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01/18/2022

NRF 2022: Direct-to-Avatar Strategy Imperative for Brands Prepping Metaverse Entry

Lisa Johnston
Editor-in-Chief
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Having a digital avatar is expected to become as common as having a social media account.

As brands work to refine their direct-to-consumer strategies, they’d be wise to add a new layer: direct-to-avatar.

One of the engagement strategies within the metaverse will be the avatar economy, WGSN Insight’s Cassandra Napoli detailed as part of a NRF 2022 primer on its potential, with having a virtual avatar as common as a social media account today.

“The possibilities are truly endless for brands in this avatar economy, as avatars will extend the scope of storytelling for brands,” said Napoli, a senior strategist at the consumer insight consultancy. “A celebrity, for example, could essentially license their digital twin, send it off to do a campaign, and earn money just by doing literally zero work.”

[Related: Weigh In Your State of DTC Maturity]

What’s more, the physical appearances of our avatars are expected to influence our behaviors both online and off. And while digital fashion is not a new concept, it’s gaining momentum and provides brands with a potentially more sustainable and inclusive way to reach consumers — not to mention lucrative: Juniper Research forecast in-game skins to reach $50 billion in consumer spending this year.

“The direct-to-avatar model is linked closely to the direct-to-consumer model, and that allows brands to side-step supply chains and sell clothes that don’t exist in real life directly to the avatars themselves,” said Napoli.

The metaverse will be especially impactful for Generation Alpha — ages 0 through 12 — which will be the first generation to grow up in the metaverse and will prefer digital goods to physical goods. “The metaverse is a way for Alphas to experiment with creativity and self-expression, and there’s an economy attached to that.”  

Whereas Alphas are playing in the virtual world, millennials and Gen Z are using it to escape from their harsh and/or boring realities, and “for brands and retailers, this provides new opportunities for growth and communication.”

[See also: P&G: BeautySPHERE Is Just the Beginning]

The maturing of the metaverse will also unlock new economic opportunities that will redefine brand engagement, product discovery and online brand conversions, with augmented reality serving as a stepping stone into the virtual experiences.

NFTs similarly were cited as the easiest point of entry for brands to enter the metaverse, with their potential extending to new retail formats and shopping incentives. All told, the global metaverse revenue opportunity could become $800 billion, according to Bloomberg Intelligence.

To be sure, challenges abound for metaverse maturity — including securing commercial space in the myriad virtual worlds — but brands must start planning their strategy now or risk getting left behind, Napoli said. This includes considering factors like real estate placement, generational differences, enabling augmented reality capabilities, and developing awesome experiences that stand out in a sea of noise.   

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