News | July 19th 2022

Muse by Clio | Don't Talk to Me About NFTs and the Metaverse

How to really think about the promise of Web3

Originally published in Muse by Clio by Dan Gardner

Web3 and all its buzzy trimming has a reputation problem. And I'm regretful to admit that is largely due to my tribe—creatives. That’s why I’m calling bullshit. Just because you are a creative in advertising doesn't give you the right credentials to be an expert and give effective solutions.

Before you get defensive or roll your eyes, I'd like to give some context. I promise you that I did not form this stance overnight. Let’s get into it.

New Worlds, Same Humans

I've been chest deep in digital flood waters for more than 20 years.

I quit my job at a traditional agency after a couple months out of college and co-founded Code and Theory on September 1, 2001. The world was thrust towards unimaginable and radical changes to our collective economic, social and cultural fabric—beginning with 9/11 and continuing with the burst of the dotcom bubble. We had our work cut out for us. Overall, there was huge reluctance and skepticism to do anything digital, so we were relegated to just making some fun flash websites, mainly using cool but useless animations. And only now when I reflect back do I realize how transformational those "useless" projects were to not only our business, but the industry as a whole.

I, like many of my fellow esteemed creatives, spent the better part of the aughts explaining what "digital-first" actually meant and then justifying why companies should be digital-first (now a buzzword). In my opinion, it was hard work, but good work because we were all digital disciples actively participating in socratic analysis and discourse about changing values and its impact on business. Our proselytizing had purpose. Fast forward to the emergence of web2; once again, the world had to adjust to new standards of engagement as they were forced to adopt digital as a necessity. (Side note: I never fully got everyone to understand that digital-first is simply digital as a strategy, not just digital as a tactic. Lesson learned?)

With the maturation of a better tech stack and a seemingly more clear rationale of why digital is a requirement—obvious to us NOW—the industry created a new buzzword called digital transformation (no, prioritizing your media spend to digital is not it). There also was a plethora of creatives and other allied professionals, a lot of whom did not have a purposeful definition of digital transformation, pretending to have solutions for businesses. However, these folks who don't even have a purposeful definition, how can you solve a problem that you don't even understand exists? Out of it came many pointless ideas sold as digital transformation, but failed to actually deliver on the core opportunity. So much more to say about digital transformation, but I'll stay on topic.

So cut to the environment now, and we don't even know what digital transformation actually is and yet we want to start to talk about NFTs, metaverse, crypto, decentralized and smart contracts, DAOs, blockchain and dare I say… web3. Even real life moments now have a fancy acronym called IRL. Creatives get too distracted with novelty and innovation for innovation's sake. Thus, web3 is positioned as a new marketing opportunity when it is really so much more than that. At its best, web3 is a new creative and business model. When we elevate the conversation and view web3 through a creative model lens, the promise of web3 begins to materialize, providing new ways to deliver consumer and business value. As a business model, it's provisioning new markets via new ways to connect with consumers, new revenue streams and transformation of merchandising, production, design, brand governance and marketing. This distinction is nuanced yet profound. The end result being the difference between spewing talking points that sound fancy, exploitative cheap "creative" ad NFT ideas, and a meaningful exploration of value-chains across communities and experiences.

Stop Being a Tourist

So here we are. Web3, crypto, NFT, blockchain... It’s the wild west. And with the pace of innovation happening, it's quite easy to know a little bit about a lot and sound well-versed. We can become tourists and not actual stewards or citizens. Do you own a non-custodial wallet? Have you ever swapped different types of crypto-currencies on decentralized exchanges? Have you ever been on a whitelist? Have you used your tokens to actually vote on a proposal in a DAO? If the answer is no, it's probably safe to assume you haven't even bought or sold an NFT. Yet, we are filled with an industry that is coming up with and talking about cool "creative" NFT ideas for advertising purposes to get the next cool award or win the next big account.

And on the opposite spectrum, you have the critical discussion that oversimplifies the problems like energy usage, hard to use tech, no value, Discord sucks, blah blah blah…

Now, do you understand the different chains and their energy effect on how it computes power? Or to that point, the difference between "proof of stake" and "proof of work?" Were you the person who said, "I'd never do online shopping because dialing up on my modem was really slow and the websites were confusing in the late '90s?" Were you the person who thought mp3s were a niche problem when they were limited to sharing over local networks on college campuses? Did you just looove the feel of a print magazine, so you thought digital media had no chance?

I don't want to have those discussions if you haven't actually engaged with web3 or are close-minded to have the openness to new perspectives. I spent two decades already having similar arguments like that. And to that point, nothing sounds worse to me than sitting on a panel at the next big event to have a shallow web3 discussion where we say "utility" 20 times and talk about how DAOs will be the solution to any business challenge.

Now with all that said, let me be very clear. I am a huge believer in web3. I do believe that it has the potential and likelihood to fundamentally change how most industries conduct business. The same way I thought digital would change the world back in 2001. I didn't know much about anything back then, but we were at least filled with technological promise and some creative dreaming, both of which I have now again. It's incredibly exciting and inspiring.

Web3 is a technology and a philosophy that gives new constructs of economics for intellectual property. It changes the relationship between creator and fans, or brands and consumers, or consumer and consumers for that matter. It clearly is disrupting the way we think about banking through DeFi (decentralized finance). It's changing the way we think of online identity. Is it singular, is it multi-dimensional, is my identity tied to status, is my banking my identity? It's changing supply chains, it's changing the idea of ownership, both the need for physical ownership and the opportunity and desire for digital ownership. You'd have to live under a rock to not realize how it's changing gaming or how it may change gambling and sports. How it'll probably change digital services and loyalty programs. How it's changing ticketing and events. It literally threatens old types of business models, while giving way to new opportunities for new businesses. The list can go on.

But here is the challenge to having these bandwagon-y discussions; these are highly technical, highly disruptive, highly early in our understanding and potentially transformative philosophy and technology. I'm not the first one to make a comparison to the early days of the internet where the understanding was low, but potential was high.

For those curious to understand a practical example have to look no further than the StockX and Nike dispute. If you spent some time understanding what's going on and why it's important for both companies, you could begin to imagine a world around where there will be cascading effects of how this technology can transform both of these businesses.

And that's my point, the cascading effect. That is what's both interesting and important. The connections between what web3 and its corresponding buzzwords can achieve and where it will have impact across a brand. It fundamentally has the potential to change so much of a business.

At Code and Theory, we have always maintained a belief that a brand is the sum of all its interactions, not just the siloed experiences they are traditionally organized to. It takes rigor and insight to make those connections and identify the cascading effects, often revolving around behaviors, technology, digital capabilities and of course, creative thinking. Or as some people like to call it "digital transformation" or how others like to call it "digital-first" or as I like to call it, the way companies need to do business in today's competitive connected world.

So… let me know if you want to talk about NFTs and the metaverse. And if part of that discussion happens to be "What should our web3 strategy be?", I know what at least part of the answer is, and it will NOT be limited to just a web3 "metaverse activation."

Even if that wins the next big award.

I love this stuff, just let's really discuss it and be creative.

Says a Lot —

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