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The Top Five Innovations of 2021 That All Brands Should Know

A retrospective on the five buzziest innovation territories of the year, and what brands can do about them in the coming year

As we enter the last month of 2021, it is time to look back and examine the key innovation territories that popped into the mainstream during this year of uncertainty and recovery. As vaccination rates continue to climb and states gradually reopen, this year marked an expected return to in-person experiences and events for some, while for many others, certain aspects of our lives have remained virtual, showing no signs of backsliding into the offline world. It is in such a tenuous push-and-pull between the online and the offline that we found ourselves reimagining what the next “new normal” would look like for brands and marketers.

With uncertainty comes changes and adaptations. The need for innovations is being reaffirmed and supercharged as we reconfigure the way we work, live, socialize, shop, and invest. While the overall digitalization accelerated by the pandemic has slowed down compared to the year before, 2021 turned out to be a breakthrough year for these following innovations.

The Metaverse

Ariana Grande’s Fortnite tour. Image: Epic Games

What It is

We here at the Lab have been tracking the emergence of the metaverse concept since Epic Games worked with Disney to create an immersive Star Wars-themed event in Fortnite in December 2019. This term, which originated from Neal Stephenson’s 1992 sci-fi novel, Snow Crash, proposes a future of physical reality converging with our digital world into a shared, persistent hybrid reality. Technologists have been touting the concept as the next iteration of the internet where we will all work, play, and socialize in the coming decades.

What Happened in 2021

While Facebook’s recent decision to change its corporate name to Meta and rebrand itself as a “metaverse company” may be motivated primarily by external circumstances, it is nonetheless a decision that will have enormous consequences on how the metaverse is perceived by the general public as well as its competitive landscape in the years to come. When the world’s biggest social media company decides to go all in on “the metaverse,” there is no denying that this emerging concept has been catapulted into the mainstream consciousness.

That said, Facebook certainly was not the first company people associated with the rise of the metaverse; rather, most of the metaverse developments have been coming out of the video game industry, especially those that are developing massively multiplayer online (MMO) games. As we explored in our 2021 Outlook trend report, games like Fortnite (owned by Epic Games), Roblox, Minecraft (owned by Microsoft), and Animal Crossing: New Horizons increasingly exhibited metaverse-like elements.

Throughout 2021, these MMO games continued to develop beyond simple gameplay to become virtual spaces for socialization and events. From Ariana Grande’s Fortnite performance that drew over a million live views to the trippy Gucci Garden experience the fashion brand built in Roblox, these experiences are grounding the development of metaverse in accessible, shared experiences. Nike’s recent decision to develop a Nikeland on Roblox, primarily as a space to showcase its branded digital goods and experiences, further signifies the metaverse as the next frontier for brands to explore.

What Brands Should Do in 2022

For brands curious about exploring the metaverse, there is an early-mover advantage that applies to all emerging media channels — get in while the space is still forming and not crowded with competitors, and connect with the early-adopter audience. Perhaps it is better to think about what virtual experiences your brand can build and test out in the existing proto-verse environment today, and deliver them at scale in tandem with all other media channels.

While it is important to develop 3D branded assets in preparation, it is just as important to understand what the metaverse concept really means for consumer behavior. Instead of following the dominant idea of thinking of a 3D virtual space in which your brand needs to establish a presence, try to think of it more as an inflection point in the trend towards digitalization, where people start to value their digital lives as much as, if not more so than, their offline lives. Throughout the last 16 months or so, a larger part of our collective existence has moved online. Therefore, brands should be thinking about their role in a society led by digital culture and understand the direction audience attention is flowing.

The Crypto Movement

NBA Top Shot. Image: Dapper Labs

What It is

The crypto movement refers to the emerging trend of seeking to replace the traditional structure of finance, ownership, and organizational management with a decentralized model powered by blockchain technology. Bitcoin is one of the most widely recognizable products to come out of the crypto movement so far, but the crypto believers have far larger ambitions. The rise of non-fungible tokens (NFTs), a special type of cryptographic token that represents a unique digital asset, is revolutionizing the way we value and trade digital goods.

What Happened in 2021

2021 marked a breakout year for the crypto movement. After years of rallying behind bitcoin, the cryptocurrency advocates successfully branched out into other blockchain-powered tokens, popularized NFTs and other tokenized ownership as alternative investment vehicles, and formed DAOs (decentralized autonomous organizations) to implement new initiatives.

The DeFi movement, a leading faction within the larger trend, is recruiting new users and making a real impact on the finance industry, setting the stage for more crypto-led disruptions beyond personal finance management. Roughly 16% of U.S. adults say they have bought or traded cryptocurrency, according to a recent survey by Pew Research Center — that percentage notably rises to 43% for young men ages 18 to 29. As financial institutions and financial service brands recognize the turning tide on crypto, many have also made proactive moves to capitalize on this growing sector via partnerships and integrations. Mastercard’s recent partnership with Bakkt, a crypto marketplace platform, is one such example.

As of June 2021, about 4.1 million Americans have bought or sold an NFT. Startups like Dapper Labs (creators of NBA Top Shot) and OpenSea are remaking what we think about the value of digital goods and collectibles. Brands were quick to jump on the NFT bandwagon to capitalize on its hype, but mostly without truly realizing its potential. One notable exception is Burger King’s recent campaign in collaboration with NFT marketplace Sweet, which did a better-than-most job at elevating NFT integration from digital art-based marketing stunt into a genuine tool for building engagement.

What Brands Should Do in 2022

Love it or hate it, crypto is here to stay. For brands, the rise of NFTs unlocks exciting new possibilities in the realms of digital goods, digital media distribution, and access management. In short, NFTs make digital goods easily tradable, which, in turn, makes them more likely to accumulate value through trading. Perhaps one of the biggest takeaways from the growing crypto movement is that, in the move towards web3 infrastructure, brands will need to become far more collaborative with their customers and reward them for their loyalty and attention.

Beyond NFTs, a renewed interest in applying blockchain technology to other consumer-facing use cases has led to the emergence of new crypto concepts such as DAOs and personal tokens. Together with NFTs, these blockchain use cases usher in a new paradigm that flips the current brand-consumer interaction model on its head.

Not every brand needs to pull an AMC and start accepting meme-coins as a payment method, but it is important to start formulating a crypto strategy and figuring out if it is worth incorporating things like cryptocurrencies and NFT-backed digital goods into your brand experiences. Tapping into the vibrant communities in the crypto space may lend credence to branded initiatives and reach target audiences, as Adidas’ recent team-up with the Bored Ape Yacht Club has shown.

Social Commerce

Image: Instagram

What It is

Following a year of retail transformation and surging social media usage, major social platforms are embarking on diverging paths to figure out new product focuses and even explore new business models. Yet, one thing that nearly all social platforms have in common is the move towards building shoppable products, both organic and paid, to help brands boost discovery and sell directly to consumers. This is often aided by interactive social features such as comments and live video, which, in turn, allows brands to turn live events and product demos into a new form of entertainment.

What Happened in 2021

The pandemic has fundamentally changed the way people shop, accelerating ecommerce and redefining the consumer journey. As such, social media platforms, keen to take advantage of their already-important role in that journey, have invested heavily in their social commerce capabilities, hoping to keep consumers in-platform as they shop.

As the market leader in this space, Instagram already added a dedicated shopping tab and a new feature for influencers to sell products in live video in late 2020. In May, it started testing a new “Drop” tab to showcase trendy and limited-edition items on its platform, further indicating its commitment to experimenting with social commerce features. Rivals like TikTok and Snapchat are also eagerly developing similar features to lure shoppers and, along with third-party solutions created by startups like MikMak and NTWRK, provide brands with a new ecommerce channel.

As a result, social commerce is now a growing force within ecommerce. eMarketer forecasts that social commerce sales in the U.S. will increase 34.8% to $36.09 billion and comprise 4.3% of all retail ecommerce sales in 2021. Despite the impressive growth rate, social commerce is at the early stage of development in markets outside China. There is still plenty of room for social platforms to build upon the momentum and create a more integrated shopping experience.

What Brands Should Do in 2022

For consumer-facing brands, the growing opportunities of selling directly to consumers via social media platforms like Instagram and TokTok is becoming evident. The appeal of social commerce is that it replicates the social elements embedded in offline shopping. One reason live video is compelling for social platforms and brands is that it offers a rare opportunity for direct, live engagement with consumers, resembling the experience of talking in-store with a salesperson.

Though the fashion and beauty category has had the highest percentage of brands leveraging social commerce thus far, opportunities exist for brands in every industry vector. As activity begins to ramp up in the U.S., it’s imperative that your brand begin to test and learn now in order to optimize for when social commerce is a normalized behavior in a few years. Start small by making a few SKUs available across owned and operated social channels and track performance to gauge your consumer’s appetite to shop across those destinations.

Resale Economy

Nike’s recycling program powered by ThreadUp. Image: Nike

What It is

A growing number of consumers are turning to peer-to-peer resale platforms, partly out of a growing awareness of the environmental impact of fast fashion and over-consumption. Platforms like ThreadUp and Poshmark provide new spaces for sustainability-minded shoppers to gather and trade, and some designers even started selling directly on Depop. In particular, Gen Z, with a love of good bargains and sustainability, are driving the growth of the resale economy, with 9 out of 10 Gen Zs saying they are open to buying used clothing.

What Happened in 2021

Like social ecommerce, the resale economy has sustained its growth momentum gained during the lockdown months in 2020 and continued to expand its footprint in 2021. The online retail market for pre-owned merchandise this year is expected to surpass $65 billion, an all-time high for the industry, according to a recent survey by ecommerce startup Mercari; three in four people surveyed said they were likely to buy at least one secondhand item this holiday season.

Throughout 2021, the resale economy grew through acquisitions and partnerships. In June, Etsy bought leading fashion resale app Depop for a reported $1.62 billion. Depop currently has about 30 million users across 150 countries, which should help Etsy further expand its customer base and gain insights into a vibrant, trend-setting community of Gen Z and young millennial shoppers. Similarly, Adidas also got into the resale game with some help from ThredUp, with the launch of a custom resale solution powered by ThredUp’s resale-as-a-service program integrated in the brand’s Creator’s App. Notably, ThredUp also currently powers resale for major retailers and brands such as Walmart, Madewell, and Vera Bradley through the same program.

Towards the end of the year, with the global supply chain issues still persisting, resale companies The RealReal and Poshmark are playing up their secondhand supply chains, inventory levels, and pricing. Interestingly, some brands and retailers, such as H&M, Macy’s, and J.C. Penney, have started to tap into upcycling and resale programs for potential solutions.

What Brands Should Do in 2022

The growth of the resale economy signals a new channel for brands to not only diversify their businesses, but also for cultivating long-term relationships with customers. Secondhand goods are shredding their shoddy reputations from the thrift-store era and becoming a new playground for younger consumers to express themselves through unique customization and remixing of vintage and brand new items.

The drive to sell more sustainable products to meet the demands of environmentally conscious consumers offers an additional boom to the resale economy. As sustainability continues to rise as a tenet of brand value, more brands should be looking to tap into the booming resale economy to reduce waste and boost street cred with eco-minded consumers. For example, Adidas’ foray into resale falls in line with the brand’s environmental pledge to end plastic waste and reduce its carbon footprint.

Social Audio

Twitter Spaces. Image: Twitter

What It is

Social audio — audio-only live streaming with added social features — was a hot topic in early 2021, largely thanks to the sudden rise of Clubhouse. Built around the idea of live audio-only interaction, Clubhouse enables users to broadcast their live conversations and invite live audience feedback. Instead of a central content feed, users are presented with different “rooms” to join for live discussions on various topics where they can choose to simply listen or to participate.

What Happened in 2021

Clubhouse enjoyed a few months of buzzy popularity at the beginning of the year, attracting some adventurous brands to the app to reach listeners with sponsored sessions and “rooms.” By summer, however, the buzz around Clubhouse, and the social audio space in general, had died down significantly. This is largely due to the fact that social audio was replicated across major social platforms as an integrated feature, although Clubhouse’s slow rollout to Android devices and larger audiences also hindered its ability to scale and stay competitive.

Twitter first launched Spaces in November 2020 as a response to the budding success of Clubhouse; by May, it had expanded the ability to host a live audio room to all users with more than 600 followers, significantly boosting its scale and overtaking Clubhouse in terms of accessibility and features. Twitter also added ticketing and tipping features to Spaces shortly after to help creators monetize. Facebook too tested live audio features on Instagram, which failed to take off among its overstuffed features. And the likes of LinkedIn and even non-social platforms like Spotify and Amazon have all developed their own social audio features.

By the end of 2021, it has become clear that the social audio gold rush is over and brands have largely moved on. It seems clear that the rise of Clubhouse and consumption of live audio content was mostly fueled by our inability to gather and socialize in person at the beginning of the year. As people get vaccinated and start to socialize in person again, the need for social audio, and the flexibility in one’s schedule to spontaneously listen in on a live session, have dissipated quickly.

What Brands Should Do in 2022

Since social audio has been broadly co-opted into major social platforms, brands can now easily tap into it as part of their broader social strategies. Despite its diminishing buzz, social audio does offer specific use cases that may help brands boost engagement and build communities among its followers. For media companies, it could even become a new monetizable channel. ESPN, for example, recently created a Twitter Spaces for a ticketed fundraiser event that followers can join for a dollar to listen to and chat with ESPN personalities.

More importantly, the rise and fall of Clubhouse, and social audio by extension, offers an interesting lesson to brands in our approach towards innovation. Sometimes a buzzy innovation channel may be a fleeting fad more than a lasting trend, but there is still value in striking while the iron is hot to test and learn. The insights gained from such experiments can and should be applied elsewhere to help brands stay alert of the emerging changes in consumer behavior. In this case, although Clubhouse may have faded from mainstream attention, the social audio feature it popularized will remain as an useful engagement tool for brands in building social presence.

As we close the book on 2021, brands and marketers alike should be asking themselves, have I paid enough attention to these five innovation territories? If so, what actions have we taken to explore them, and what insights have we learned? If not, what is stopping us from doing so, and should we reevaluate our approach in 2022? Innovation is a fast-moving space, and only brands that are constantly reflecting on their strategy can stay on top of emerging media channels and the changes in consumer behaviour.

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The media futures agency of IPG Mediabrands

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Richard Yao

Richard Yao

Manager of Strategy & Content, IPG Media Lab

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