impact and future of the causes Zomato champions.

The big idea

Marketing can’t work independent of core business strategy and sustainability needs to be core to the business. If it doesn’t make business sense, it won’t make marketing sense.