What is Web 3 and why is it so important to marketers?

At Cognition, we’re constantly thinking about how innovative technology can improve experiences for people. We get excited when we see new things come around, especially things that can democratize ideas and disrupt monoliths, providing individuals with more than a voice. Instead, handing individuals the power to make a change. With the new world of web 3, we’re beginning to see just that.

What is Web 3.0?

To better understand Web 3, we’re going to quickly recap the previous iterations of the world wide web.

The world wide web was created by computer scientist, Tim Berners Lee, and according to him, Web 1, was essentially a version of the web which was “read-only”. In other words, the early web allowed us to search for information and consume it but there was very little in the way of interaction with the content or with users.

Web 2 forwent the web’s previously static nature and saw the web become dynamic, allowing users not only to consumer information but also to create it themselves or write information. However, this more participatory web also created large problems, namely placing highly sensitive personal data in the hands of those running the digital platforms which means that platforms own your data and profit from it.

Web 3 aims to solve this by going from a dynamic to a decentralized web. Decentralized means that the data isn’t owned by centralized entities. Instead, rather, it’s shared among its users. Moreover, Web3 focuses on improving backend functionality, much as how web 2 saw a focus on front-end functionality. Web 3 aims to make the internet a more decentralized place, extending this philosophy to the applications that run on the web. The terms “dApps”, or “decentralized applications” are all largely synonymous. They all refer to decentralized, generally blockchain-based applications.

Decentralized applications have one integral component, smart contracts. Smart contracts are essentially self-executing software agreements, pieces of code that run on a blockchain like the Ethereum blockchain. These automatically run or execute when a relevant set of terms are met. As such, these contracts can automatically verify and perform a transaction between different parties. Because dApps use smart contracts, the contracts’ logic dictates the application behavior. In practice, this cuts out the need for a company to act as an intermediary.

How will Web 3.0 impact marketing for brands?

The web isn’t just evolving. Decentralization is revolutionizing the way brands think about everything. With the advent of blockchain technology, this is a unique opportunity for both brands and individuals to take over their data and exchange value directly with each other without the need for an intermediator. We’re living in the earliest stages of a seismic transition in computing and virtualized connections. These technologies will almost certainly impact the way consumers experience, consume, transact and behave. So how are brands beginning to use decentralized applications for marketing?

NFTs, Physical Goods, and Exclusive Communities

Brands are beginning to offer customers branded NFTs. Branded NFTs offer the most passionate customers collectible virtual goods that generate grand engagement, unlock new experiences, foster a passionate community, add new revenue, and will be critical assets for upcoming metaverses and virtual worlds. If brands are digital leaders and are comfortable with trying new tech, launching an NFT campaign makes a lot of sense. Especially if your brand has fostered an active community of supporters.

Real-world products prove provenance & ownership with digital assets to accompany them

Automotive brands, jewelry companies, fashion brands, and other similar passion industries will provide virtual assets with each product. This will be used to certify product provenance or even be a twin replica that the customer can show off in NFT galleries.

Virtual Assets will offer real-world experiences and utility

The best-branded product drops will include virtual experiences, access to events, online communities, and other special surprises. Limiting supply, will create intense demand and many bids and accompanied buzz.

Decentralized experiences IRL

Brands are beginning to offer decentralized experiences, allowing consumers the possibility of access to an event via an NFT ticket, receiving proof of participation access and gifts, and allowing guests to view NFT galleries. Some brands are even having guests mint their own NFTs.

I believe that marketers can expect the buzz and development of products around web 3.0 to grow in the near future and we will begin to see brands allow empowered customers to shape products and services as they interact and transact with brand experiences. Brands may develop a co-creation relationship with audience members and customers.