The metaverse offers businesses an invaluable opportunity for advertising. While the technology is still developing, several big brands have already seized upon this, including Gucci, Burberry, Nike, Coca-Cola and Heineken. However, there are still grey areas and it is not particularly clear what rules will apply to brands looking to advertise in the metaverse. This is primarily because, unlike other internet platforms such as Facebook or Google, there is no clear owner of, or jurisdiction for, the metaverse, meaning there is no central body to regulate the metaverse and no clear guidelines to follow. As it is built on blockchain technology, the content is distributed across numerous computer servers throughout the world. While there are theoretically loopholes to exploit, companies should seize the opportunity to take proactive steps to promote their brand responsibly. When the regulatory regime inevitably catches up, this could pay dividends.
Two particularly interesting avenues to consider in this context are (i) identification of advertising and (ii) responsible advertising.
Identification as advertising
An area that regulators have increasingly focused on in the ‘real-world’ in recent years is that advertising should be easily identifiable as such. This has been particularly problematic in the realm of influencers and online advertising, as individuals have been paid to use or promote products but have not disclosed this when doing so. The opportunity for brands to advertise in the metaverse is a significant part of its appeal. However, advertising in the metaverse will obviously be different from advertising in ‘real-life’ and this may lead to confusion about whether brands are actually advertising. For example, is product placement in a virtual reality more akin to advertising or handing out free samples? It may be that this is viewed in a similar manner to product placement on television shows or in films. However, this is an example of the kind of question that regulators will need to grapple with.
Brands should also consider how to ensure that their advertising in the metaverse is appropriate to their target market. A particularly potent example of this is the advertising of alcohol in the metaverse. Alcohol brands are rapidly expanding into the metaverse, and prominent brands have become involved in the industry in a number of ways, launching virtual liquor stores and NFTs, as well as sponsoring and marketing at virtual events. Virtual liquor stores are a particularly effective means for alcohol brands to utilise this new online world. In their virtual stores, companies can use the same marketing tactics that they would use in physical stores, such as shelf placement, labelling and branding, however brands can also leverage the technology that the metaverse offers to allow their target customers to get closer to the products being advertised than would be the case for 2D online alcohol sale platforms (such as online supermarket shopping). Additionally, this forum allows people to visit shops from the comfort of their own home, and is therefore more convenient for the consumers than visiting physical stores.
A significant issue which is yet to be addressed is that existing regulatory systems are not equipped to handle this rapid expansion of alcohol in the metaverse. Existing policies on the advertising of alcohol differ between countries. For example, in the UK, advertising is regulated by the Advertising Standards Authority (ASA). There are a number of regulations with which brands must comply, including the prohibition of alcohol adverts directly targeting under 18s through the selection of media, style of presentation, content or context in which they appear. Additionally, alcohol adverts must not appear in any medium if 25% or more of the audience is under 18 (for example, teen magazines).
It is not clear whether the ASA has any jurisdiction to enforce these rules in the metaverse. It is possible, although not yet tested in practice, that the ASA would seek to impose jurisdiction over companies registered in the UK and that regulators in other countries could adopt a similar approach.
At this stage, however, it is possible that drinks companies, acting irresponsibly, could exploit this loophole to market to those who are underage. It is likely that regulators will be focusing on catching up in this realm as a matter of urgency. However, this intervening period does provide brands an invaluable opportunity to make a positive impression and real reputational gains, by wisely choosing their means of advertising in the metaverse.
Heineken, for example, emphasised that their launch into the metaverse must be consistent with their brand. When it came to choosing a platform, Heineken were aware that they needed to engage an age-appropriate community and so required a platform with enforceable age restrictions. Roblox and Sandbox were inappropriate options because of the extent to which children engage with these platforms. In contrast, the Decentraland platform applies age restrictions for certain content and is aimed towards a more mature demographic, allowing Heineken to develop a visually mature platform, reflective of a real-life bar experience.
Therefore, while advertising in the metaverse is raising some complex questions for regulators, brands should still aim to seize the opportunity to use the metaverse for their own responsible promotion. Understanding and investing in the metaverse could prove to be a very profitable venture for businesses. Doing so responsibly will allow brands to make the most of this seemingly exponentially expanding marketplace to stimulate their own growth and build their reputation.
Look out for the next article in our series which will discuss tactics for businesses to protect their brand in the metaverse.
The Metaverse series
- Part 1 – Introduction to the metaverse
- Part 2 – Non-fungible tokens (NFTs)
- Part 3 – Brand considerations in the metaverse
- Part 4 – Protection of intellectual property rights
- Part 5 – Employer considerations in the metaverse
If you would like further information about the topics covered in this series or the services that the Media and technology team provide, please contact Joanna Boag-Thomson.