Beyond Traditional Advertising: Exploring Interactive Experiences and Web3 Innovations
Unlocking A New Brand-Customer Relationship Through Interactive Advertising Experiences: Games, Quests, and Digital Collectibles.
TL;DR — Brands are struggling to maintain engagement while sustaining return on advertising spend. But there are alternatives advertising avenues on the horizon. In this article we explore these techniques that may transform the relationship between customers and brands, which can increase brand awareness, engagement and customer lifetime value (LTV).
Introduction
In the last eight years, customer acquisition costs for e-commerce players have gone up by 222% (source). In 2022, it was reported that digital ad costs on Facebook and TikTok have risen by a staggering 89% and 92%, respectively (source). Brands are struggling to maintain their engagement and recoup their advertising spend.
The rapid rise of digital advertising costs has been attributed to its effectiveness. But this also led to a reliance on Google, Facebook, Apple and Amazon (also commonly referred to as the “walled gardens”). In fact, they control 70% of digital advertising spend (source).
This dependency was made the more evident with the release of Apple iOS 14.5 (ad tracking), which increases privacy for users by making it harder to target specific consumer profiles. Brands are finding it more challenging to reach their desired audience while sustaining the same returns on advertising spend (ROAS). Therefore, there is a demand for new ways to reach customers. This need is driving a rise in alternative digital marketing.
Increasingly, brands are exploring outside the walled gardens into the “open internet” where advertisers utilize digital news networks, websites, and video games. The in-game advertising market is currently worth US$8 billion, 6% of the digital advertising market but is expected to reach US$17 billion (11% CAGR) by 2030. The future of gaming is so huge that the Financial Times describes gaming as “the next big tech battleground” (source). Additionally, there are emerging technologies and methodologies that may increase brand awareness, engagement and customer lifetime value (LTV).
In this article, we will explore how virtual worlds and gaming rose in popularity as advertising channels and evaluate emerging methods like “Quests” and Web3-powered Digital Collectibles as alternatives to conventional digital advertising.
Gaming – The next big advertising channel
Virtual worlds, such as video games and virtual experiences like Roblox, Decentraland and Sandbox, are being used in advertising – but it's only the beginning. These platforms provide immersive and interactive environments where consumers can engage with brands and products in novel ways. For example, Red Bull may create branded items inside a video game for players to consume, or IKEA can create an AR home simulation game, in which players use IKEA furniture and products. These mediums can provide advertisers with original ways to connect with consumers to create memorable experiences that drive brand awareness and loyalty. The size of this opportunity is enormous.
By 2025, it is estimated that there will be 3.5 billion gamers globally. With such a huge audience, Japanese advertising giant Dentsu has gone beyond traditional advertising to provide integrated solutions with game advertising and branded in-game items through Dentsu Gaming (source). Gaming companies like Roblox announced that they will launch in-game advertisements in 2023 (source), while Microsoft and Sony announced that they will soon launch ads on Xbox and Playstation respectively (source).
Virtual Experiences
One example of a successful virtual-world advertising campaign are brand collaborations in Fortnite, which is a popular video game developed by Epic Games with 239M monthly players. Brand powerhouses like Nike, Marvel and Samsung collaborate with Epic games to release products within the Fortnite universe. In 2018, players got the chance to be like Mike when they laced up their favorite pair of Jordans. This campaign generated a lot of buzz, and most importantly sales. Similarly, in 2019, Samsung sponsored a Fortnite tournament, in which the top prizes were exclusive limited edition Samsung products. This campaign generated a lot of brand equity for Samsung amongst the younger demographic. These experiences allow advertisers and brands to reach the game's large and engaged audienc.
Roblox is another massive gaming platform that has successfully helped brands create virtual experiences for consumers. Nike created Nikeland within Roblox in 2021, by September 2022, Nikeland had received 25 million visitors (source). Nike’s enormous success showed that huge numbers of people were willing to spend time in these experiences if they were authentic and dynamic. . Nike wasn’t the only brand that built virtual experiences in Roblox, brands such as Gucci, Samsung, Walmart, Foot Locker, retail giant H&M, Warner Music, and many more have created their own virtual experiences in Roblox.
Branded experiences, as aforementioned, are impactful approaches for brands to interact with consumers. Attributions may be a concern but brands can measure their efforts by tracking the number of visitors to their experiences, dwell time, engagement or even QR code scans and digital asset purchases (source).
In-Game & Integrated Advertisements
While branded experiences are new, in-game advertisements have been around longer and are increasingly utilized. Gaming is the next big advertising channel (source). And it’s not only used to advertise to the male demographic.
In a November-December 2022 advertising campaign of Prada x Candy Crush, L’Oréal sought to reignite the relevance of their Prada Candy fragrance with their target audience in the 18-34 age group (source). Prada Candy partnered with Candy Crush Saga, the world’s most prominent mobile puzzle game which has over 240 million active users. Once a player completes the Prada Candy-themed puzzles, they are rewarded with a sample of the perfume – forty thousand vials were requested within 24 hours (source).
The external effects of the campaign led Prada Candy to achieve an increase of 1,813% in web traffic, a 6.6% click-through rate, a 98.9% engagement and a 96.2% completion rate which were stellar results.
Another case study of rewarded media ads in December 2021 was with Unilever’s Ben & Jerry’s delivery service. (source). The campaign showcased Ben & Jerry’s creamy offerings with ads that had a clear call-to-action: visit their website and order ice cream.
The ad was a success. Ad recall, a campaign metric that measures how memorable an advertisement is to an audience, grew by 19%. Ben & Jerry’s became unforgettable.
There are more successful case studies of in-game ads which we will examine in future articles. But in the next section, we’ll explore another technique called “Quests”.
Quests – On-Demand Sampling, Brand Awareness, and Engagement tool
Quests are tasks or challenges that users complete for rewards. An example of a simple quest may be logging into an e-commerce application daily to collect discount codes. Brands can create quests to drive consumers to try new products, experiences, and games, similar to sampling at a supermarket. Well-designed quests can be useful growth tactics.
Pokemon GO’s Quests
One example of a successful quest-based campaign is the Pokemon GO! app, which was developed by Niantic and sponsored by several brands, including McDonald and Starbucks. In this app, users had to "catch" virtual Pokemon creatures that were placed in real-world locations, such as parks, landmarks, and shops. Companies can turn their brick-and-mortar stores into Pokemon Gyms, where players can battle, or Pokestops, where gamers can collect items. In the Starbucks - Pokemon GO! partnership, an ordinary Starbucks coffee shop on the street corner turns into a lively attraction filled with the thrills of battle and the allure of a rare item.
There are many other retail brands, restaurants, and businesses that also sponsored the app. These companies benefited from the increased foot traffic and brand exposure, as well as the data collected about consumer behavior and preferences. In a study with 2,032 US restaurants, stores located near PokeStops attain about 4.8% more reviews than restaurants that were not (source). This finding implied that PokeStops were effective.
Web3 Supercharges Quests
Increasingly, web3 startups are experimenting with such “Quest” models as an alternative form of user acquisition. Quests are created to incentivize users to try products and services, ranging from games to decentralized finance (DeFi) applications and many others.
Blockchain-powered Quests have numerous benefits:
Blockchain offers a fully transparent data layer to serve quests to interested parties, completion of tasks and rewards given are all recorded.
Blockchain enables easy allocation of rewards to users such as airdropping token or non-fungible token (NFT) to user’s wallets.
Blockchain enables users to keep a record of their activities on-chain and brands can easily reward loyal users even years later, which also allows projects to create new consumer experiences through quests and web3 powered digital collectibles (NFT), . Starbucks is experimenting with the launch of their latest web3 loyalty program, Odyssey. We will dive deeper into it in the next section.
We’ve touched on why Quests are on-demand sampling with the earlier examples. Let’s look at how Quests can be used as an engagement tool.
Increase User Engagement through Quests
In the education space, Quests can be used as a fun and inviting way to teach students about a particular subject or concept. For example, a teacher might create a quest where students have to solve puzzles and challenges that are related to a historical event or a scientific principle. This can help to make learning more interactive and enjoyable, while also providing valuable data about student performance and progress.
Shopee Seller Missions is a great example of Quests. Shopee designed missions to help their sellers learn everything about their platform in a more interactive and appealing way. Sellers can complete quests by issuing a voucher, fulfilling 5 orders and many other tasks to claim Shopee product boosting. In doing so, Shopee created a program that not only educated sellers but also increased their retention – win win.
Starbucks’s Rewards, often regarded as one of the best retail loyalty programs, recently launched a web3 version called Odyssey. They seamlessly merge Quests, which they call “Journeys'' and digital collectibles. In the next section, we’ll explore how Starbucks does it and their digital collectibles strategy.
Digital Collectibles – driving brand awareness, engagement and increasing LTV
Digital collectibles, such as non-fungible tokens (NFTs), are digital assets that are unique, verifiable, and solely owned by a specific individual or entity. NFTs can represent art, collectibles, virtual items, and other assets that have value and scarcity. In advertising, NFTs can be used to create limited-edition offers or rewards. Starbucks Odyssey is a great case study in helping us understand how digital collectibles can be utilized.
Case study: Starbucks Odyssey
What is Starbucks Odyssey?
Starbucks Odyssey is an extension of Starbucks Rewards, powered by Web3 technology, that unlocks access to exciting benefits and experiences for members. Starbucks Odyssey transforms a typical loyalty program into a digital community, where members can come together, interact, and share their love of coffee. Starbucks is using meaningful elements of Web3 technology to reward members, including digital collectable Stamps (NFTs) that serve as an access pass to the alluring world of coffee and unique adventures with Starbucks. (source)
The Starbucks Odyssey Experience
Members can participate in a series of entertaining, interactive activities called ‘Journeys”. Once a Journey is completed, members will earn collectible ‘Journey Stamps’ (NFTs) and Odyssey Points that will open access to their subsequent journeys and next level benefits.
Changing The Customer-Brand Relationship
In an interview with Joe O’Rourke, co-founder of Forum3, the company that powers Starbucks Odyssey, Joe described the current state of loyalty programs as very transactional, in general loyalty programs are just discounts. Everything a consumer does is about discounts. But digital collectibles could change this into a 2-way value exchange. This removes the transactional nature of loyalty programs.
Starbucks Odyssey is a gamified extension of the current loyalty program. Think of it as a game layer. The customer’s experience is changed from single player – me and a discount – to a multiplayer game, where there is a community with shared interests and common goals. When the customer participates in collecting, trading, and living the coffee culture with each other, they feel like they belong. Another element that unites the community is the sense of true ownership. Each member wholly owns and fully controls their Stamps so each exchange and interaction is real. This is only possible using Web3 NFT technology.
The added advantage of Web3-powered digital collectibles is composability; it is easier to add perks and utility to the holder of the collectible, not possible in web2. In other words, other brands could offer products or services to customers with a lot of Journey Stamps without asking Starbucks for permission. It’s likely that a user with a lot of stamps enjoys drinking coffee, so Breville could airdrop coupons for their espresso makers to these users. This leads to the final point of digital collectibles: targeted advertising.
Digital Collectibles Enables Targeted Advertising
As Web3 becomes mainstream, we may see brands start to provide value on top of one another – cranking the competition meter to the max. Starbucks stamps are on the Polygon public blockchain, which means anyone can identify a loyal Starbucks member. This leads to stamp owners receiving multiple rewards for holding the same stamp. For example, a yoga studio seeking loyal customers could target long-time holders of Starbucks Stamps and give them a voucher for a free session. They could easily airdrop a token or NFT to represent this voucher to the stamp holder. Thus, reward stacking will be huge and the consumers will reap the benefits.
As target advertising and retargeting become more difficult, and soon unfeasible, brands will turn to targeting digital collectible holders as an alternative advertising method. This emerging segment of advertising will become more valuable and effective as more people own NFTs, similar to how facebook advertising rose in popularity as the number of mobile phone users grew.
Closing thoughts
By combining these techniques, brands can transform their relationship with customer and unlock new customer segmentation methods. This will materially impact every company’s brand equity and profitability.
This article provided an overview of these new techniques, but there is much more to unpack. In future essays, we will dive deeper into how brands can maximize the results when using these techniques as well as which technique works best at various parts of a brand’s customer funnel.
Sources:
Fast Company — Advertising reimagined for the gaming world
Activision Blizzard — Gaming Transformed Entertainment Consumption
Activision Blizzard — In-Game Ads Campaign Case Studies
Activision Blizzard — Case Studies (Prada Candy)
Open Internet — Insights into Consumers, Channels, and Advertising
Social Samosa — Open Internet Advertising Spends Report
TechCrunch — Pokemon GO! Sponsorship Price
3Mint — Case Study Starbucks Odyssey
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