Virtual Dreams, Real Nightmares: The Pitfalls of Metaverse Expansion Retailers may have thought the metaverse was going to be the next big thing, but it seems
the hype may have been short-lived. With reports of low engagement and lackluster conversion rates, many are walking back their virtual reality plans faster than you can say "Avatar." But fear not, shoppers! Augmented reality is here to save the day, offering a more practical and personalized shopping experience without the headache of navigating a 3D digital world. Looks like it's time to say goodbye to the metaverse and hello to a more down-to-earth approach to retail tech.
Retailers are walking back their metaverse expansion plans suddenly, causing some to question the future of this virtual world. Brands have been using the metaverse to build brand experiences and marketing, but many have yet
to report on its conversion rate. With the threat of recession, retailers and brands are likely to pare down unprofitable areas of their businesses. The metaverse is a broad term that refers to 3D-enabled digital spaces where people can socialize and live their personal online lives. In recent years, brands saw the metaverse as a means of elevating their virtual experiences and reaching Gen
Z in particular. Walmart launched Universe of Play on Roblox in September, while Disney's division focused on crafting interactive storytelling methods using technologically advanced channels. Retailers of varying sizes were attempting to incorporate the metaverse in their strategies. However, while brands were optimistic about the metaverse, consumers didn’t seem to match their sentiment.
Melissa Minkow, director of retail strategy at digital consultancy firm CI&T, found that 81% of respondents haven’t made a purchase in the metaverse and 45% said that they don’t ever see themselves shopping in it. Meta initially set a 500,000 monthly active user target for its metaverse offering, Horizon Worlds, by the end of last year but then changed its goal to 280,000, indicating how the company underestimated people’s engagement level with the platform. “Long term, it has the potential to be a profitable business, but many brands aren’t there yet, and the threat of the recession could force some brands to reconsider their pricey metaverse ambitions,” said Kyle Wong, chief strategy officer at customer experience platform Emplifi. Pacsun released an NFT series called
Pac Mall Rats last year that the company positioned as part of its metaverse strategy. Overall, Pacsun’s goal with the NFT series was tied to expanding its presence in the virtual world. However, reporting from Sourcing Journal last year indicated that after Pacsun sold its first NFT, every token was sold for less than the ones before it. The report states that the retailer attempted to auction off an NFT artwork by artist Sara Shakeel last year with an opening bid of 0.327 ETH or $1,000 at that
time and received no bids by the time the auction closed. While it’s never been clear whether brands and retailers were ever truly welcome in the metaverse, or if it was just an intrusion into a space meant for pure entertainment and disassociation from the real world, it seems the investments retailers have made have not paid off. One alternative strategy is augmented reality (AR). AR technology can elevate the shopping experience by integrating virtual elements into the real world, allowing customers to visualize products in their own surroundings. Moreover, AR technology can boost customer engagement by offering entertaining experiences, increasing the likelihood of a purchase. Additionally, AR can help retailers create a more personalized and interactive shopping
experience, which can foster customer loyalty. Snap, parent company of Snapchat, has been instrumental in promoting the adoption of AR commerce, having invested in AR for over a decade. It recently launched a Shopping Suite that includes a range of try-on and sizing tools tailored for retail, particularly for clothing, footwear, and eyewear. The company said in a press release that more than
250 million users engage with AR on Snapchat every day. Despite the potentially high cost of implementing AI and AR tools, Snap aims to enhance accessibility of the technology for retailers. That said, last month, in an interview with Modern Retail, Carolina Arguelles Navas, Snap’s head of AR enterprise product strategy and product marketing, emphasized that the company prioritizes both
delivering realistic experiences and streamlining the integration process for retailers. While retailers may be walking back their metaverse expansion plans, this doesn’t mean that they won’t resuscitate their strategies in the future. However, it does show that brands need to be cautious about jumping on the latest tech trends without a clear understanding of their target audience and
expected ROI. As the metaverse hype and reality continue to clash, the question remains: what is the future of virtual shopping experiences? AR technology seems to be the more practical and profitable solution for retailers looking to enhance their customers’ shopping experience. Unlike the metaverse, AR offers a more personalized and interactive experience that can be seamlessly integrated
into the real world. Snapchat's AR tools have been employed by retailers such as Prada and American Eagle, allowing their customers to virtually “try on” and purchase products such as sunglasses and sneakers. With the introduction of AR Enterprise Services (ARES), which debuted in March, retailers can now integrate these same tools into their websites and product pages, affording them
greater authority over the shopping experience and user data. |
All the news you need today, in a format that isn't TL:DR, summarized for the busy executive.
Spotify is helping broadcasters turn their radio content into on-demand podcasts with a new technology called B2P. This tool is available to any publisher with a Megaphone account and allows for automatic creation of podcast episodes from previously broadcasted content. This is great news for broadcast
publishers who want to reach new audiences with their content, as it saves them the 30 to 60 minutes it typically takes to manually convert each episode. With radio consumption on the rise and consumers wanting to listen on their own schedule, podcasts have become increasingly popular. Vaughn, global head of advertising business development & partnerships at Spotify, sees this as a huge revenue opportunity for broadcast publishers, with podcast ad spending projected to hit nearly $2.2
billion in 2023. With 500 million users, including 50% of Gen Z and millennials in the US, Spotify is well-positioned to help publishers tap into this growing market. Google has rolled out an update to its reviews feature, covering reviews about products, services, and "things." The update will evaluate content written for the purpose
of providing recommendation, opinion, or analysis, across multiple languages. Depending on the focus of a website, the impact of the update may vary, with sitewide content potentially evaluated and ranking affected. However, the impact should be felt within the first few days. In other news, Google Analytics 4 has new experimentation integrations with third-party testing platforms, and Google Marketing Live is approaching, with the virtual event showcasing new product innovations and opening for
registration on May 23. As with any Google update, April's reviews update may bring some surprises, but adherence to Google's guidelines should ensure positive outcomes. uto-GPT is the latest creation from OpenAI's API that has caused a stir among hustle bros and get-rich-quick schemers. It uses OpenAI's GPT-4 model to automate multi-step
projects that would have required back-and-forth prompting if done manually. Twitter is already buzzing with excitement over its use cases, which include analyzing stocks, automating product reviews, and creating podcasts. Although technically impressive, opportunists have latched onto Auto-GPT in ways that make people wary of AI's potential to fuel hustle culture. While Auto-GPT is publicly available on GitHub, some programming experience is necessary to use it, though there are
already similar apps available that do not require coding knowledge. Yum! Brands, the parent company of KFC, Pizza Hut, Taco Bell, and the Habit Burger Grill, experienced a ransomware attack on January 13, which was discovered on March 9. Although Yum! Brands did not disclose the total number of people affected, it notified affected customers
and provided complimentary credit monitoring and identity protection services for two years. The data breach resulted in Yum! Brands taking systems offline to contain the incident and closing approximately 300 restaurants in the UK for one day. The data compromised in the breach included the name, driver's license number, or identification card numbers of affected consumers. Roy Akerman, CEO of Rezonate, stressed the need for proactive access management and continuous monitoring to
prevent data breaches from compromising personally identifiable information (PII) and leading to further incidents. According to a new survey by Dentsu, nearly a third of Japanese respondents are aware of the concept of Web3, with awareness surging to almost half among younger consumers aged 15-19. Web3, a term used to describe a range
of blockchain-enabled digital media platforms and applications, has garnered significant attention among Japanese consumers, who expect it to improve information security, prevent unilateral changes to related rules, and facilitate cross-platform use of tools. However, the report notes that the lack of public understanding, information security risks, and slow progress in updating relevant laws are common concerns among respondents, as well as industry insiders. Twitter is relaunching its creator subscription program as "Subscriptions," which will enable users to monetize their tweets and build businesses on the platform. The program will allow Twitter users to charge subscribers for exclusive tweets, subscriber-only Spaces, special badges on their tweets to show affiliation, and a subscriber-only tweets tab on creator
profiles. Twitter has reduced the entry requirements for Subscriptions from 10,000 followers to 500, opening monetization to millions more Twitter users. Creators will have the option to charge $2.99, $4.99, or $9.99 per month, with all revenue passed on to creators for the first year. However, Twitter will take a cut of any revenue generated from the second year. The move is part of Elon Musk's plan to revamp Twitter and provide more ways for users to make money on the platform, which may
reduce its reliance on advertising revenue. TikTok's dominance in short-form video advertising may be challenged by increased competition from platforms such as Instagram Reels, YouTube Shorts, and Snapchat's Spotlight, according to industry observers. While ad spend on the format is growing, it is now being divided across more
platforms than before, potentially leading to slower ad growth for TikTok in the long term, as the app may lose out to competitors. Brands are also beginning to look at a more holistic approach to short-form video advertising, spreading their spend across multiple platforms, rather than solely focusing on TikTok. However, TikTok's closely guarded algorithm, which has helped keep users engaged with the app, will make it difficult for rivals to replicate its success. |
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