The metaverse is taking virtual experiences to the next level, giving organizations opportunities to reach consumers in new and innovative ways.

Metaverses are infiltrating the internet, and many businesses -- such as Microsoft, Apple, Nike and Coca-Cola -- are using this emerging platform to engage customers. Projections of the metaverse's worth vary widely, with predictions ranging from hundreds of billions to trillions of dollars by the end of the decade.

As the metaverse continues to grow and evolve, marketers need to understand how it works and how they can use it to enhance components of their marketing strategies, including:

Bolstering brand engagement.
Showcasing products.
Building community.
Collecting data for customer insights.
What is the metaverse?
The metaverse is a 3D, immersive digital world where people interact with one another on multiple platforms. To make this experience immersive, augmented reality (AR) and virtual reality (VR) are used. The metaverse mimics the real world, and people can use avatars to interact with others and purchase virtual goods.

An example of a metaverse platform is in the video game Roblox. In this virtual reality game, players attend events, interact with other users and purchase digital merchandise in real time.

Key characteristics of the metaverse
Because the metaverse is virtual, it is continuously active. Other key factors of the metaverse include the following:

User-generated content.
Fully functional and self-contained.
Virtual and individual identities or agencies.
Use of human interface technologies.
Open and shared world through decentralization.
Fully functioning economy with digital currency, non-fungible tokens (NFTs) or cryptocurrency.

The evolution of marketing
Marketing is the practice of promoting and selling a company's products or services. It encompasses the four P's of marketing: price, product, promotion and place. Marketing and advertising in the metaverse can offer new places to buy and new ways to promote.

The evolution of marketing reflects the changes to the web. When Web 1.0 started, the goal of marketing was to have a website with contact information for a business. Then Web 2.0 started connecting people and gathering their search history to make the user's experience more personalized. Now, with Web 3.0 comes a more immersive experience, according to Griffin LaFleur, senior marketing operations manager at Swing Education and a B2B marketing consultant.

There are 600 million unique and active users accessing a metaverse platform monthly, according to a report from consulting company Metaversed, posted on LinkedIn. To reach these users, Lafleur said companies need to follow their generational audiences to the metaverse.

Why companies are marketing in the metaverse
There are several reasons companies are eyeing the metaverse. It enables companies to engage with customers in different ways to stand out. But, one of the main reasons companies are targeting the metaverse is to reach Gen Z and millennials.

An interesting aspect of the metaverse is decentralization, LaFleur said. Unlike on Facebook -- where organizations and individuals use a platform owned by another company -- metaverse platforms generally provide users an opportunity to create their own world and create the environment they see.
Examples of how companies are using the metaverse
The gaming industry was the first to fully embrace the metaverse. But early adopters of the metaverse in a variety of industries are realizing its potential.

"The metaverse is an open slate. If you can think of it, you can make it," LaFleur said.

One early retail adopter of the metaverse is Gucci, which became the first luxury brand to launch an NFT. The company released a pair of digital sneakers in March 2021 called the Gucci Virtual 25.

Taking it to the next level, Gucci then created the Gucci Garden in Roblox, a virtual experience simulating the Gucci Garden Archetypes in Florence, Italy. Roblox players can purchase digital pieces while mingling with others in the area.

Another example of a company using the metaverse to expand its products is Microsoft. Mesh for Teams was made generally available to users in early 2024. The new meeting platform introduces immersive work experiences using mixed reality and other cutting-edge technologies to create the feeling of physical presence. Employees can train together anywhere in the world using holographic 3D images for sharing and visualization, which can cut down on travel expenses.

Keys to marketing in the metaverse
The metaverse is about creating an experience for customers. Whether marketing products or services, there are ways for marketers to embrace a future in the metaverse.

Organizations should set goals before entering the metaverse and be sure to experiment because platforms constantly evolve. Businesses should start small to test reactions and make the necessary adjustments.

Businesses should also consider how to use the metaverse to reach the target audience. If the main goal is to increase sales, then offer virtual items similar to those found in brick-and-mortar stores. Find a way to connect the two so people can have them both virtually and physically. But be sure to know the audience before entering a metaverse platform. Roblox, for example, typically caters to a younger audience.

Here are some ways marketers can work in the metaverse to reach their audience:

Make collectibles available. People enjoy collecting items, and there is a new opportunity to create another collection in the metaverse. Digital collectibles can also be traded with other users. Nike, for example, is creating NFTs for digital products, which are unique and secured with blockchain technology to prove ownership.
Engage with existing communities. Businesses shouldn't show up to an existing community and push marketing on its members. Instead, consider the style of the current platform. Interact with current members to create user-generated content -- such as videos, text, images and audio -- and they can help execute a business's campaign naturally.
Use native advertising. As people explore the metaverse, there will be opportunities for native advertising such as billboards on a virtual street or product placement. There are also sponsorship opportunities for events within the metaverse. Coca-Cola and Samsung have virtual billboards in video games such as Football Manager. Moreover, rapper and recording artist Nas hyped his new album through in-game audio ads during racing games and Fortnite.
Create a specific metaverse platform. This is the most expensive and biggest way to invest in the metaverse. Businesses can create a game or a world specific to a company's product or service; however, this full experience might take time and research as well as a significant investment to find the best fit with the target audience. For example, Shopify launched its new AR/3D shopping experience for businesses to create virtual versions of their products, and is also working on its own NFT marketplace.

Allow customers to try products. Using virtual and augmented reality, customers can see a 3D version product before buying it.
Car companies, such as Porsche and Hyundai, have created virtual viewing rooms and events to get a virtual tour of the car. Companies can do the same with a variety of items, so customers do not have to leave their homes to try a new product, such as using augmented reality to see furniture in their homes or trying on clothing.

Design interactive live events. Many events went virtual when the pandemic hit, but the metaverse can take them to a new level. These kinds of events are interactive with 3D options. Remote employees will also be physically present in the metaverse with others to feel less alienated. The metaverse can be more cost-effective and flexible, enabling collaboration and interaction with one another. This is done by visualizing and solving problems in 3D instead of facing 2D limitations of virtual meetings today.

Engage with virtual influencers. Created by AI, 3D modeling and other technologies, virtual influencers are digital avatars designed to interact with people through social media videos, comments and virtual appearances. As people spend more time in the metaverse, these computer-generated characters are emerging as powerful marketing tools.

Challenges to marketing in the metaverse
One of the biggest challenges of the metaverse is its newness, making companies unsure about diving in. Reaching the pinnacle of hype in late 2021, the metaverse experienced a crash in 2022. Backers like Meta reported big losses in their immersive technologies divisions. Eager to return to their pre-Covid lives, user interest in VR and AR experiences stalled, leading to claims that the metaverse was dead.

The technologies that enable immersive experiences, however, have continued to evolve and improve, underscoring the need for companies to develop a marketing strategy for these new computer interfaces.

Other challenges to marketing in the metaverse include the following:

Data privacy concerns. Customer data is the building block of the metaverse, raising concerns about how data is collected, stored and used. Building trust and being transparent about how customer data is being used is considered key to successful marketing in the metaverse.

Lack of governance and regulating authority. The metaverse's decentralized nature, evolving technology and global reach present hurdles to establishing an overarching governance authority. Government regulation is likely coming, but in the meantime the burden is on companies to figure out how to deal with data privacy and other issues such as harassment and interoperability.

Specialized technology for optimal experience. While there is a growing trend to make metaverse experiences accessible through mobile phones and computers, users often need expensive technology, such as high-end computers and VR headsets or lenses, to be fully immersed in a virtual experience. Not everyone has access to these devices, which can limit the potential for marketers to reach a larger audience. Businesses that want to create their own platforms and experience will need to invest in the technology and acquire the knowledge to create the experience.

Cybersecurity. Data breaches, phishing attacks, scams, and fraud pose significant cybersecurity risks in the metaverse. To safely navigate this new terrain, marketers must educate users about potential scams, invest in security measures, and closely monitor the metaverse environment. However, metaverse identities can still be stolen, and there is currently limited support available to help resolve such issues.

Brand risk. Hitting the right note in the metaverse is challenging given the newness of the space. Poorly executed marketing campaigns could tarnish a company's brand if perceived as intrusive or inauthentic. User-generated content and the untested nature of virtual interactions could lead to brand messaging being distorted or misunderstood.