While brands like Lush are moving away from tech giants to more ethically sound digital spaces, other retailers favour commercial return and data exchange.
In March, Lush announced its “big tech rebellion”, reducing its investment in Google ads to move to alternative platforms like the metaverse.
“We wish to have zero reliance on the rabbit hole that is ‘trademark buccaneering’ on Google in favour of interacting with our customers in more ethically sound digital scenarios such as across the metaverse,” Lush said in a statement.
As a result, the company has enforced an open-source policy, as Lush aims to “accelerate away from Web2 toward Web3 as quickly as possible.”
Steven Coulomb, who works in Digital Acceleration at McDonald’s, suggested that this is the right time for companies to experiment, try new type of campaigns, unleash the creativity and make it more fun and experiential for customers.
However, he pointed out a few major challenges: the Web3 is quite spread with a few different actors and these campaigns are rarely cost effective compared to the well-known tech giants.
“Furthermore, we see more and more regulations occurring to protect the data privacy of users like with GDPR and local regulators being even stricter across the EU. Users are more aware of their data privacy and concerned.
“Web3, with its decentralised technology, will offer more ownership to the user around their data. This is why it is important for brands to experiment now in the Web3 to anticipate what will impact them in the near future.”
Subscribe to Charged Retail for free
Click here to get the latest retail tech news free in your inbox each day
Platforms like TikTok are actively reducing their ad prices, where the cost to obtain 1,000 impressions is almost half the price of Instagram Reels, a third cheaper than Twitter and 62% cheaper than advertising on Snapchat, according to data from New York-based media agency VaynerMedia.
However, many retailers continuously favour tech giants for interacting with consumers. For example, Stephen Renou, head of retail strategy at VCCP, told Charged that across their clients which span retail, brand and service, they have seen increased investment in owned retail media and direct-to-consumer commerce spaces.
“Clients are willing to spend on media and commerce spaces that provide valuable first-party data and shopper insights that can draw direct links between spend and sales as well as provide the opportunity to build community engagement.
“While ethics and sustainability could play a role, data ownership, community building, and return on investment are more than likely guiding these decisions. This can be seen across major brands like Nike which has heavily invested in virtual stores and owned digital spaces where they can merge community and commerce.
“Even big FMCG companies like Unilever have invested in subscription brands and loyalty platforms where they can own the data and learn more about their shoppers. While ethics, purpose, and sustainability are no doubt guiding brand development and media spending, this will always have to be balanced with commercial return and data exchange.”
Ultimately, most companies will likely remain with tech giants who can offer data insights while allowing to interact with customers directly.
However, when retailers start actively exploring Web3 spaces, they’ll have to follow in the footsteps of Lush, which introduced ethical data usage by ensuring all data that is stored on its products or systems is transparent, encrypted and secure.
