What is Web3 and What Does it Mean for Brands?

Beyond the Buzzwords

The web as we know it has gone through several phases of development. The first, Web 1.0, was the earliest era of the online world and ushered in the likes of Netscape, AOL, Yahoo! and early website development and use. The internet as a paradigm for consumer activities began to take off mostly in the 1990s. The era had its most rapid development in the dotcom bubble of the early 2000s, leaving a few market players such as Amazon, eBay and Google that are still cornerstones online and in our daily lives.

Web 2.0 is characterized as the era of social media and user-generated content including Facebook, Google and Twitter. Web 2.0 was a time of frenzied, highly-profitable online activity and increasing general user awareness of the internet. This was also the era of centralization, “a centralized digital network is one in which a central authority controls the network.” New platforms, or multi-sided markets, facilitated transactions between users and suppliers, with a massive increase in digital ad spending based on data capture and new programmatic tools for reaching audiences with finer granularity. Before long, all core services of the web were bundled up in a few giant companies involved with many aspects of our daily lives.

If Web 1.0 was the web stretching its legs, Web 2.0 was where it began to run…fast.

Multinational digital empires were born and consolidated in the era of Web 2.0. Amazon became the all-encompassing and powerful brand it is today along with Facebook, Google, Twitter, LinkedIn, Baidu, WeChat and others. Web 2.0 brought more people together more quickly, cheaply and effectively for transactions than at any point in human history. Connection and the dissemination of information became the defining business of the 21st century thanks to these tech giants. The growth exceeded anything that even seemed possible in the Web 1.0 days. Now the web had expanded real estate where everyone could be a creator regardless of technical skills and content was king.

But, like all rapid growth, this has had its own perils. These same platforms have often murky boundaries, uncertain modes of data capture, vague uses of collected personal information, political misinformation and controversy and a general impunity to operate within a wide swath of terms of service. Our data and our online lives are centralized; users do not control their data or their footprint online. Massive corporations decide what to show us, what to algorithmically link in our feeds and shape our online conversations on everything from the best shoes this fall to COVID-19 vaccines.

Enter the next evolution.

There are many different visions of a future web, but the most highly sensationalized is Web3. Web3 is differentiated from Web 3.0 in its emphasis on the sociopolitical aspects of the internet such as centralization versus decentralization. Web 3.0 is simply the next phase of the web without necessarily known or set traits, whereas Web3 is an attempt to decentralize the online ecosystem away from the tech giants and move toward the control of the people who use it. This happens usually through things such as:

• Non-fungible tokens (NFTs)
• Cryptocurrencies (Bitcoin, Ethereum, etc.)
• The metaverse (Meta, Decentraland)
• Self-sovereign identity (SSI)
• Blockchain (Hyperledger Fabric, supply chain tracking, etc.)

Web3 has many shorthand names such as the Internet of Value or the decentralized web. It almost always means an emphasis on individual users and an iteration of the web free from centralized control by legacy tech monoliths. Online, Web3 is associated often exclusively with blockchain, cryptocurrencies, NFTs and the nascent metaverse. While artificial intelligence is frequently thrown into the mix as well (such as the new ChatGPT), there is nothing exclusive to Web3 about its inclusion.

As can be seen from numerous rising and falling valuations, there is a lot of potential money to be made in Web3. Facebook (now Meta) has spent very heavily on its transition to a new web based on its vision of the Metaverse, a virtual reality-connected online space for play, commerce, politics and relationships between connections. Cryptocurrencies are designed and built specifically for chains within the new web infrastructure.

And naturally, brands often want to get in on this.

Determining if Web3 is Right for Your Brand

Many brands have run headfirst into Web3 with guns blazing. It’s common to see new initiatives launched every day for NFTs, the metaverse, or crypto capability with legacy brands and the big players in and out of the tech space. For smaller companies, the new web can seem like a confusing, even upside-down place with too many buzzwords and possible selling points to settle on any real meaning. How exactly does a brand in the real world suddenly become a hangout hub in a virtual reality space like Decentraland? And for that matter, why would one want to?

Web3 is no different from Web 2.0 in this regard: Brands need to decide what this space would fulfill for their customers that isn’t being fulfilled by current marketing and branding efforts. Many companies struggled with the transition to social media services such as Facebook during its initial launch, but now a Facebook page is a baseline for any company trying to breakout successfully. So, too, with the new web. Brands that do well are the ones that best harness their image and their capabilities to match the changing ecosystem.

It can be tempting for brands to chase trends and try to mint everything they do in NFT form, even if the concept doesn’t fit their image, goals or doesn’t have a marketing mix follow-through to engage customers. Some companies have transitioned to blockchain only to discover they didn’t really need to in the first place and have seen no benefits from decentralization that weren’t there for the old model. Worse yet, it may have hurt their business from being too hasty.

Any brand thinking about transitioning its marketing to the Web3 paradigm should ask itself a few questions beforehand:

• How does this help the brand and further our goals?
• Can we manage new and often experimental technology? Can we make it meaningful?
• How does this help our customers navigate their options with us?
• What does the option provide that the old one doesn’t?
• Is this something we need to do, or are we chasing trends instead of making them?
• Do we have a firm plan of success when using these ideas?

When a core overriding need for Web3 marketing is in place, a transition is a potentially very lucrative move. If the evolution fits with your overall brand goals and vision, then the journey is worth the effort. If you’re uncertain, it’s best to explore your options and decide from there what you’ll need going forward. If you conduct a brand audit or do market research and discover your audience is using Web3 more and more and you believe you can better serve them there, then go for it. If you’re not sold on it, do more research and brainstorm possibilities with and without the new tech.

All brands can benefit from charting a path forward to greater success, independent of the technology they use to get there. But if you’ve gone through the steps and are still not sure if Web3 is the place for you and your company, give us a call and we can help you navigate brand options in a changing and fast-paced online world.