Marketing’s Big Shift: How Your Brand Can Lead the Way From Engagement to Fractional Ownership
What matters: How brands engage their customers and how we, as consumers, interact with them is beginning to change. The accretion of brand assets presents an immense opportunity for growth.
The nature of our experiences with brands is shifting ever so slightly from one-and-done transactions or experiences to the act of acquiring an asset, be it fractional or otherwise.
We all see and sense it—things are moving incredibly fast these days. And while at times it feels as though we are collectively careening towards the unknown (just open up your Apple News feed), what’s undeniable is that we’re witnessing a gradual, yet seismic, shift in how we are experiencing our world.
This is particularly true in marketing, where the way brands engage their customers and how we, as consumers, interact with them is beginning to shift—moving from engagement to fractional ownership. In other words, we’re starting to shift from reciprocal interactions to an exchange of something of value, extending beyond the traditional data value exchange.
We can attribute this to the confluence of several things. The first is our fragmented and asynchronous, yet exceedingly sophisticated, digital ecosystem, which is—when done right—channel agnostic and experience-led. The second is the use and continued adoption of blockchain technologies, powering cryptocurrencies and non-fungible tokens (NFTs) en masse. And lastly, digital third, shared or virtual spaces are giving rise to a whole new breed of experiences that, not too long ago, were not considered mainstream or were rudimentary at best.
For those concerned that we’re unwillingly being thrust into a digital abyss where we will be joined by expressionless avatars instead of going to malls or shopping on Amazon from our smartphones, fear not: we still live in a world where most barber shops offer punch cards, or where we needlessly and endlessly queue in a drive-thru for an iced mocha with whip.
But the nature of our experiences with brands is shifting ever so slightly from one-and-done transactions or experiences to the act of acquiring an asset, be it fractional or otherwise. So, where are these changes happening, and how can savvy marketers and brands navigate this shift in a balanced way? Below are three ways fractional ownership is coming to life for consumers, and how brands can adapt.
WELCOME TO MY VIRTUAL WORLD
Virtual spaces are one area where fractional ownership is emerging. Often referred to collectively as the metaverse, it isn’t a single place—rather, a fragmented set of digital experiences that are merging our physical and digital lives. And while many brands are beginning to dip their toes into its cool, cool waters, the metaverse presents an entirely new way for brands to connect with consumers who are willing to meet them there.
In this sense, the brand transforms into a three-dimensional space where interactions are rooted in experiences—quite literally. And access to these spaces is often limited to those who have earned it, or restricted to those who have not, through walled-garden experiences or the unlocking of new worlds. For example, last May the audio streaming platform Spotify launched its eponymous Spotify Island in the Roblox universe, where listeners can take part in virtual treasure hunts, unlock exclusive content and even interact with artists.
The key for brands is not simply to show up in these virtual spaces, but to elevate core features of the brand experience that add value and complement the customer experience in unique and ownable ways.
DON’T FORGET YOUR (DIGITAL) WALLET
One of the biggest ways in which the shift from engagement to fractional ownership is playing out is on the blockchain. Specifically, digital currencies, cryptocurrencies and NFTs have spawned an entirely new breed of transactions and accretion of digital assets, some of which have attracted widespread attention and value (Bored Ape NFTs sales alone are said to have eclipsed over US$1 billion).
The idea of an NFT, which is essentially a record on a blockchain, is something that cannot be duplicated, replaced or exchanged, and therefore creates a unique asset of real value to the owner. Naturally, many brands have seized on this opportunity, creating brand-specific ownable assets that can be bought and sold between consumers, often in digital stores or virtual spaces. Nike was one such early adopter. The iconic apparel company announced late last year its acquisition of a digital collectibles studio, where NFT sneakers can be bought, sold and worn in VR and metaverse settings, adorning Nike and other avatars whose swag is met with virtual envy.
For marketers, the power of digital collectibles goes beyond the stickiness factor of status and asset ownership for those customers willing to open up their digital wallets. It’s also a tactic to attract and retain the next generation of digitally savvy consumers, who are more and more inclined to seek out these ownable brand assets.
MEMBERS ONLY
The idea of fractional ownership isn’t confined to three-dimensional or virtual walls. Digital collectibles and NFTs have gone mainstream and entered into our physical and 2D spaces. The use cases are many—from concerts requiring NFTs for entry and digital leave-behinds at high-end events, to virtual swag at conferences or NFTs tied to physical purchases—numerous brands are experimenting with creating highly exclusive and community-themed experiences.
Status-seeking consumers can now join, amass and collect digital curios and boast about exclusive experiences to those who will lend an ear or like or comment. But it isn’t just the rare, exclusive and luxury goods model where these types of members-only tactics are playing out. Some brands are taking it to the street. Starbucks has announced a web3 tie-in to its extremely successful loyalty program, Starbucks Rewards, where members can collect coffee-themed NFTs and offer access to exclusive content and other perks to its tens of millions (and growing) members.
For marketers, the key here is that the mere act of creating (or offering or transacting in) NFTs in and of itself is not the answer—rather, where and how these strategies fit within your brand experience, if at all, depends on your brand’s growth strategy, digital and customer experience roadmap, and of course, the willingness of your consumers to adopt them.
We can’t all afford (or need) a $186,000 pair of virtual Nikes. While that may seem excessive, the reality is that consumers are becoming more voracious in their digital appetites and status-forging experiences, especially when it comes to their favorite brands. As consumers are more inclined to partake in fractionally ownable experiences and the acquisition of brand assets, the value exchange stakes are getting higher, and newfound opportunities for growth abound.
Andrew Kelly is Head of Marketing at Salient Global.