The emergence of Web3 is creating waves across all industries, giving brands a new platform for engagement and providing powerful opportunities that would have been unthinkable even just a few years ago.
But how exactly are companies adapting to this exciting shift?
Before exploring how brands are pioneering Web3, let's first explain what Web3 is and how it differs from Web2.
To put it simply, Web3 is a decentralized web platform that uses blockchain technology to create a secure and trustless environment for individuals and businesses to operate within.
Unlike Web2, which relies on centralized servers and third-party services, Web3 is built on a network of distributed nodes linked together and secured by cryptography. This means that data is more secure, transactions are faster, and more efficient processes can be developed.
Web3 also provides users with access to a new range of applications and services that may not be available on the traditional web.
The potential benefits of Web3 for brands are numerous. For starters, brands can use Web3 to securely store and manage customer data, process payments faster, and create innovative services for customers.
In this blog, we’ll explore how brands are leading developments in the decentralized ecosystem. We’ll cover:
- Uses cases for Web3
- Advantages and challenges of Web3 for brands
- Some notable organizations pioneering developments in Web3
- And the future outlook of Web3 for brands
Use Cases for Web3
With the emergence of Web3, new use cases are coming to the forefront. This gives brands the freedom to experiment with new ways of engaging their consumers.
Let’s discuss the different uses cases for Web3
Decentralized Finance (DeFi)
DeFi is a system of finance tools and technologies built on the blockchain. It is revolutionizing the way we access and interact with financial services.
DeFi enables brands to offer innovative financial services to their customers in a secure and decentralized manner. Businesses can also benefit from DeFi with services such as peer-to-peer lending and stablecoins. Examples of brands that are using DeFi include Compound, which allows users to borrow and lend cryptocurrencies. AT&T and Starbucks are also notable brands that accept cryptocurrency payments made possible by DeFi payment processors.
Non-Fungible Tokens (NFTs)
NFTs are digital tokens used to represent a unique item or asset, such as digital art, certificates of ownership, music, event tickets, etc. The token is stored on a blockchain thus, it cannot be replicated.
NFTs are transforming the way brands interact with their customers. For example, brands can use NFTs to create amazing digital experiences for their customers such as rewarding long-term customers with access to exclusive events or custom-edition gifts.
One notable way a brand utilized NFTs is when the NBA partnered with Dapper Labs to launch the NBA Top Shot. NBA Top Shot is a marketplace where fans can buy, sell, and collect video clips of historic and incredible moments in the NBA.
Another example is Unstoppable Domains, which sells custom domain names as NFTs such as 0xgetfit.dao, 0xstaysharp.nft, etc.
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Decentralized Autonomous Organizations (DAOs)
DAOs are organizations that are designed to be self-governing and autonomous. The rules for establishing and running a DAO are encoded into a smart contract, stored on a blockchain.
DAOs enable brands to create new business models and engage with their customers in a more decentralized manner.
An example of a brand using DAO is Aave, a DeFi protocol governed by its DAO members who steer the development and implementation of new features on the protocol. The DAO members recently voted to enable users to be able to search for other users using their blockchain domain names such as 0xomnipresent.nft rather than with wallet addresses.
Advantages of Web3 for Brands
Enhanced Transparency and Security
Web3 offers a higher level of security and transparency for businesses. This allows them to ensure the privacy of customer data and protect it from malicious actors. This also helps to ensure accuracy and reduce the risk of fraud as blockchain information cannot be altered or deleted.
Increased Customer Engagement
Web3 provides an opportunity for brands to enhance their relationship with customers. Brands can use blockchain technology to create unique customer profiles, track customer activity and gather insights into their preferences and behavior. This helps them to better understand their customers and provide more personalized experiences.
Ability to Build Decentralized Communities
With Web3, brands can build decentralized communities of customers who can interact with one another, exchange ideas, and collaborate on projects. This creates a sense of trust and loyalty as customers can see that their voices are being heard.
Challenges of Web3 for Brands
Web3 is still in its early stages, and some technological barriers can make it difficult for brands to use. For example, blockchain technology is complex and difficult to implement. There is also a shortage of experienced developers and engineers to help build decentralized applications.
Additionally, the costs of developing and maintaining a Web3 platform can be unaffordable for some brands.
Lack of Regulation
As Web3 is still a relatively new technology, there are currently few or no clear regulations governing its use. This can be a challenge for brands in highly critical industries such as healthcare or brands who are uncertain of how to ensure the safety and reliability of their systems.
Using Web3 poses some risks to a brand’s reputation, as customers may be skeptical of a technology they are unfamiliar with. Brands can also suffer a reputation crisis if something goes amiss.
Examples of Brands Using Web3
As Web3 technologies evolve, more and more brands are experimenting with it and its associated technologies, such as NFTs and the Metaverse. Here are a few examples of brands using Web3 and the various initiatives they have developed to leverage its potential.
Nike was one of the first major brands to explore the possibilities of Web3 technology. It partnered with RTFKT, a company that specializes in digital artifacts, to create a dedicated metaverse where customers can create virtual shoe designs and then purchase them as NFTs. Nike plans to use the metaverse to build a deeper connection with its customers and gain valuable insights about their preferences.
Credit card giant Visa is another brand experimenting with Web3. They first made headlines when they bought a female CryptoPunk avatar for about $150,000 in August 2021. Since then, they’ve expanded their reach in the Web3 ecosystem by establishing an NFT Creator Program, a cohort for small business owners and entrepreneurs to collaborate and build their Web3 ventures.
Adidas is another brand that's been experimenting with web3. The sportswear giant partnered with Coinbase in November 2021, in a move to facilitate payments with cryptocurrencies. They also partnered with The Sandbox to gain a foothold in the Metaverse.
Adidas has also launched an NFT collection ‘Into the Metaverse’ to give customers a unique and innovative way to engage with their brand. They created the collection in partnership with gmoney, Bored Ape Yacht Club, and PUNKS Comic.
Unilever has also joined the Web3 revolution. In April 2022, Rexona, a deodorant brand under the Unilever umbrella, partnered with Decentraland to host the world’s first metaverse marathon. The marathon was to promote well-being and equity, diversity, and inclusion as it featured adaptive wearables such as wheelchairs and running blades for people with disabilities.
Later in June, Unilever also gave their fans and customers a glimpse at futuristic food shopping. Magnum, Unilever’s ice cream brand, encouraged guests at the MET AMS metaverse festival in Amsterdam to visit their virtual world and order ice cream from a vending machine.
These are just a few examples of how brands are experimenting with Web3, and there are sure to be many more in the coming years.
The Future of Web3 for Brands
The potential of Web3 for brands is glamorous. As you’ve seen in the previous section, brands can create more personalized experiences for their customers. They can also build stronger relationships by interacting with customers via virtual communities.
Web3 has opened up a whole new world of possibilities for businesses, and many brands are already starting to explore its potential.
So, what does the future of Web3 for brands look like?
One of the most promising aspects is that brands will increasingly use Web3 to create more engaging customer experiences. For example, brands can use Web3 to create decentralized communities that are built around shared values, interests, and goals. These communities can be used to strengthen customer loyalty, encourage user engagement, and provide a platform for customers to interact with the brand.
Furthermore, Web3 offers brands the opportunity to create new business models, as demonstrated by Adidas and Nike. Brands can also create new sources of revenue such as decentralized marketplaces, tokenized advertising, and loyalty programs.
Finally, Web3 will enable brands to bolster their security, by ensuring safety and privacy when dealing with customer data which can lead to increased trust from customers.
Web3 has the potential to revolutionize the way brands interact with their customers and help them to create new business models. Brands can use Web3 to securely store and manage customer data, process payments faster, create innovative services for customers, and build decentralized communities.
Furthermore, Web3 provides a platform for brands to create unique customer experiences, track customer activity, and gain valuable insights into their preferences and behavior.
Despite the potential of Web3, there are some challenges to consider. These include technological barriers, lack of regulation, and reputation risks. Brands must be aware of these challenges and be prepared to mitigate them.
As Web3 continues to evolve, more brands will embrace and leverage the technology. With the right strategies and resources in place, brands will be able to use Web3 to create unique experiences, gain a competitive edge and foster deeper relationships with their customers. The potential of Web3 for brands is truly exciting and the future looks bright.
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