During 2022, spending on the Metaverse more than doubled, racking up an estimated $12bn to $14bn of venture capital and private equity investment. This year Meta reported $20bn in losses since its rebrand and no one seems interested in building these new digital worlds anymore. It bodes the question; was any of this investment worth it?
It is tempting for marketers to jump on the next trend hoping it’ll resonate with customers. But knowing where there is a potential upside of being a first-mover versus a potential wasted investment isn’t so easy. Brands recently flooded into NFTs but quickly pulled back when it became clear much of the space was full of pump-and-dump scams – hardly helpful for brand affinity.
This year’s break-out trend, generative AI technology, is proving to be on a different trajectory, with brands globally leveraging it for scalable use cases to reach customers more efficiently, help resource-strapped internal teams scale, and expand brand experiences worldwide.
With so many trends looking to disrupt the market with new ways to communicate and engage, how does the marketer know where to place their bets? And with marketing budgets under strain, how do they make sure those bets pay off?
Marketing budgets must focus on ROI
According to a 2023 Gartner survey, only 29% of CMOs believe they have the necessary budget to execute their strategy. On the buyer side, a lot of people are feeling the pinch at the moment and much more discerning with budgets and disposable income.
That’s why its critical marketers are more strategic about where they spend, making every decision count when the next trend emerges. For example, the suggestion to replace writers with ChatGPT certainly saves cost and gains short-term ROI, but continuing to leverage humans in the process to create content that connects with customers has greater ROI potential in the long run.
If brands are smart and create a strategy focused on a customer need, they can succeed where others falter. Nike’s bet on the Metaverse seems to have paid off, for instance. Its Fortnite collaboration boosted user engagement, giving players the opportunity to hunt for its popular Air Force trainers. And it acquired RTFKT, which creates NFTs, selling millions of dollars of virtual apparel. Young, digital consumers valued these collaborations. But elsewhere, we’ve seen huge loses. Disney eliminated its entire Metaverse division and Horizon Worlds, Meta’s own virtual world, only paid its entire creator base a measly $470 revenue in its first year.
Trends can help at a tactical level, boosting sales and driving conversation around a brand. But the impact is often short-lived. Users move on and brands are back to where they started and likely out of pocket. Making real, long-term impact means taking a considered approach and questioning whether an entry into something new is the right path for the business and the brand.
A safe bet on personalisation
At a fundamental level, brands need to ensure they’re delivering customers personalised, engaging and relevant content. And they need to jump on the trends that help them do this at scale and optimise the way they go to market. Putting this foundation in place will build loyalty long-term by delivering what customers actually want, not just what’s buzzy online at the moment.
Hannah Grap is chief marketing officer at Sitecore