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Industry Contributor 24 May 2022 -

What will a decentralised Web 3.0 mean for brands – and the three questions marketers should ask themselves now

By Steve Thornton - Digital Director, Wavemaker

From the metaverse to NFTs and crypto, brands are falling over themselves to explore the new frontier of Web 3.0. But are they adequately weighing up the opportunity against the risk, and are they even asking the right questions, asks Wavemaker Digital Director Steve Thornton.
 

Heralded as the next evolution of the internet, Web 3.0 is coming – but no one knows when.

While the hallmark of Web 2.0 is interactivity, Web 3.0 is shaping into a decentralised entity, putting creation in the hands of the creators and not platform owners – and allowing individuals to maintain ownership over their data.

This sounds a lot closer to Tim Berners-Lee’s vision for the internet way back when he set up the first web server in 1990.

But don’t get carried away.

Web 3.0 is a pipe dream, for now

Web 3.0 as a decentralised virtual world with a persistent online presence that seamlessly interacts with the physical world is a concept not a reality. It lives in the minds of the innovators, the founders, the crypto bros and defi guys. Apart from small (but far from interoperable) pockets in gaming, finance and events, it is many years away.

Currently the most commonly associated terms or concepts attached to Web 3.0 are (in order of unmitigated hype):

  1. Metaverse
  2. NFT
  3. Crypto
  4. Blockchain

And all four are starting to see the creeping inequalities of Web 2.0 fester into their narrative.

Within days of Meta launching its Horizon Worlds VR multiplayer app in December 2021, an early beta user was sexually harassed, exposing once again the lack of rules to protect users’ safety in these spaces; and in January, Crypto.com confirmed a security breach that saw 483 users affected by a hack that compromised their identity and saw approximately $33.8 million in crypto assets stolen.

NFTs, while offering unique ways for artists and creators to profit from their art, have simultaneously become a new means for the uber rich to intentionally symbol their status with scarce assets that only they would want to afford.

But this is only the beginning, and the night is always darkest just before the dawn.

Addressing the mistakes of the past

It is vital to the success of whatever the next iteration of the web is – whether it be the current vision for 3.0 or something entirely different – that the mistakes of the past are addressed.

Andreessen Horowitz-owned technology VC firm a16z lists 10 principles for world leaders shaping the future of Web3:

  1. Establish a clear vision to foster decentralised digital infrastructure;
  2. Embrace multi-stakeholder approaches to governance and regulation;
  3. Create targeted, risk-calibrated oversight regimes for different Web 3.0 activities;
  4. Foster innovation with composability, open source code, and the power of open communities;
  5. Broaden access to the economic benefits of the innovation economy;
  6. Unlock the potential of DAOs;
  7. Deploy Web 3.0 to further sustainability goals;
  8. Embrace the role of well-regulated stablecoins in financial inclusion and innovation;
  9. Collaborate with other nations to harmonise standards and regulatory frameworks;
  10. Provide clear, fair tax rules for the reporting of digital assets, and leverage technical solutions for tax compliance.

While these all lay the foundations for Web 3.0 to have a vital (and profitable) role in the economy of tomorrow, there are three adjacent principles we should include:

  1. Create products and services that are proven to minimise harm with globally applied penalties and liabilities for those that do not.
  2. Allow users to opt in to having their data collected, never share that data without permission, and make it simple to opt out or customise at any time.
  3. Foster companies building a stakeholder model, not a shareholder model, that appreciates public value creation and accepts taxation accordingly.

All of this requires underpinning by a public sector that has the necessary capacity to understand and regulate these principles.

Where is it headed and why?

We will continue to see the growing presence in our lexicon of terms like ‘decentralisation’, ‘custodial wallets’, ‘smart contracts’ and ‘Decentralised Autonomous Organisations (DAO)’ as adoption increases and investment continues to grow.

Brands will look to take first-mover advantage with fashion, entertainment and finance all likely benefactors, but their forays will be long-term bets with any view of long-term value far from certain.

The challenges with the proposed vision of Web 3.0 have been well documented and there are some critical obstacles to overcome early.

Is it acceptable that Bitcoin’s energy usage is equivalent to the population of Finland?

If we are building a new future based on a decentralised blockchain system, should that system not be immune to hacking?

If the industry cannot agree on a solution to cookies, are we truly ready for a shared, collaborative, interoperable digital space?

In this state of early design, testing, learning, fast failing and blue-sky thinking, we should be able to agree that Web 3.0 must be an inclusive and safe space for all who use it, that privacy is a right not a privilege, and that competition is healthy for the ecosystem.

What brands should be asking themselves

1. Brands should be prepared for volatility in their current digital Web 2.0 ecosystem.

Whether that be in continued restrictions to data collection/activation practices or changes to the scale or scope of their current leading advertising platforms. Diversification of platforms and a culture of test and learn should be the tools to guard against fragmentation and disruption.

Key question: Would my brand be prepared if the efficacy of my lead digital platform was compromised?

2. Brands should consider how their choice of partners reflects on their brand.

Never before have consumers expected so much from brands or been able to apply such scrutiny to their business practices. Ensuring that a brand talks as well as walks the talk has become a key consumer purchase driver.

Key question: Would I be comfortable sharing a list of my advertising partners with the public?

3. Web 3.0 should be treated as an opportunity. And a risk.

With burgeoning technology comes new opportunity and brands may feel they are missing out if they do not participate immediately. The reality is that only 16% of Americans can define the Metaverse, and only 250,000 globally are taking part in NFT transactions each month. This space will take decades to scale to the levels seen in today’s platform-based internet.

Key question: How much am I willing to risk in Web 3.0 technology investments versus observe and react?

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Steve Thornton

Digital Director, Wavemaker

Market Voice

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