21.2.2022

Why Web2 Brands Fail in Web3 and How to Test the Waters

Note: This was written for ConsumerDAO's Newsletter #1. A version of this is published on the ConsumerDAO website.

­Despite the volatile cryptocurrencies market, the scramble to "win" Web3 hasn't seemed to slow down at all. Among the recent successes (StockX's Vault NFTs immediately comes to mind), we've also seen great companies stumble and receive severe backlash (my prayers go to MeUndies and Discord). I think it's imperative for us to understand that while we may believe that NFTs have genuine, irreplaceable value to consumers, the journey to mass adoption is still a hike, and it's best to remain cautious.

Reasons of Failure

🏁  Wrong entry point. I'm convinced that the #1 thing brands are doing wrong is losing sight of their original mission/vision/purpose that their most loyal consumers have been drawn to while daydreaming on the potential of Web3. Take a look at the Brand Web3 Innovation Landscape below (still a work-in-progress) - selling NFTs or creating new membership programs technically constitutes a business model pivot in my mind. Any unwarranted pivot will likely lead to some form of backlash, especially if intentions are miscommunicated, and Web3 is no different.

🎙  Miscommunication. While there is already plenty of misinformation being spread around, it doesn't help the cause when brands drop important news cryptically. MeUndies posted a photo of an ape just captioned with "We couldn’t keep this primate—sorry, private." What does that even mean? Then, allegations of greenwashing and cash-grabbing came pouring in as MeUndies left it to social media to direct the conversation. Like entering any new markets, brands should take time to educate their audience on why this is ultimately beneficial for the consumers. I have my guesses, but to this day, I still don't know what MeUndies' plans are with their ape.

Naturally, I think the most sensible thing to do if brands are curious about Web3 for marketing/branding is to test the waters.

*This mostly refers to consumer-facing Web3 applications, although if you believe your brand is well-positioned take on infrastructure or enterprise innovation, that's a conversation we can have separately (feel free to email/text).

­­

­­­­

Potential Entry Points­

✍️ Survey. Probably not the most inspiring idea that you're here for, but Discord found out quickly that the gaming community was anti-NFT/crypto through a survey sent out by a product manager to a small segment of their consumers. They received backlash, although I would argue it was actually quite well-handled.

Interesting to note that some users on Reddit found the survey was not well-designed and didn't allow users to voice their concerns on crypto, which contributed to the backlash. An unbiased survey designed more professionally could likely have mitigated the consequences even more.

🏅 POAPs. POAP stands for the "Proof of Attendance Protocol." They describe themselves as "digital mementos, minted in celebration of life's remarkable events." I personally like the passport book analogy, where you have a collection of stamps issued by different countries that correspond to specific travel experiences. Instead of stamps and vacations, users instead collect NFTs at events. POAPs are energy-efficient and are typically not meant to be bought or sold, so immediately shake off the eco-terrorism and money-laundering image (if done right).

Brands can distribute POAPs at events (pop-ups, conferences, meet-ups, parties, webinars, etc.) to signal a desire to be more involved with Web3, without taking an explicit position on how they wish to execute. Without going into too much technical detail, you can use POAPs as a way to identify users who are early supporters of your endeavors and have them play a more meaningful role in a future project.

🤝 Collaborations. In my mind, these are win-win situations if brands have enough resources to allocate to seeking good collaboration opportunities proactively in the Web3 community. NFT projects and DAOs are typically very willing to collaborate as there is typically no incremental cost to run collabs. Plus, physical goods feel more "tangible" and they create value for the community and drive up token prices. For brands, usually it means an immediate access to communities that usually start at ~2K people and can go up to 10K+ NFT holders and even 100K+ overall Discord server members.

A great example is Taika who partnered with Friends with Benefits, a Web3 + arts & cultures community, to co-create and co-market a limited edition beverage drop. While Taika took care of formulation and day-to-day operations as they normally would, FWB sourced a working group from within their community to create designs and marketing collateral, and engage in product testing. While this is more than what typical "white-labeling" is, I think there is plenty of room to explore new modes of product co-creation.

Related Entries