In a Web3 World, Values Lead Your Marketing Strategy
In the world of Web3 technologies, cryptocurrency, blockchain, and FinTech firms need to align their marketing strategies with their values to live up to their brand promise. This article provides a practical outline for discussions that leadership teams can have around creating Web3 marketing strategy built around Web3 values.
Why Web3 Values Matter for Marketing?
Web3 isn't fully here yet but the concept is changing the internet and our world. (Need a primer on what Web3 is? See here for a summary and here for a tech stack explanation for starters.) There are many unknowns in what Web3 will become but the values of decentralization and user-owned data are leading the way to create a next version of the internet.
As the internet evolves from Web2 to Web3, how firms operate evolves too. And maybe most importantly, consumer expectations evolve along with it. As Web3 begins to take hold, we have seen the creation of a more decentralized environment through cryptocurrencies, NFTs, and other blockchain business models. A 100% decentralized business may not be the norm, but the values of decentralization and placing power back in the hands of creators and consumers is a priority for many people.
So what does this mean for marketing strategy leaders? It means they have to look in the mirror and ask, "Is my marketing strategy consistent with my beliefs and the beliefs of the people who use my product?"
The answer to that question may or may not create some difficult conversations and introduce a little cognitive dissonance. But it is an important question to answer, especially as consumer expectations change and as marketing teams in the world of Web3 firms are made up of team members with differences in values. In the long-term, it will become difficult to sell Web3 products to Web3 consumers using Web2 marketing strategies.
Let's break down how a marketing leader can think this through using a spectrum of potential outcomes.
The Web3 Values Spectrum
Before we break this down, it is important to note that there is not a good or bad end of the Web3 values spectrum. Much of it is driven by personal preference and the realities of running a business. It's also important to keep in mind that most of the world is currently operating in what's close to a 100% Web2 environment. The goal is to operate a strategy consistent with your values and the values of your product users. You can think of this spectrum as three phases that a firm can move back and forth through as they evolve with nearly all firms starting from phase 1 as we are currently living in Web2.
Phases of the Web3 Values Spectrum
PHASE 1 - Web2
Phase 1 is essentially our current Web2 marketing strategy.
Marketing Analytics: In phase 1, Google Analytics and similar vendors are used for web analytics. Heat maps and session recording technologies that tracks user behavior unknowingly are used frequently. Many times data is stored off-prem on vendor servers and potentially "owned and used" by the vendor. User tracking is not always transparent and occurs in the background without most users even knowing data is being collected.
Advertising: Heavy use of paid Google, Bing, Facebook, Twitter, and other digital ad networks with aggregated consumer data from thousands of sources used in targeting. There is a lot of budget waste in Web2 with ad fraud and viewability an issue throughout the industry.
Data Storage: Centralized SQL (or similar) databases with large amounts of personal customer data that is shared throughout the organization.
PHASE 2 - Web2.5
Phase 2 is a mix of phase 1 and phase 3 depending on the use case and realities of the business model. Most firms will move within the spectrum, living in phase 2 while making decisions on how to manage marketing strategy. Even Web2 firms will migrate along the spectrum, trialing Web3 strategies. For example, we are seeing Web 2 brands, from Starbucks to McLaren Racing and Manchester United, test NFT-based experiences.
PHASE 3 - Web3
Phase 3 at its essence is about marketing leaders focusing on decentralization and transparency in all activities.
Marketing Analytics: Tracking is only used when needed and is done transparently with a clear ability for users to opt-out when feasible. Analytics software like Matomo and Plausible allow firms to own and/or host their data. There is a strong focus on keeping all analytics anonymous unless needed and communicated clearly to consumers. For blockchain market research and industry growth analytics, tools like Dune Analytics can be used to create SQL queries of activity on the Ethereum blockchain or IntoTheBlock to conduct market research and understand social media sentiment.
Advertising: The primary growth channels are community building and partnerships with less desire to rely on leveraging third party, aggregate data. Of course, for the foreseeable future, phase 3 still uses ad platforms, text messaging, and email lists but the experience is built in a way that puts power and control of data into the consumer's and brand's hands. Blockchain based ad networks may also start to become more prevalent which reduces the need to buy and sell consumer data. Also, NFTs will continue to be used in creative ways to reach consumers through digital experiences.
Data Storage: Centralized databases with large amounts of data will most likely be used to track internal data by marketing teams for many years to come. Honestly, blockchain may not make sense for managing internal customer data sets in most use cases. But when using an internal centralized database, continued evolution in how and what data is stored is the key decision to maintain a Web3 approach. Much of it goes back to being transparent with your customers about what data is collected and stored. Additionally, if you are managing prospect lists, limiting the use of the data and length of storage are important decisions. A good starting question if you are managing an internal, centralized marketing database is: What data is needed for this initiative and how long do we need to store it for? For example, firms like Trezor, the cryptocurrency hardware wallet manufacturer, are on record that they anonymize customer purchase data 90 days after each sale, just enough time to process the sale and returns.
Trade-Offs of Web2/Web3 marketing
At the extreme ends of the spectrum, Web2 and Web3 look completely different from a strategy and tech stack perspective. Because of these differences, firms will have to make trade-offs as they change how they operate. There are many but let's explore a few below.
Tracking User Data
In Web2, thousands of data points are aggregated and marketers can create very detailed consumer profiles based on demographic and psychographic data. It's important to note that these profiles are not always anonymous, with most advertisers being able to buy data to paint a picture of specific users in their datasets. These consumer profiles are used in micro-targeting, predictive modelling, and other data analysis. In Web2, firms generate millions and millions of dollars using consumer data. But the consumer does not control the data nor profit from a firm's exploitation of their data.
The takeaway for tracking user data is that firms will need to learn new ways of targeting and be comfortable buying less data on consumers. Overtime, regulation in favor of consumer protections may force this anyway as we are starting to see with less access to data from platforms like Google and Facebook. Successful marketing leaders will balance the transition to Web3 so that their data strategies evolve with the ad platforms and consumer expectations.
Trade-offs in marketing talent will need to be made as the advertising platforms and overall internet evolves.
In Web2, we have specialists certified in Google Ads and Google Analytics among other platforms. In Web2, we have teams of specialists dedicated to email marketing and database management. As time evolves, Web3 will require marketing leaders to ensure their teams are staffed with marketers who understand blockchain platforms, digital wallets, NFTs, and anything else required to reach consumers where they are and how they prefer to be engaged with brands.
Marketing technology stacks will slowly evolve as Web3 takes hold. We'll see new vendors enter the market and incumbent vendors add Web3 services.
MarTech budgets are only so big which makes tradeoffs inevitable. In Web2, it was relatively easy to check the boxes of budgeting for data analytics, AdTech, content management, and other needed technologies. Web2 is established enough that most firms know which vendors can meet their needs with very powerful incumbent tech vendors. Web3 will introduce new technologies from new vendors that will require marketers from CMOs to specialists to educate themselves on how these things work. As marketing leaders budget and conduct strategic planning, flexibility needs to be built into the strategy in order to avoid being "locked in" to a Web2 strategy as the world shifts to Web3.
Preparing for Web3
As the Web3 begins to take hold, marketing leaders can ask themselves the following questions to plan for the future:
Right now, where does our marketing strategy fall on the Web3 values spectrum? Are there areas (data management, web analytics, community, etc) of the strategy that are closer to Web3 than others?
Are we comfortable with where we currently fall on the Web3 values spectrum? Do we need to make any immediate changes?
In three to five years, where do we need to fall on the Web3 values spectrum to meet the needs of our users' and our firm's values to reach our growth goals? What are the potential Web3 developments that we can leverage for growth? Are there tests we can conduct now to help show proof-of-concept for future marketing investments?
Do we have enough Web3 knowledge within our marketing team? What training is needed?
No one knows exactly what Web3 will look like in the future, but marketing leaders can take steps know to align their firm's values with the values of consumers and creators across industries to ensure growth into the next phase of the internet.