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Why the Metaverse Could Be a Breakthrough in Privacy-Compliant Digital Marketing

The metaverse is currently one of the buzziest areas in marketing, yet questions remain as to how privacy — an increasingly important value for consumers — will be considered in the burgeoning space. A lack of technical knowledge about augmented reality/virtual reality (AR/VR), historically slow-to-move policy regulations and consumer skepticism create an uphill battle for marketers, who will need to take privacy seriously if the metaverse ever reaches the level of public interest for which companies hope.

Despite these challenges, or perhaps as a result of them, the metaverse presents an opportunity to be a breakthrough in privacy-compliant digital marketing. Brands have the benefit of taking lessons learned from previous digital marketing efforts, such as the importance of consent or the necessity of listening to a user community, and applying them to the development of their metaverse platforms. And with the impending deprecation of third-party cookies, the space could be a fresh start built on more privacy-forward tracking alternatives.

“For brands, [the metaverse] will be a bit like the Wild Wild West, so what would be ideal is that they take the frameworks and the learnings from the internet and start to understand how those can be applied proactively to the work that they’re doing,” said Rachel Noonan, director of strategy at agency Jam3, which recently merged with Media.Monks.

The metaverse’s development could mirror the web’s development in significant ways, including the key role that advertisers will play in influencing consumers on new platforms. Brands should therefore take the lead on the privacy conversation, Noonan said.

But history has a way of repeating itself: Meta, formerly Facebook, is angling for control in the metaverse similarly to how it did on social media. If brands stay passive and the company — or other walled garden giants — draws the same level of consumer distrust it has on the current web, the fruit of the metaverse could be spoiled for everyone.

“How does a brand come out in front of this and own that and set an example and nudge behavior of other brands?” asked Noonan.

No Cookies, No Problem

A significant opportunity for the metaverse to be privacy-compliant comes with the impending deprecation of cookies. Google now plans to phase out the tracking mechanism by 2023, a time that will likely coincide with fundamental development of the metaverse given the technology is still years away from fruition.

What this means for brands is that the metaverse could be an incubator for safer tracking methods, such as contextual marketing, because cookies will no longer exist as an option.

“The rise of [the] metaverse and the way there is so much talk going on about it is because it’s a logical fallout of the deprecation of cookies in some form,” said Gowthaman Ragothaman, CEO of martech company Aqilliz and former global client lead at WPP.

By consciously entering the metaverse for each session, users have to opt-in to that service, which for brands ticks many of the regulatory boxes for a logged-in, direct consumer, Ragothaman said. This process is similar to the idea that underlies Apple’s App Tracking Transparency (ATT) framework — a notable improvement in privacy compliance from the previous assumption that consumers always gave consent.

“Consumers are repeatedly asking for experiences and you can actually every time ask them, ‘Can I use your data?'” Ragothaman said.

The push-pull of consumers wanting personalization but not through invasive methods is at the center of a new privacy paradigm, according to Noonan. As the metaverse is created, the onus is on marketers to develop data strategies that are transparent but also simple enough for consumers to understand.

“We’re building the house, we have the foundation, and if [brands] build it on wood versus brick … it’s going to be tough to rebuild the house,” Noonan said.

Community and Consent

Through previous digital marketing efforts, brands have learned that prioritizing the user community in its approach helps to build trust on the platform. On TikTok, for example, brands have seen success through “community-based commerce,” which increases engagement via marketing that looks and feels like organic content.

In the metaverse, brands should similarly welcome users into their decision-making processes, said Maura Welch, vice president of marketing at Together Labs, a software company that operates the metaversal social networking site IMVU.

“We leave it up to the community to decide what’s cool … we actually bring our community into that conversation. And that’s the way that brands should approach the metaverse,” Welch said.

For a fashion show this spring, for example, IMVU paired a host of designers in the real world with 3D creators on its platform, and together they developed clothing lines purchasable for the IMVU users. The activation also tapped producers from the IMVU community to promote the event.

“It’s a very different experience when you’re actually interacting with the brand, wearing the items, walking through the spaces that are designed and co-created with people that you respect and know from the platform,” Welch said.

Like community, consent is another idea that has become increasingly top-of-mind for brands looking to build trust in digital spaces. With companies like Facebook repeatedly abusing user consent, consumers are both wary of privacy practices and willing to go elsewhere if they feel like they’re being mistreated.

“The moment a consumer realizes that his or her data has been exploited … it snaps. So we have to be very, very careful in breaching the consumer trust [because] it can break very fast,” Ragothaman said.

Brands in the metaverse could therefore benefit by keeping a record of what data they have on users, per Ragothaman, similar to a customer relationship management system. Such a record could further help brands get a jump start on regulatory policy if and when it catches up to the space. In the EU, for example, using a CRM platform has been a useful way to gain General Data Protection Regulation (GDPR) compliance.

Nonfungible tokens (NFTs), which have been one of the more popular mainstream entries into metaversal spaces, illustrate how consent management could be improved in the metaverse. The technology behind blockchain allows for a more secure transaction in the digital world, offering the ability to conduct commerce in a fluid, protected manner, Ragothaman said.

As the metaverse is developed, this same technology that allows for secure NFT wallets could normalize data wallets, Ragothaman noted, such that consumers would be able to fully consent to the bits of data they want to trade for experiences, collectibles or other assets.

“The metaverse provides all these things … instead of exploiting, you can leverage consumer data in a much better fashion,” Ragothaman said.

Decentralized vs. Centralized

Another lesson brands can apply to the metaverse is that walled gardens are troublesome for nearly every party involved. While a few stalwart companies such as Facebook and Google benefit from centralization on the internet, marketers across the board face obstacles in learning about their consumers, while the consumers themselves will inevitably interact with less relevant ads. For these reasons, the metaverse could be an opportunity for brands to create a more decentralized advertising environment.

“If you put up walls and you put up barriers, it creates tension points and friction points for consumers,” Noonan said.

She added that the metaverse ideally will be a place where many different platforms are talking to each other and allowing for consumers to pass through one space and into another. In a centralized environment, such fluidity would be made difficult by stringent rules of one or more powerful gardens.

Similar to the internet, policy will help to determine how this navigating will work, but in the meantime, marketers should be proactive in their strategies and not wait for the legislation to arrive.

For example, making alliances with intermediary groups who’ve already done much of the heavy lifting on what is privacy-compliant and what is not could help brands get ahead of the curve, Noonan said.

The Electronic Frontier Foundation is one such group that has troves of data useful for brands; it has also written specifically on the privacy issues of metaversal technologies. Other groups Noonan cited were media advocacy organization Harmony Labs and the Pew Research Center, which is already compiling experts’ opinions on the future of digital spaces.

Retrofitting an existing product with new regulations is expensive, per Noonan, which is why brands should consider these things now. Moreover, having to go back and restructure a company with jobs and task forces could levy a hit to product development.

Centralization is not the only area threatening an open and connected metaverse. Barriers in consumer trust still abound, from hesitancy of testing out VR platforms to a lack of technical knowledge about the space. But as they move forward, brands are smart to look back at how marketing has evolved through the current iteration of the web, and use those insights to inform their metaverses.

“It would be a shame if we didn’t take all those learnings [from the last few years] and set the parameters so that we can bring people what they want, how they want and where they want, but in a place where people feel safe,” Noonan said.

This article was written by Asa Hiken from Marketing Dive and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

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