Everybody wants into the Metaverse, as soon as we can build it, even if it is not yet truly decentralized. Digital fashion is creating an exciting new asset class, and the Metaverse offers new experiential spaces. All of these innovations will be subject to global data protection regulations, and the ever-increasing number of privacy laws in the US. As a Privacy Consultant, I am currently seeing a disconnect between where companies want to go in this space, and them knowing the people with the tools who can help them responsibly build the applications to get them where they want to go. My intention is to present a few thoughts before team-building for projects in this space, and to help make these professional connections.
The people who built your existing technologies may not be the best people to use for these new projects. The adtech rules are changing, the cyber security concerns differ from web2 applications, and if you intend to use XR (extended reality), you will need to be very careful in handling biometric data. You will also need to decide how to handle children in these spaces. They are very curious and interested, and will be your future audience, but collecting and using their data can be dangerous if the proper precautions are not taken. Catastrophic losses are possible without proper safeguards in place, or knowledgable people working on the legal, development, and security teams. You will need new specialists to help you navigate the best path forward, such as blockchain developers, privacy attorneys, ethicists, data scientists, and other privacy and security professionals.
Privacy and Trust need to be out front and center of your brand messaging in the new data economy. Consumers are driving the shift in data control from adtech’s tracking and targeting marketing models, into more privacy-respecting, contextual marketing models. Recently, when Apple asked consumers if they would like more privacy, a resounding 96% of consumers said “yes”. This resulted in epic financial losses for the businesses who rely on freely using consumers’ data, because consumers are over the current adtech models, and because consent matters. There is opportunity here.
An example of contextual marketing would be for an ad marketing snow boots to show up when I am viewing an article about skiing in Utah. You do not need to know if I ski, or if I wear boots, and you certainly do not need to know my name, age, gender, location, sexual preference, or true hair color. So far, the returns on marketing spend shows contextual marketing models consistently outperforming the legacy adtech targeting models, and it increases brand loyalty and reputation.
Influencer marketing has also proven to be a creative and wildly cost effective strategy. The pitch deck that YugaLabs (Bored Ape Yacht Club) prepared for investors was leaked online recently, all 90 pages of it. Buried in the back were the financials, and for all of the hype and FOMO they generated, their marketing spend for 2021 was only $2mm USD. Status sells.
Culture will need to be a part of your considerations when deciding upon your company’s “coin strategy” and marketing in the Metaverse. Please seek out experts in these areas to ensure inclusivity and a proper understanding of your market. My 2 favorite experts on “all things Metaverse” are Teddy Pahagbia and Kelly Vero, and I am grateful for their thought leadership on the human issues involved in the techno-transition into web3 applications. Privacy is already a part of your brand message, and consumers want to know what data you are collecting, and how you intend to use it. According to the Cisco 2021 Privacy Benchmark Study published last month, 46% of consumers feel they “cannot adequately protect their data, and the primary reason is that they don’t understand what organizations are collecting and doing with their data.” We have trust problems in our global society today. The best way to earn consumers’ trust is to build privacy respecting technologies, to collect less data, and to be open and transparent about your data practices. Ask what is the purpose for collecting the data, how long do you really need to keep it, and would you be proud of your data practices being exposed if there is a problem later?
The financial incentives and benefits for companies investing in strong privacy programs is encouraging. The Cisco report states the average privacy spend for companies with 250-499 employees was $2.1mm (USD) in 2021 and the ROI was estimated to be USD $2.5mm (USD) for these companies. 90% of business respondents said they “consider privacy a business imperative”. The top benefit reported by companies was Loyalty and Trust, at 71% of respondents. The other benefits include operational efficiency, agility and innovation, mitigating security losses, and reducing sales delays. Privacy investments are good for business.
On the issues of sustainability and trust, the US Securities and Exchange Commission (SEC) is currently adopting rules to force companies to disclose their carbon footprint data as part of their regulatory filings. This falls in line with other European regulatory demands, but has some room for changes before implementation, especially on “scope 3” emissions (emissions generated by suppliers and customers). If you are building new technologies, please be aware of the carbon footprint of the various distributed ledger (blockchain) technologies. Hedera offers developers the tools they need to build applications with a much lower carbon footprint than Ethereum and lower transactions fees. https://hedera.com/users Be honest and transparent in all of your public disclosures, or risk losing your hard-earned trust. Investors and consumers want to support businesses with genuine ESG goals, and boards that hold themselves accountable.
Transparency and accountability are key to showing consumers how you respect their privacy, and why they can trust you with their data. You already understand that failure is a required part of the technological innovation process, even with the best experts on your teams. Consumers understand this too, and have been shown to forgive companies who make mistakes- if they are open and honest about how they intend to handle their mistakes moving forward. Investors also value this transparency as it shows trustworthy leadership, corporate culture, and supervised product growth. There is so much opportunity to build in brand messaging, even in regulatory disclosures.
Relationships and authenticity will be the new drivers of community engagement in the Metaverse, and having the right team members is the best way to build better technologies. Privacy professionals are ready to help you build better, more trustworthy, and privacy-respecting technologies whenever you are. Privacy is a human right, data is a currency, and dignity is priceless.