Imagining µniverse: The B2C Metaverse (Part 23)

Summary

This has been a long journey into a future that is coming. As with the internet, no one is exactly sure how it will evolve. The innovations creep up on us with the early adopters starting to use them. Today’s users of Fortnite, Roblox and Minecraft will be tomorrow’s customers and will therefore expect richer engagement experiences with brands. They will drive the cutting edge and the construction of the metaverse future.

While the metaverse will be led by our desire to share experiences in the form of space and time with others, the µniverse will be driven by the need for a brand to offer differentiated and rich experiences for its most valuable and profitable customers – that little extra that wins them over for life. Just as it was very difficult to imagine all the possibilities of the Internet in the mid-1990s, it is our 2D and small screen imagination that limits our exploration today of the possibilities of the metaverse future. But that future is coming. Technology has a relentless forward march and early failures are but small blips in the path of progress.

In this series, I have, in a limited way, explored some ideas. Atomic rewards to counter attention recession, a micro-currency Mu to provide access to the new world, gamification and 3D interfaces to combine with avatars, digital twins and software agents to provide a persistent presence in this parallel universe. All of these are individually there; what entrepreneurs need to do is to start putting them together.

One of my first projects when I started working at NYNEX in 1989 was to explore an Intel technology called Digital Video Interactive (DVI). I would imagine replicas of places which one could explore via the desktop. Later, in the early days of IndiaWorld in the late-1990s, I would imagine a 3D mall as a manifestation of the global marketplace that I wanted to create. And then came SimCity, which enabled the development of buildings, offices, factories and their interplay. Video games and movies fed our fascination for alternate worlds. The big difference now is that the technologies are finally ready to place us in these new worlds. Instead of static, detached, game-like interfaces, we are getting to a future where reality gets extended into a “mirror world.”

The metaverse is a once-in-a-generation opportunity to completely reimagine and construct something very new and different. My lens in this series has been the brand-customer relationship. The physical and anonymous past of that relationship has now become digital and data-driven. The µniverse will transform it further. As Alan Kay said: “The best way to predict the future is to invent it.” The best way to imagine the metaverse future is to build it!

Thinks 282

Network Effects Are Overrated: “Sometimes also referred to as the “flywheel effect,” network effects occur when every new user increases the value of the network to existing users. In a digital environment, it is argued, not only do new users attract still more new users ad infinitum, but the continuous improvements facilitated by A.I. make the prospect of successful competitive attack ever more remote, leading inexorably to a world dominated by impregnable winner-take-all markets. The problem with this narrative is that it ignores the numerous ways in which the new digital platforms actually make businesses more vulnerable to competitive attack compared with the analog models that they have disrupted. The ease with which customers can switch undermines captivity and the asset-light nature of these businesses both lowers entry barriers and the level of activity required to break even.”

The Economist: “If classical liberalism is so much better than the alternatives, why is it struggling around the world? One reason is that populists and progressives feed off each other pathologically. The hatred each camp feels for the other inflames its own supporters—to the benefit of both. Criticising your own tribe’s excesses seems like treachery. Under these conditions, liberal debate is starved of oxygen…Aspects of liberalism go against the grain of human nature. It requires you to defend your opponents’ right to speak, even when you know they are wrong. You must be willing to question your deepest beliefs. Businesses must not be sheltered from the gales of creative destruction. Your loved ones must advance on merit alone, even if all your instincts are to bend the rules for them. You must accept the victory of your enemies at the ballot box, even if you think they will bring the country to ruin. In short, it is hard work to be a genuine liberal… Classical liberals must rediscover their fighting spirit. They should take on the bullies and cancellers. Liberalism is still the best engine for equitable progress. Liberals must have the courage to say so.”

Shankkar Aiyar: “Demography is not destiny. India’s politicians are right to fear the looming spectre of rising working-age population and unemployment but both the cause and consequence are of their making. India needs structural reforms to propel growth. Effectively the demographic dream rests on the hope that India’s rulers would tune policy to empower the willing millions. Without growth, politicians will only be left with poverty and promises to redistribute.”

Imagining µniverse: The B2C Metaverse (Part 22)

Action Agenda

The metaverse – or the µniverse as I term the B2C metaverse – will get built over the years to come. Meanwhile, CEOs and their marketing teams can take many actions to begin the journey to the new world.

First, collect customer data across all touchpoints. Machines and not humans in marketing departments are going to process this, so there is no need to economise! Every datapoint is a piece that goes on to create a single, unified, composite view of the customer, so no data is irrelevant. Computing and storage are cheap enough to make this almost a given. And yet few companies do this well. So, start by creating a “Chief Data Officer” (distinct from Chief Digital Officer). In the right hands and with the right software, data can tell amazing stories.

Second, invest in a full-stack communications and martech solution. The “full-stack” bit is important. The mistake marketers make is to get the next shiny point solution and then face a big challenge with silo-ed data and integration hurdles; they lose sight of the forest for the trees. For the magic of AI-ML to work, a single omnichannel stack is the way to go.

Third, lay the foundation for Velvet Rope Marketing – by analysing the customer data to calculate customer lifetime value (CLV) and decode the Best Customer Genome (BCG). CLV will help identify the Best Customers, and BCG will offer clues on the ideal customer profile and journey.

Fourth, construct digital twins for the Best Customers. AI-ML software can do this. With this, it will also become possible to predict the next best action that needs to be proposed for the customer. This is an iterative process – with every new customer input in the form of an action (or inaction) creating a new output in the form of personalised recommendations.

Fifth, consider atomic rewards as the answer to information overload and attention recession. This is where Mu, the attention currency, comes into play. Selected customers can be rewarded for their attention (push messages to begin with). Atomic rewards help nudge the customer along the journey and also bring in an element of gamification.

Sixth, imagine new, rich experiences for Best Customers. What is it that will surprise and delight them? How can the combination of content, context and community create lasting memories and the urge to share and refer others like them?

Seventh, use gaming engines to give life to these experiences in a private µniverse. Even as the larger metaverse takes shape, it is possible to create gateways to new worlds with today’s technologies to strengthen relationships with the Best Customers – the first step to creating a profipoly (profits monopoly).

Each one of these seven actions can be begun today – readying the business for tomorrow’s world. The basics of business success have always remained the same: get the category’s best customers, keep them forever, and persuade them to refer their friends and family. The metaverse is the next evolution in doing the basics even better. The digital journey that began with the Internet is ready for its next – and most exciting – big leap. It is our combined imagination that will birth the new µniverse future.

Thinks 281

FTX Trilogy: “FTX is set to be one of the most consequential companies of the next decade. The cryptocurrency exchange has risen to prominence in a little over two years, securing an $18 billion valuation. It’s done so through insane speed, balanced aggression, product innovation, and a unique culture.”

What I Wish I Understood When Starting Out In My Career: One of the 10 pieces of advice: “Learn to time travel: It took me a while to learn how to “travel” a few decades into the future and then return to the present. Being able to conceptualize what the future looks like is one thing, but the real trick is recognizing that dynamism underlies everything. Nothing is static, and all things constantly change, adapt and move forward.”

David Perell on writing daily: “In an ideal world, you only write when you’re filled with the creative spirit. The problem is that when most writers say: “I’m not going to write today because I’m not feeling it,” they are really running away from some kind of fear. Maybe it’s a fear of judgment. Or maybe, it’s a fear of realizing that first drafts are never as perfect as the image in your mind. But writing every day and committing to a regular publishing schedule forces you to push yourself to transcend the hurdles of self-doubt. Consistency comes before choice.”

Imagining µniverse: The B2C Metaverse (Part 21)

A New World

The µniverse may sound like science fiction today, but it is waiting to be constructed. It is inhabited by our digital twin – much like we have personas in the games we play. There is one big difference; when we exit the game, the persona also exits. Instead imagine persistence, where the digital twin – constantly learning from our actions engaging with brands – stays on in the metaverse. The digital twin is constructed from our digital pheromones and AI-ML engines. The twin, undeterred by attention recession, can chat with brand bots, consume an infinite supply of marketing messages, and identify which of these merit our indulgence. Which book to buy next, which news story to read next, which movie to watch next – the digital twin helps us choose from the vast cornucopia of offerings. It can also spawn offspring in the form of software agents which can ferret out nuggets beyond what may be obvious to us.

The µniverse is the habitat of the digital twin. There can be a single twin created by each of us. What is perhaps more likely in the near-term is that there will be a digital twin created by every brand which lets them predict what we will do next. It is like playing Chess – a human can perhaps play a few other humans simultaneously but only a computer can play millions of humans at the same time. In the same vein, marketing managers can determine next actions for a limited number of  cohorts of customers, but only in the µniverse can the next best actions of millions of customers be individually predicted and consequent actions be taken to nudge them along those journeys.

Constructing the µniverse will require new tools – just like making the first-generation of HTML websites needed site builders. These tools are likely to come from the world of gaming. For most customers of a brand, the regular website or the app is good enough – these are the 80% Rest Customers who account for 40% of revenue. But the 20% Best Customers who account for 60% revenue and perhaps more than 100% of profits need what they have not got so far – an exclusive experience that nudges them towards maximising their spend with the brand. This is where the ideas of the metaverse can come into play – with access restricted by either attention (Mu earned) or lifetime value. The experience of the µniverse becomes the next axis of differentiation – after price and convenience have been equalised.

The µniverse is the new world that beckons brands to a future where attention and profits matter more than new customer acquisition to show lossy growth. Just as human attention is finite, so is investor appetite for spending (aka paying Google and Facebook). The tide will turn, and profits once again will be in vogue. Just product, price and delivery equalisation will not be enough; marketers will need to bring in experience into the mix – especially for their most profitable customers. The time to take the steps to birthing the µniverse is now!

Thinks 280

FT on the great speculative era: “And then there are cryptocurrencies. Fifty years ago, US president Richard Nixon severed the last link between the dollar and gold. For a while, inflation surged just as gold bugs predicted. But central banks got on top of the inflation problem and people came to accept that paper money was fine, when it was backed by a government that could insist that debts and taxes were settled in its domestic currency. Many cryptocurrencies have no asset backing, nor do they have a tax-raising state behind them. Their supposed value comes from their scarcity, yet almost 6,000 have been created. This makes nonsense of the claim that they provide a hedge against the money-creating tendencies of central banks. And their volatility makes them neither a reliable store of value nor a suitable means of exchange.”

A decade and a half of instability: The history of Google messaging apps: “Sixteen years after the launch of Google Talk, Google messaging is still a mess.”

Tom Palmer: “One way of understanding the history of modern civilization is as a constant struggle between liberty and power.” [via CafeHayek]

 

Imagining µniverse: The B2C Metaverse (Part 20)

Building Blocks

Attention is the key currency in today’s world. The world of digital lets brands literally track every eyeball movement for a person who is using the website or the app. And yet, no business measures and incentivises attention. While many offer rewards for transactions, the triad of attention-action-engagement that precedes a transaction is largely ignored. As such, all that brands are left with is looking at spends and running loyalty programs to offer points. Imagine if attention could be rewarded – with the prize being an entry into the metaverse for unique, differentiated experiences. I call the attention currency as Mu (µ), and the metaverse, appropriately enough, as the µniverse. Let’s play out this vision.

In the pre-digital world, transactions were the only element of the consumer lifecycle that could be tracked. That’s how loyalty programs emerged – to collect data at an individual level and thus get better insights into customer behaviour. In the digital world, this has continued. But when interaction is via a keyboard, mouse, or touch, it now becomes possible to track everything upstream of the transaction: attention, action and engagement. The more time someone spends on Site/App A means that the time is not being spent on Site/App B – attention is a zero-sum game. Since attention can now be tracked right from opens and clicks on emails to actions taken on SMSes and push notifications, it now becomes possible to create a rewards program for attention. This is the idea behind Mu. [See: Imagining Mus: An Attention-Action Currency.] Mu is the first building block for the µniverse.

Push messages are today sent to inboxes that end customers have: Gmail, SMS, or increasingly, WhatsApp. In the Gmail inbox, Google’s algorithms decide which folder the emails land in. Incoming marketing emails also have to compete with various personal emails. Just like P2P messaging has largely moved from the SMS inbox to WhatsApp, there is a need for a new inbox – the micronbox – dedicated for marketing emails. [See: Micronbox: A New Inbox.] The micronbox, our second building block, is a repository of microns – brand push messages with reward (Mu). Since all messages in this are only based on customer opt-in, this is a spam-free repository. At the most basic level, it can do for emails what Microsoft’s SMS Organizer does for SMSes. Over time, the micronbox can evolve from an inbox into an app, a portal to the µniverse.

The µniverse is the third and most ambitious building block for the metaverse. It is where brands and customers can have intimate experiences, where customers can participate in communities, where communities can drive co-creation with brand managers. The µniverse is an exclusive space – reserved for a brand’s Best Customers, accessed via attention as measured by Mu or based on customer lifetime value as determined by the brand. It is thus the ultimate Velvet Rope Marketing prize. [See: Best Customers and Velvet Rope Marketing.]

Thinks 279

Economist on Apple CEO Tim Cook: “No CEO in history has created as much total shareholder value as Mr Cook. When he took over the company had a market value of $349bn. Today it is worth $2.5trn, more than any other listed firm ever. Under his aegis annual sales surged from $108bn in 2011 to $274bn last year. Net profit more than doubled to $57bn, overtaking Saudi Aramco’s oil-fuelled earnings and turning Apple into the world’s most profitable company. Less widely noticed, during his tenure the “Apple economy”—its annual revenue plus everything other companies make on one of its platforms—has grown sevenfold to more than $1trn.

Thomas McKinlay’s top 5 marketing insights: At #1: People love products with rituals

India OTT audience survey: 40.7 million people in the OTT universe are a paying SVOD (subscription video-on-demand) audience, with each one paying for 2.4 brands on average. The non-paying segment, which watches pay-driven video on subscriptions taken by their family members or friends, or via telecom packages, is sizeable at 69.8 million. Together, these comprise 31 per cent (over 110 million) of the total OTT universe in India. [via Business Standard]

Imagining µniverse: The B2C Metaverse (Part 19)

Engagement to Experience

Websites and apps track our every action. Can they use this knowledge to make us better? I am writing this on Microsoft Word on a desktop. The app has seen me write tens of thousands of words, and other than some spelling and grammar suggestions, little has changed in the basic writing process. What would a metaverse-enabled Word look like? For one, it could create a digital twin for me based on all the writing I have done, and find me articles and references that keep me updated on topics I have written about. It could organise all my docs in a 3D cabinet, showing me connections between topics and docs. It could show me what I was thinking a year ago! It could encourage me to join a writing community. Or in this case, offer to connect me to others thinking about the metaverse. Each of this can perhaps be done today, with some friction, by separate apps or utilities. The point is: how can a more seamless experience be constructed with the data that our computers and mobiles already have on us?

Imagine time travel – but in the past. I would love to sit through a video of James Buchanan teaching public choice or Hayek talking about liberty – along with others who are learners like me. A few of us could get together virtually and create a small working group to explore some themes further. And as we are engaged, imagine running into today’s experts who could enlighten us – exactly what would happen at a conference we would have physically attended. Imagine next leaving a software agent in the metaverse that would alert us for interesting new ideas and conversations. As I said earlier, independent tools do make all this possible but there are a number of hurdles and therefore we don’t do it.

The uniting theme across these futuristic scenarios is “experience.” Customer engagement is all about customer experience. And yet most businesses have done little – other than faster delivery, lower prices and better recos. Improvements in logistics and AI will make these improvements par for the course for most brands. What’s beyond that? This is the opportunity that the metaverse brings: a way to differentiate based on experience. A few rupees difference in the product may not make us switch, but a truly unique experience could, especially for the brand’s most valuable customers.

Let’s take the example of news media; worldwide, it is facing survival challenges because of the onslaught from various alternatives. Consider Mint or Business Standard. They have excellent reporting and commentary. The print edition doesn’t tell them what I am reading and ignoring; but their digital properties gives them a deep insight into my interests – they can in fact create a replica of me and create a “Daily Me” personalised version. What else can they do for a core audience to generate additional revenues by giving unique experiences? Imagine creating a space where readers can interact with editors in exclusive events, a 3D view of news letting me see connections and context better, and coordinating interactions with others like me who can bring their expertise on specific topics. The metaverse can also offer news organisations the ability to curate 1:1 engagements between business leaders to explore new opportunities. News may have become commoditised, but experiences will never be. What business leaders need is imagination and a willingness for experimentation.

Thinks 278

George Saunders: “Each of us is born with a series of built-in confusions that are probably somehow Darwinian. These are: (1) we’re central to the universe (that is, our personal story is the main and most interesting story, the only story, really); (2) we’re separate from the universe (there’s US and then, out there, all that other junk – dogs and swing-sets, and the State of Nebraska and low-hanging clouds and, you know, other people), and (3) we’re permanent (death is real, o.k., sure – for you, but not for me). Now, we don’t really believe these things – intellectually we know better – but we believe them viscerally, and live by them, and they cause us to prioritize our own needs over the needs of others, even though what we really want, in our hearts, is to be less selfish, more aware of what’s actually happening in the present moment, more open, and more loving.”

Andrew Chen on Web 2.0 lessons for social apps: “One of the hardest lessons we learned from that period: It wasn’t enough to build the app, you needed to also grow a critical mass of users. Without the right users there at the beginning, a user-generated content product would inherently be too shallow on content. Low engagement would lead to more low engagement…It’s still better to focus on a single community, gain saturation, before adding adjacent networks. Viral loops are still a thing that can be constructed, measured, and optimized. The core stickiness of an app is all about p/m fit.”

Atanu Dey on Superabundance: “There’s something incredible in the works for the world of only a couple of decades hence. That world will be as different from our world today as our world is different from the world of our stone age ancestors. Our ancestors of even a few hundred years ago could not have imagined the marvels — they really are marvels if you think about it — of our world today. Similarly, it is impossible for us to imagine the world of superabundance in any detail but the broad outlines can be guessed provided one thinks intelligently about it. The future world is being built by a bunch of very remarkable people. The guy who is the leader of that lot is Elon Musk. There have been extremely rich people, extremely visionary people, extremely intelligent people, extremely diligent people, extremely ambitious people but it’s a rare individual — perhaps one in a billion — who combines all those extreme qualities. Musk is that one in a billion.”