What is the state of Web3 in 2024? We explore emerging use cases for brands, challenges for mass adoption and what the future of Web3 could hold.
There comes a time with any new technology when inflated expectations pop and a more realistic outlook emerges. Perhaps counterintuitively, this phase often indicates that exciting times are ahead.
In the evolving digital realm, blockchain, crypto, and NFTs all seem to have had their time in the sun – illuminating paths to decentralized innovation. Today, it’s AI capturing our collective imagination. Tomorrow, who knows? Yet, amidst this flux, the concept of Web3 is quietly but steadily gaining ground.
Right now, public sentiment about NFTs seems to be up in the air. Many people still fixate on the 2021 NFT boom and subsequent crashes as their primary reference point. But the outlook of Web3 becomes super interesting when viewed through the lens of recent research.
A 2023 global Web3 and crypto survey of 15,000 people found that many people support the underlying concepts of Web3 – ownership of digital assets, control over personal data, and fair compensation. But only one in four people know what Web3 is:
- 67% of people believe they should own their digital creations
- 79% want greater control over their online identities
- 70% feel they should have a stake in the profits generated by companies using their data
If we look at the state of Web3, blockchain, and NFTs in 2024, we can see the Gartner Hype Cycle playing out. Web3 as a concept is tracking behind AI, NFTs, blockchain and cryptocurrencies.
Despite its relative novelty, Web3 is already showing value to brands in the form of easier brand collaborations, better loyalty programs, and more effective customer engagement strategies. So, all is not lost.
To better grasp Web3’s progress, let’s explore emerging use cases and their long-term impact on brands and customers.
1. Loyalty and membership programs
The evolution of customer loyalty programs over the last year is most likely in response to increased customer acquisition costs and the constant need for brands to drive revenue. After all, customers spend twice as much after joining a loyalty program, on average.
It just makes financial sense to reward your customers for their loyalty. But having a loyalty program isn’t enough.
And so this is where the competitive advantage that Web3 offers comes into play. Web3-powered loyalty programs can give customers:
- Increased transparency and control of their data - Connect your digital wallet to a brand, and rest assured they'll only access the transaction history of that specific wallet. No more, no less.
- Personalized, exciting rewards - Web3 rewards can be non-financial and personalized to individual user interests. Customers get unique, non-financial incentives like a special NFT that doubles as a VIP pass to exclusive brand events, all aligned with their interests.
- True ownership of rewards - Web3 loyalty programs link rewards directly to your digital wallet, not just your account. This gives you full ownership and freedom to buy, sell, or trade these rewards. Customers can enjoy real value from loyalty programs, even if you decide to move on.
Brands to develop their Web3 loyalty programs last year include Starbucks, Clinique, D&G, Lacoste, the NBA, Adidas, Coca-Cola, and many more.
Starbucks launched the Odyssey loyalty program to transform the traditional points-based loyalty program into an interactive journey as customers buy coffee. With every visit, they earn unique stamps (NFTs) that can be sold to other customers. These stamps help users level up their loyalty and unlock greater benefits that include discounts, additional points, free coffee, and even access to special events.
Last year, Clinique launched The Clinique Labs – an interactive metaverse-based experience that connects customers to the culture, science, and history of the brand. Clinique takes a gamified approach to the loyalty program, offering games, trivia questions, and custom digital avatars to program members. Clinique has also in the past worked with artists to create NFTs based on some of their most popular products.
2. Community Building
The need to belong is a driving force behind consumer behavior. A survey of 19,000 US and UK customers found that emotional attachment was the biggest driver of value, being responsible for about 43% of business value.
“Customers don’t know what they really want. They say they want a product, but what really drives business value is emotional attachment.”
– Zhecho Dobrev, Principal Consultant at Beyond Philosophy
Creating a brand community is an extremely effective way to either build or strengthen this emotional tie and create a sense of belonging among customers.
Reddit’s community power is unparalleled. Their collectible avatars are digital representations that users can trade and personalize their unique tastes and preferences. This initiative is part of a broader movement to infuse greater value into social media spaces. It aims to reward users for their content creation with more than just intangible acknowledgments like 'likes' or 'upvotes'. (For a deeper dive into this topic, check out our podcast.)
With Nike .Swoosh, members can create, trade, and display their digital creations in a brand community space. These digital creations are NFT sneakers and apparel that are sometimes even designed by its members. Displaying greater amounts of engagement will reward customers with exclusive products, discounts, and even experiences.
Dolce & Gabbana
The Dolce & Gabbana community involves different NFT access passes that come in different tiers. Each tier has its own attached benefits that involve access to community spaces, fashion shows, and even physical apparel.
3. Proof of ownership
Web3's blockchain technology brings to the forefront verifiable digital goods. These are digital assets whose ownership can be authenticated seamlessly through the blockchainExample Autograph.IOAutograph.IO, co-founded by Tom Brady, is a platform that allows celebrities to sell digital versions of their autographs as NFTs. The NFTs themselves are registered on the blockchain and therefore verifiable as legitimate. This type of verified digital ownership was previously impossible over the internet, but is now enabled by Web3.
Autograph.IO, co-founded by Tom Brady, is a platform that allows celebrities to sell digital versions of their autographs as NFTs. The NFTs themselves are registered on the blockchain and therefore verifiable as legitimate. This type of verified digital ownership was previously impossible over the internet, but is now enabled by Web3.
4. Access passes and ticketing
Web3 technology not only confirms the ownership of both digital and physical goods, but also elevates the concept with NFT “tickets”. Owning these NFTs can unlock a range of exclusive benefits tailored to the owner's interests. These privileges are earned based on conditions set by the brand, offering a personalized and secure experience that aligns perfectly with customer preferences.
Global Fit Club
The Global Fit Club utilizes NFTs as access passes to gyms across the world. With ownership of a Global Fit NFT, users not only get access to exclusive clubs but also special discounts and an app to help track your fitness journey. As a customer continues to engage with the Fit Club, their NFT will evolve and earn them special rewards as they continue to exercise.
The cafe and restaurant chain Farm Girl’s debut NFT collection acts as a tiered-based membership program that gives free coffee to its holders at any of the stores. The higher the NFT tier, the better the benefit for its holder. For example, the most common tier gave holders a year of free coffee every day. The highest tier is a lifetime supply of two free daily coffees and two free daily meals.
Co-creation symbolizes the dynamic, two-way collaboration between brands and their customers in developing new products and ideas. This approach involves customers directly in the creative process, fostering a deeper connection and sense of ownership.
On the other hand, co-branding often engages a brand's most loyal customers in the decision-making process, typically through mechanisms like voting or showcasing community creations. This strategy not only promotes customer engagement but also leverages the unique insights and preferences of the brand's most dedicated followers
The Nike .SWOOSH program allows community members to design the digital apparel that’s bought, sold, and traded in the .SWOOSH ecosystem. This apparel even has an opportunity to be developed into a physical product.
And so with some of the big developments in 2023 outlined, we look onward toward 2024 and beyond. What’s next for utilizing Web3? What are its biggest obstacles?
Barriers to mass adoption of Web3 in 2024
Web3 is plagued by technical jargon which can make it difficult for most people to understand, let alone make use of. This complexity can especially be a hurdle for brands and marketers unfamiliar with Web3.
We hope to do our part in breaking down these barriers to help customers experiment with Web3 concepts and ideas!
Why should a brand bother to invest $$$ into a Web3 initiative when so many other things need their attention? What are the benefits of integrating Web3? What will the return on investment be?
Real use cases and benefits are emerging, but these are valid questions which decision markers and marketers need to get their head round.
There’s a stigma around NFTs and cryptocurrencies due to the 2021 NFT hype bubble and seemingly endless crypto scandals. Audiences may perceive your NFT project as a rug pull if not properly positioned and communicated. This can lead to campaigns having the opposite effect of damaging your public perception rather than growing your audience.
What’s next for Web3?
Customer expectations are always changing. The demand for more enriching rewards, substantial discounts, and enhanced experiences in exchange for loyalty is at an all-time high.
For many big brands, Web3 technology is a strategic move towards staying relevant and competitive in a rapidly changing consumer environment.