Direct to avatar (D2A) commerce is a relatively new concept, having only emerged on the market in the last few years. It is steadily increasing in consumer popularity and fast becoming a tool that businesses should be incorporating into their marketing strategy.
What Is An Avatar?
Avatars are personalised graphic characters that users can create on internet forums, video games, social networking sites and any virtual world to represent themselves. Avatar customisation and appearance can vary depending on the platform they are created. Some offer basic changes to a 2D avatar, whilst others offer extensive clothing and customisation in 3D. While they are largely used in online role-playing games such as Fortnite, it is becoming more common to see them on websites and social media platforms such as Snapchat, Instagram and very soon even across virtual co-working spaces such as Microsoft teams.
Gen Z’s adoption of new virtual world technology has added significant value to investing time and resources on the development of avatar customisation tools and options.
Teens are asking for V-Bucks on Fortnite so that they can buy their favourite gamer’s skin, rather than asking to purchase something to be used in the physical and real world. With more time being spent on these platforms, businesses need to be adapting their strategy to target consumers as they spend, connect and create, emphasising the importance of direct to avatar marketing.
“Direct-to-avatar (D2A) refers to an emerging business model selling products directly to avatars - or digital identities - bypassing any supply chain management like dropshipping, logistics of how to get a physical product to a consumer's door,” as explained by Ryan Gill, co-founder and CEO of Crucible.
Why Is It Important Now?
A significant shift has started to happen in the world of marketing. In this new digital era of Web 3.0, avatars are the extension of a consumers' life beyond the physical world. They are more customisable than ever before, and users can express themselves through their online personas more extravagantly than possible in the physical world. Some people also opt to introduce a different version of themselves through their avatar as a form of escapism. Users are defining themselves by not only the games they play but the paths and actions they take in the games. This presents businesses with the unique opportunity to target avatars acutely through unique consumer experiences tailored to the platforms they’re using.
According to Samantha G. Wolfe, founder of PitchFWD and Adjunct Professor at NYU, "Gen Z considers their digital avatars an extension of themselves. This generation loves individuality and challenges social constructs. So it makes sense that as they spend more time in virtual worlds, they want to represent themselves uniquely. This might start as buying branded goods and clothing, especially ones that connect to them authentically.”
Within the gaming industry, the avatar economy has been growing for years. However, with the rise of NFTs and metaverse, the realm of gamers has been opened up for brands across different industries. Bringing brands more scope than ever to add to avatar experiences, the metaverse will decentralise access to D2A marketing strategies.
There is a significant untapped market out there for new brands in the space, with statistics showing the power and future behind this new digital economy of D2A as “Free-to-play games generated $20.6 billion in 2019”. One of the biggest games, League of Legends, earned $1.5 billion in revenue from these skins in 2019.”, and competitor Fortnite generated $1 billion of its total $2.4 billion from in-game skins on the avatar marketplace.
Today, this market is not just exclusive to professional or amateur gamers, but a broader spectrum of the world audience. Gen Z are immersing themselves in virtual worlds like no generation before, demanding brands across beauty, retail and lifestyle to collaborate across these platforms.
The direct to avatar economy is expected to reach $50 billion by 2022, highlighting the importance of a brands ability to understand what is valuable to avatars in the digital world, and the best channels to communicate with them. Looking further than purely cosmetics, how can they provide digital services to target avatars to get a slice of this extremely large pie!
How can brands dive into D2A marketing?
Direct to avatar marketing is going beyond the traditional and heading straight for completely new territory. The marketing strategies in this new digitalized world are soon to be drastically transformed. Where previously people may have seen digital billboards advertising brands in the game world. The new direct to avatar marketing allows brands to create a fully immersive experience and a real presence within the new worlds and realities that are being created. All of this is directed at the avatar, rather than directly to the consumer.
Users may have heard of the Gucci Open which is an in-game tennis tournament that allows them to compete against each other while sporting their best Gucci look. This is a fantastic form of direct to avatar marketing as it is providing users with what they want for their avatars, getting them interested by creating within the user’s world.
For fashion and clothing brands, the skins are a way to plant the seeds within a game world and it represents an entirely new blue ocean of avatars to sell to.
Other industry brands will also be able to tap into this new crypto economy world. Decentraland allows brands to create their own experiences on the platform in which users can visit. Vollebak, UK based outdoor apparel company has recently set up their own store on the platform, which allows avatars to view and purchase their virtual jackets through in-game NFTs. These NFT cloths can be worn anywhere on Decentraland as well as being redeemed on Vollebak’s website for a physical item. Metaverse platforms like Decentraland are an exciting opportunity for brands to market directly to avatars
Through NFTs, brands have the possibility to engage with consumers through different forms, such as digital collectables created in collaboration with influencers, exclusive access tickets for virtual, XR events and even building a new way to interact with the brand through their loyalty schemes that offer unique access to NFTs from the brand, as they reach a certain level of membership.
Clinique is another brand looking to capitalise on NFTs by using them to drive loyalty and engagement on social media. The beauty brand is offering customers who have signed up to its reward scheme the opportunity to win 10 yearly supplies of products and digital artwork in an NFT Bundle. Customers enter by resharing powerful stories to their Instagram. This is a bid by the makeup brand to modernise loyalty by helping their fanbase become familiar with NFTs and emphasise their status as social currency, as well as being a strong marketing tool.
Influencer marketing and D2A
Influencers can also play an important part when it comes to direct to avatar marketing. These professionals often create virtual content such as digital items and NFTs for certain brands. Gaming is currently leading the way with Fortnite having partnered with multiple influencers and celebrities since the game's creation. Some of the more notable names are LeBron James and more recently Ariana Grande, collaborating with Fornite for the last live event, by releasing an extremely popular skin.
Teaming up with influencers is a strategic move to start tapping into D2A commerce. Businesses are able to provide the tools and assistance to the creators during the creation of these products, and then market them through virtual worlds.
Key takeaways and learnings.
- The D2A Industry will be worth over $50 billion by 2022.
- As the metaverse expands and interconnects, the D2A industry will evolve past just gaming into every industry.
- An avatar is an extension of a person's personality in the virtual realms, often expressing themselves in a way which they may struggle to in the physical world.
- Influencers can be the key to opening up brands to avatars in new virtual worlds, through the creation and understanding of NFTs as a new strategy to build consumer interaction and relationships.
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