How to incorporate Web3 into your marketing strategy
Marketing teams and executives at Fortune 500s to startups are trying to figure out how to approach Web3 — and the secret lies in rethinking ownership, incentives and community
As the pace of the crypto market cools down along with the rest of the economy, marketers have a moment to step back and get our heads around Web3. Now is the time to debate questions such as: What should be our Web3 marketing strategy? What do Web3 marketing tactics look like for our organization? What marketing tools do we need to operate in Web3?
In this post, I’ll share my perspective as a Web3 VC at Gossamer Capital and long time marketing executive and consultant to lay out a strategic point of view for approaching Web3 marketing, along with a few tactical examples. As this is a new and constantly evolving space, I always welcome thoughts and feedback.
The next inflection point in advertising
The rise of Web 2.0 was an inflection point that reshaped the marketing industry and provided the arc for many of our digitally native careers (mine among them.) It tells a clear-cut story in hindsight: See the meteoric rise of social and search-based ad spend. See the surging growth in mobile computing. See traditional media fall off a cliff. The bulk of this is captured in the chart below by WARC — digital channels now account for more than half of total global ad spend, and growth in social media, video, e-commerce, and search over the past decade has come at radical cost to the so-called “traditional” established channels of TV and print.
Today, many of us who had a hand in building Web 2.0 marketing and navigated the origins of that massive paradigm shift, when the tools were still new, are recognizing the early seismic activity of Web3 for what it is: the next inflection point. Where those who seek to shape the frontier of Web3 marketing will have to develop a new strategic framework, and adapt to new tactics and tools that will bring our fundamental understanding of marketing to bear in wildly new ways.
Web3 and the opportunity for marketers
Web3 is a new iteration of the Internet built around blockchain technology — an ecosystem that includes pillars like Cryptocurrencies, NFTs, DAOs, DeFi, DApps, and the Metaverse. These pillars leverage concepts like peer-to-peer networks, decentralization, wallets, smart contracts, open-source development, and token-based economics.
That might be a lot of new vocabulary for some, but suffice it to say that a new suite of technologies are restructuring digital ownership away from centralized middlemen like Facebook and to the individual. As the power shifts from corporations to individuals, new Web3 tools like NFTs, DAOs, and the Metaverse enable individuals to organize into communities and allocate resources. As Yat Siu, Chairman of Animoca Brands put it, “Blockchain isn’t just a technical innovation; blockchain is a social and political innovation.”
Marketers that are able to leverage this cultural shift will be rewarded with a more direct and valuable relationship with their customers and communities. But in order to best capitalize on this opportunity, marketers will have to engage with the underlying tenets of Web3 (ownership, community governance, etc.) as they take up these new tools. As we see the paradigm shift to questioning “Web 2.0 middlemen,” our job as marketers is to be less reliant Web 2.0 middlemen ourselves.
The new tools of Web3
Web3 is a fast growing ecosystem of new technologies. The common thread of these technologies is the ability to restructure ownership, provide new incentives for participation, and enable communities to organize and flourish. Not all of the tools of Web3 are imperative for marketing, but I’ll provide a brief overview of the ones that are critical.
1. Cryptocurrencies
Cryptocurrencies, or fungible tokens, enable a parallel, programmable financial system and a tokenized economy. For marketers, cryptocurrencies offer a new tool for incentivizing customers, as well as processing transactions. Some cryptocurrencies like Bitcoin, Ethereum, and Stacks fluctuate with supply and demand, but another class of cryptocurrencies called stable coins are pegged to the US dollar, such as USDC. Brands could even launch their own cryptocurrency, but the tokenomics of that offering should be purposeful and provide utility.
2. Non-fungible Tokens (NFTs)
NFTs are forming the asset layer of the Internet. Today, NFTs are mostly static profile pictures for the engaged communities, but dynamic NFTs that pull in data from oracles and evolve over time are the future. For marketers, NFTs might be the most important tool in Web3. Instagram plans to launch an NFT platform built on Polygon later this year. NFTs are a tool for organizing communities, and providing token-gated access to unique marketing experiences. NFTs can be transactional, such as coupons or tickets, and the only limitation for use cases is the imagination of the marketer.
A good example of a branded NFT project done well is the Wave Riders Club by Surfing.com. This NFT provides the owner with VIP access to all surfing.com properties, access to ad free original content, voting rights in the United Surfing League, as well as merchandise, airdrops, and giveaways. The collection was minted and produced on HeyLayer, an NFT workflow for brands. For brands to manage a community of NFT holders, they will need Web3 growth and community management tools like Frens.
The creator economy, which consists of 50 million creators globally and priced at $100 billion annually, will be revolutionized by NFTs. New Web3 social competitors are arriving such as MomentoNFT, which aims to be the TikTok for Web3. Creators can produce video clip NFTs and sell directly to fans, where fans can resell the content later on. In Web3 social media, owning content is the new like button.
3. Decentralized Autonomous Organizations (DAOs)
DAOs are empowering global communities to allocate resources to initiatives large and small, and will likely become the corporations of the future. For enterprising marketers, DAOs offer a great tool for building community. DAOs are legal entities in Wyoming and Tennessee. Brands could create DAOs around their products, or create sub-DAOs for highly engaged and loyal customers. Companies like StackerDAO Labs provide an all in one DAO management solution to make operations easy. Brands can also simply join an existing DAO to be part of a community that’s meaningful to its customers.
A good example of a well executed DAO would be LinksDAO, I know firsthand because I’m a member. The goal of LinksDAO is to build the world’s greatest golf community and buy an IRL golf course. Over two days, LinksDAO minted two tiers of DAO membership through NFTs and raised $10.4 million to create an operating treasury. LinksDAO members actively connect on Discord to coordinate local golf matches, talk golf, and receive an array of corporate benefits from corporate sponsors like TopGolf, DraftKings and Callaway. Every golf-related brand should own a LinksDAO NFT and engage with the 10,000 active golfers directly, with no middleman.
4. The Metaverse
There are a lot of iterations of the Metaverse, but none signal the importance of Web3 more than Facebook’s rebranding to Meta, product pivot, and investment in Oculus. Today, there are multiple Metaverses for users to engage with such as Roblox, Sandbox, Decentraland, and play-to-earn games like Axie Infinity — all of which have their own unique communities and are incentivized by cryptocurrencies and NFTs. Right now, brands are mostly just showing up in the Metaverse and using it as ad space, but some like Gucci are investing heavily and creating new sales channels.
While these new tools of Web3 might seem foreign, it’s important for marketers to realize these technologies can also be viewed as new media channels with dedicated budgets and annual plans. By having a successful NFT campaign or DAO project, brands will build strong customer communities and gain earned media and mindshare. But separately from media channels as we know them today, these new tools can also be new revenue streams that could offset marketing budgets or create brand led philanthropic opportunities. When combined with Web 2.0 marketing plans, Web3 marketing will be a powerful catalyst for brands’ next phase of growth.
5. Decentralized Applications (DApps)
DApps are applications on the blockchain. Just like Web 2.0 apps, DApps can be any kind of B2C and B2B application. One of the benefits of DApps is the use of smart contracts to automate functionality. For example, STEPN is a Web3 lifestyle app with social-fi and game-fi elements built in. Similar to Strava, users can walk, jog, or run and STEPN rewards this activity with crypto and social connection. Brands can advertise in DApps by finding a way to add value to the community, or by creating their own DApps.
Integrating Web 2.0 and Web3 marketing
Web 2.0 isn’t going away. In fact, Web 2.0 marketing has created inconceivable value for companies. The winning marketing teams over the next five years will be the teams that can integrate Web 2.0 and Web3 marketing into a cohesive marketing system. So how do we do it?
Web 2.0 is all about inbound & content. This is where marketers create content (e.g. videos, blog posts, etc.) and push it out across paid, owned and earned media channels, in the attempt to drive prospects and customers down the purchase funnel.
Over the years, brands have built huge social media followings and customer databases thanks to Web 2.0, and this is where our integration with Web3 marketing will begin.
Web3 is all about community & ownership. Building communities is different from growing audiences because it’s not top down, but bottom up growth. As a Web3 VC and participate in numerous Web3 projects I’ve observed a process for community development in Web3. In the first phase, creators (or brands) leverage storytelling to set an inspirational vision. Next, provide incentives for participation that can be financial, experiential, or social. The third phase is the alignment of values that happens in the community while using Discord, participating in IRL events, or through bottom up emergent leaders (and memes) within the community. Lastly, community members are rewarded for their participation which propels the next chapter of the community’s growth.
This, I believe, is a roadmap for brands to build community in Web3, but it takes dedicated resources and a long term vision. Gary Vaynerchuk said it well, “Building community only looks like one way– you are giving more to them than you want from them.”
Putting it all together. Through Web 2.0 marketing, brands built huge social audiences and customer databases. By leveraging the new tools of Web3, such as NFTs and DAOs, brands have the opportunity to convert customers and Web 2.0 audiences into a community of owners. As brands get better versed in Web3 they will be able to mine other communities for new customers.
This simple Web3 marketing strategy is something every brand can start to deploy today, and it’s already happening. In a follow up post, I’ll collect a list of best practices and Web3 marketing examples that I’m seeing and using to help clients to develop, as well as share the best emerging Web3 mar-tech startups that are creating the Google and Hubspot of tomorrow.
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