Web 3.0 and the Metaverse
A new era of privacy and data storage on the internet will be defined by Web 3.0 and the Metaverse. The concept of decentralization and blockchain technology will be a key element of this as well as a move towards virtual reality. In every industry – social networks, email, messaging, storage, banking and e-commerce – this will have an impact.
Web 2.0, beginning around 2004, is defined by massive growth in e-commerce, social media, and user-generated content – as well as targeted advertising which has historically come with risk to user privacy. Due to the widespread invasion of user privacy on social media platforms and centralized systems, users are demanding more ownership embracing self-efficacy when it comes to controlling their own data.
The Decentralized Web
The most defining features of Web 3.0 are its peer-to-peer (or decentralized) network, enhanced privacy, interoperability, utilization of virtual reality, and artificial intelligence.
Web 3.0 differs from Web 2.0 in that Web 2.0 Stores data in centralized locations. Web 3.0 gives users the opportunity to interact with data and analyze it using artificial intelligence and machine-learning technology – decentralized apps will take the place of centralized social networks, restoring users’ control and giving them ownership of their data.
There are several benefits to the practice of decentralized data storage.
Decentralized webs are based on a peer-to-peer network controlled by a community of users – rather than being distributed across a number of servers, the group would control the devices in conjunction on websites or applications. Each website or application would be distributed across hundreds of nodes on different devices.
The members of the network all carry the same data in the form of distributed ledgers – each node updates the database independently. Every node processes every transaction, and then accepts or rejects based on the majority.
The control is now in the hands of a distributed network rather than one centralized entity – it isn’t owned by anyone in particular. As more ownership and privacy measures are put in place, internet identities are becoming less linked to real life identities in this new age of anonymizing online activity.
Blockchain technology is at the core of decentralization and building a peer-to-peer network. Blockchains are distributed databases that can be accessed over a wide range of computing networks, including public and private. Mathematically-encrypted information is added to the historical record chain as a new “block.” The advantages of blockchain include the ability to decentralize, cryptographic security, transparency, and immutability.
Researchers first described blockchain as a way to timestamp digital documents in 1991. In 2009, Blockchain became widely used as the distributed ledger for bitcoin transactions.
A blockchain is a chain of blocks that each contain information. What the block stores depends on the type of blockchain. For example, in the form of bitcoin, it stores the sender, receiver, and amount of coins.
Blockchain has applications spanning over almost every industry with 2 essential functions as its basis: record keeping and transactions. Some of these applications include identity verification, smart contracts, supply chain management, payment systems, and trading.
For example, one use of blockchain in a supply chain context would be to be able to identify the origin of a consumer product in minutes rather than days or weeks.
Another example of blockchain usage would be for secure storage of personal medical data.
Blockchain is very hard to tamper with although not 100% tamper-resistant, making it a very effective way to ensure data is safe. Blockchain technology can revolutionize organizational functions such as validating insurance claims, voting, or cash-equity-trading. There are certain industries that are more suited to blockchain solutions, such as financial services, government, and healthcare. While many companies are already experimenting with the technology, widespread usage remains about 3-5 years away.
The New Age of Advertising
Consumer targeting is becoming increasingly complex – internet users are shifting towards a new stage where data ownership takes precedence, while advertisers look for innovative new ways to reach audiences.
Blockchain technology, inherent to Web 3.0, will transform the way companies track advertisement spending, making it more transparent. Through the identification function of blockchain, companies can eliminate unnecessary advertising expenditures by verifying the identity of the consumer and ensuring that humans and not bots are viewing an advertisement. Companies are estimated to have lost around $13.8 billion dollars in 2020 in the U.S alone due to fraud (Forbes, 2022)
The metaverse is going to be an integral component of reaching consumers in the coming years. According to eMarketer, there will be 110.1 million people using AR and 65.9 million people using VR in the U.S by 2023. People have already spent over $200 million on metaverse items – this includes real estate, money, entertainment, fashion. (Grayscale, 2021)
Interoperability will become a critical component of Web 3.0, since avatars or digital identities will be able to move between different metaverses, enabling potential seamless interaction with consumers.
For advertisers to succeed in the new digital landscape of the metaverse, different tools will need to be used – these tools include virtual reality advertising, in-game advertising, and user-driven advertisements.
From 2022 to 2030, the global virtual reality market is forecasted to grow at a compound annual growth rate (CAGR) of 15.0% (Grand View Research).
Adidas gave its audience the chance to climb a mountain virtually this year to promote its outdoor gear line TERREX. They used VR technology to simulate one of the most rigorous climbs on the Delicatessen route in Punta du Corbi, Corsica.
In-game advertisements will also be critical for advertisers in this upcoming stage of the metaverse, especially for young people. Andrew Douwaith, CCO at Dubit Games, believes gaming will replace TV as the most effective way to reach younger audiences, “It’s more engaging. There’s an actual fun element to it,” states Douwaith. In 2022, Microsoft stated that they are considering adding in-game advertisements into free-to-play games on Xbox, with a similar statement coming from Sony. (Forbes, 2022)
User-driven advertisement will be a vital component to Web 3.0. Because the concept relies on users giving explicit consent to use their data for advertising, advertisers will heavily rely on influencer marketing to engage audiences. This year, the popular skincare brand Eos spent 15% of its budget on Tik Tok influencer marketing – which resulted in a 2,500% increase in orders, a 45,000% increase in site traffic, and 32.3 million views on the branded hashtag.
In 2022, Influencer Marketing Hub reported a 9% YoY increase in the usage of ad blocking tools, with over 43% of internet users worldwide using an ad blocker. (Influencer Marketing Hub) As Web 3.0 is adopted, this trend is only expected to grow, so advertisers will have to leverage user-driven content in order to remain profitable.
In this new era of user-centric transparency where consumers emphasize social responsibility, are value-driven, and are moving away from conventional systems, advertisers will have to adapt to innovative new ways of impacting their target audiences.