Brand Building On-Chain: Why Marketers Are Shifting Investment Into Web3

In 2022, brands spent $297.5 billion on marketing in the U.S. Globally, advertisers spent over $1 trillion. Even with the prospect of recession looming, many marketers expect their budgets to increase in 2023. It’s not getting any easier to reach audiences in Web2. As fast as the digital media landscape has evolved, it’s still fundamentally broken for brands, artists and fan communities.

Brands contend with fragmentation. Today, a typical media mix for a major advertiser includes influencer campaigns, paid social, short-form video, TV ads, email, performance marketing and more. Once you find your community across this fractured ecosystem, your relationship with it is mediated. You’re reliant on third-party platforms and limited by third-party data.

Straith Schreder is the executive creative director at Palm NFT Studio. This op-ed is part of CoinDesk's Crypto 2023 series.

And while digital fan communities have more influence than ever before, they lack the ability and incentive to meaningfully participate in a brand’s story online. You can like a post, but you can never own it.

Web3 offers an alternative. What non-fungible token-based experiences empower, above all else, is connection. You can encode rights in a way that remunerates creators. You can give communities a stake in what they love. You can make pieces that point to what’s possible with art and technology; that live, breathe and react to the moment. Most of all, you can create something that fans see themselves in, whether it’s a generative collection that renders comic canon uniquely personal or an editioned series that makes you confront your own value system.

It’s not surprising, then, that even in the midst of market upheaval, major brands entered the space for the first time in 2022. To date, over 100 brands have launched Web3 projects. Direct-to-avatar sales became a $54 billion market. Nike announced a new home for co-created virtual goods. Starbucks' new loyalty program leverages non-fungible tokens to reward coffee drinkers. And DC’s growing Web3 platform gives collectors the chance to unlock comic books and shape canon.

Read more: Web3 and its Role in Network State Governance - Crypto 2023

As marketers continue to grow their online footprint, NFTs will become the technology standard for digital fan engagement. Just as every brand today needs a social media strategy for reach, every brand tomorrow will need a Web3 strategy for deep, vertical community-building. NFTs will simply become the most natural way we create and share the things we love. Amid a landscape that’s challenged by complexity and speculation, NFTs offer something transformative for brands: connection.

That visceral connection is encoded into every project. Your commitment to fans becomes more than a mission statement. It becomes a contract: shared ownership and space. NFTs will fundamentally change the way marketing works online. From radical customization to community-generated lore, the future of brand-building will begin in Web3.

See also: How Crypto Can Repair Its Reputation in Washington | Opinion

Generative art will center successful brand design

The sustained growth of generative art NFTs will influence the way marketers approach experience design. As generative artist Tyler Hobbs put it: “The value of a collection is around the collector and their contribution.”

Seeing yourself in an artwork is a powerful thing: 78% of consumers are more likely to buy from brands that provide personalized experiences. Generativity will shape the fabric of branded content NFTs, as projects increasingly reflect back the diverse perspectives of the collector communities that participate in them.

Tokens will replace ticketing, on- and offline

From cognac tastings to Comic-Con screenings, NFTs became the entry point into cultural events in 2022. Soon, they’ll be synonymous with live shows. Over five million Ticketmaster NFTs were minted on flow in a six month pilot. But you don’t need an arena tour to integrate token-gating. Closed community experiences will free up space for fans to go deep: creating a new brand channel for distribution, in-world storytelling and impactful discussion.

Every object will have a digital twin

Your suitcase. Your sweater. Your sneakers. Everything you own, actually. Over the past year, a number of projects have explored the space between digital and physical realities. In turn, they’ve created a powerful new lever for onboarding new audiences into Web3: It can’t be just a jpeg if it’s also a literal painting. Emerging brand projects will be visceral; offering objects you can touch through the screen and experiences that mirror the feeling of real-world collecting.

Decentralized storytelling will shift the landscape of IP

From Loot to Knightwatch, story-driven NFT features have gained mainstream traction. As major brands and studios begin to enter Web3, we’ll see creativity enter its multiplayer era. Holder-communities will create and contribute to project lore. Collectors will become protagonists; woven into brand narrative worlds. The stories we love will begin anew.

Frictionless platforms will accelerate adoption

This is a challenging time in crypto. (This is a challenging time, period.) Web3 is at the beginning of its beginning, which means chaos and complexity but also possibility. As major brands enter the space, a door opens behind them. The innovation that we’ll see over the course of the next year will make it frictionless for new fan communities to find their home in Web3. Purchasing an NFT will become as simple as any Web2 transaction. The way we build culture will begin on-chain.