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Web3: rewriting brand-customer relationships rules

Nicholas Kovacich
By Dolma Memmishofer
Dolma Memmishofer

8 Min

January 31, 2023


Web3 is shaking up the status quo and turning around the traditional brand-customer relationship. This revolutionary technology is enabling direct, two-way communication, and fostering a new era of trust and transparency between brands and customers.

Get ready to discover how Web3 is rewriting the rules of brand-customer interactions and changing the game for businesses. In this article, we’ll dive deep into the ways Web3 is transforming the way brands connect with their customers and the exciting possibilities it holds for the future.

Web3: rewriting brand-customer relationships rules

Traditional marketing campaigns are becoming increasingly expensive and inefficient

In recent years, we have been witnessing a rising trend regarding traditional offline and online marketing practices. Both in acquisition and retention, marketing campaigns are becoming more costly, inefficient, and regulated. Web2 marketing platforms are saturated from communication channels to distribution channels. As new competitors enter the market every day, social media revenues are solely driven by advertising, making the current top-down marketing model quickly outdated.

Costs of acquisition for brands are visibly increasing. In just the past year, Meta’s CPM has increased by 61%, Google Ads’ CPM by 75%, TikTok’s by a staggering 185%, and also Amazon’s CPC has increased by 14%. Marketing budgets are growing every year to fight for visibility that ultimately reaches a less-targeted and less-engaged audience, given the amount of advertising competition.

With millions of brands now spending most of their marketing budget on SEO, social media, and email marketing campaigns, these channels are becoming extremely saturated, and the chances of reaching a customer with the potential for buying conversion are decreasing.

In addition, many studies have shown that user attention span has decreased drastically, inducing brands to struggle to grab audience attention for very few seconds, often unable to convey the message needed.

Thirdly, regulations, especially regarding privacy, are becoming an increasingly concerning obstacle for marketing campaigns. Particularly in the EU, but increasingly in the US and all over the world, regulations are no longer allowing brands to target users based on the data they have collected, often not allowing brands to collect data at all.

Knowing and reaching customers is becoming increasingly troublesome, making marketing campaigns often inefficient.

Young consumers are increasingly hard to target. They are looking for a new type of brand-customer relationship.

Gen Z consumers are radically changing their online behavior. Younger generations once used to spend most of their time between online searches and social media, making them a great target for ads. Today, young consumers spend a lot of time on platforms where brands are not yet able to reach them, particularly gaming and streaming platforms. Their attention span on Google and social media is becoming minimal, and they are becoming overall less susceptible to traditional top-down marketing campaigns by brands on these platforms.

The marketing agency Whalar recently referred to younger users as “The Unreachables,” following the difficulties brands face in reaching this type of audience. They point out that “Young consumers are abandoning the unapologetic, mass commercialism of influencers like the Kardashians in favor of the trust, intimacy, and sense of belonging that come with creators and their communities. They are looking at each other to discover new brands and products.”

Communities are where young consumers turn to make decisions, both socially and financially. The research shows that 73% of young consumers in the US trust reviews from someone who seems like them, 66% affirmed that online communities help them decide which products and brands to buy, while 62% trust product recommendations from people who follow the same content creators.

This trend highlights that brands should shift their marketing funnel from the current spread-out approach that aims to reach young consumers using diluted marketing strategies and, instead, adopt a more community-oriented approach that targets a digital community of engaged and loyal customers from the bottom up.

How can brands build their digital communities?


How can brands build their digital communities?

Web3 is enabling brands to build this new type of brand-customer relationship. Technologies that are associated with Web3, particularly non-fungible tokens (NFTs), are at the center of this shift. In 2022 alone, we have seen many major brands already transitioning into Web3 to build the foundations of their digital communities.

A brand’s journey into Web3 starts by releasing digital collectibles or digital membership passes on the blockchain. Compared to Web2 platforms, which act as a middleman and have control over the interaction between brands and audiences, blockchain enables brands to directly issue their tokens/collectibles to establish direct, transparent, and unmediated relationships with their community members.

For a potential customer, owning one of these digital collectibles becomes a symbol of membership within the community of the brand or creator. Suddenly, the brand has a much deeper and more straightforward connection with its customers, and the digital collectibles serve as that constant, exclusive, and private link with the customer that brands have been missing with traditional marketing.

Some brands have enabled claiming digital collectibles in their brick-and-mortar stores, attracting more consumers to enter and explore to claim them. Others have distributed free digital collectibles through online experiences or social media campaigns, resulting in unprecedented conversion rates.

Sports fans can claim digital collectibles at the stadium, proofing their engagement with the team; film enthusiasts can spot digital collectibles in their favorite films; and online retailers can embed QR codes to claim collectibles on receipts for their customers to claim in a few clicks.

These are only some of the ways companies can distribute digital collectibles to their audience, a practice that will continue to grow as large social media platforms, such as Instagram, have already announced that users will be able to view, transfer, and buy these digital collectibles directly on their social media platforms.

How can brands develop and take advantage of their community?

#Gamification, #engagement, #monetization

Once brands have built the base for their digital community, they can deploy gamified, engaging reward and monetization campaigns targeted towards their community, thanks to token-gating. Token-gating is the practice of making something accessible only to token-holders. In other words, to access these campaigns, community members need to prove their belonging to the community through their token ownership. The feeling of exclusivity, of being part of a closed community, that owning digital collectibles gives users, is a perfect channel for engagement and monetization.

Without having to pass through intermediary marketing platforms, brands can now reward their members with digital content, access to events, product previews, and digital and physical experiences, as well as monetize them via exclusive discounts and products. And brands can do so with a level of gamification that was hard to achieve before. For example, some brands are now allocating discounts to community members who collect the most tokens or digital collectibles, proving their support and engagement with the brand. Other brands are raffling the chance to buy limited edition products ahead of the public sale or even inviting their most engaged members to brand events and experiences.

Thanks to Web3, brands can now develop this new type of gamified, individualized engagement and loyalty programs to recognize and engage their most devoted consumers, fueling growth, fostering retention, and especially brand advocacy, with community members turning from loyal customers to brand and community stakeholders and promoters.

How is this new brand-customer relationship different from existing loyalty programs?

#Co-creation, #value-sharing

Early studies already point out that Web3 communities, as engagement and loyalty platforms, are more efficient than traditional loyalty programs. Traditional loyalty programs have turned into obsolete one-to-one relationships, where the customer interacts with the brand, and the brand, in turn, provides the agreed-upon rewards. But in Web3, the community is at the center. The focus shifts from ‘one-to-one’ to ‘many-to-many.’

In contrast to traditional CRM and loyalty programs, community building requires a layer of communication, trust, and value sharing between the brand and the community, as well as among community members. Members seek to contribute value in addition to wanting to feel appreciated.

Members no longer experience brands’ engagement through old-school marketing campaigns but actually choose to participate, co-create, and share their opinions regarding brand experiences and products. In a community, there is a mutual exchange of benefits, ranging from member-to-member assistance and information sharing to active engagement in community events and member-driven value co-creation and innovation.

To build an efficient digital community, this is what brands should aim towards, a community where members not only engage in receiving something material in return but rather a community where members can truly feel included and can contribute to something greater.