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Phygital Marketing 101: What is Phygital Marketing & why is it so powerful?

Phygital Marketing

If you’re reading this, you’re probably trying to work out a phygical marketing strategy for your client or brand. Phygical seems to be all the rage – the latest buzzword to be thrown into the board-room mix. Much like augmented reality and the Metaverse, this slightly awkward portmanteau morphs physical with digital, creating a word whose sole purpose is seemingly to confuse older generations. Its ambiguity, however, is part of its attraction, giving creative license to brand strategists and digital marketers. Before we explain why Phygital matters, we’re going to explore what it is.

Phygital Marketing Definition (sort of):

Phygital is a strategy that blurs the lines between the physical and digital world. The phygital concept can be applied to many aspects of marketing, from in-store augmented reality experiences to online loyalty programs that offer physical rewards. Phygital marketing initiatives often seek to create seamless customer experiences that move fluidly between the physical and digital worlds.

Examples of Phygital Marketing:

1. NFTs

2. In-store AR experiences

3. Online loyalty programs with physical rewards

4. Personalised experiences based on customer data

Companies Embracing Phygical Marketing

Many companies are embracing Phygical marketing. They are doing so to enhance their brand, increase engagement, improve customer experience, and, ultimately, increase profits. It makes sense that larger companies with bigger marketing budgets are leading the way, but as software developer kits and smart contracts become more accessible, smaller vendors are likely to follow suit.

Amazon Go Store:

Amazon’s cashier-less convenience store is one of the most well-known examples of a phygital experience. The store uses a combination of sensors and machine learning to track what customers are buying and automatically charges them for their purchases when they leave the store. There are no physical checkout lines or cashiers, creating a seamless shopping experience.

IKEA Place:

IKEA’s augmented reality app lets users see how furniture would look in their home before they buy it. The app uses AR to place virtual furniture in the user’s real-world environment, giving them a realistic preview of what the piece would look like in their home. This phygital experience allows customers to try out products before they purchase them, making the decision-making process more seamless.

Nike+ App:

The Nike+ app uses phygital marketing to create a seamless customer experience and encourage customer loyalty. The app lets users track their runs, set goals, and earn rewards for meeting their fitness goals. The rewards can be redeemed for physical products, such as sneakers, or digital experiences, such as music downloads. The app also provides a community for users to connect with other Nike+ members, creating a more personal connection with the brand.

RealEstate - Digital Twins:

When you’re buying real estate off-plan, you can’t always visit a demo house or showroom. The realtor might send you 3D pictures, a link to a promotional video, a plan that is difficult to understand, and a pdf about the project, all of which take time and effort to digest. How much easier would it be if you could put on a VR headset and walk around the property? It’s not just property developers who are building digital twins, luxury yacht manufacturers, automotive dealers, and even hospitals are creating them to improve customer experience and simplify the decision-making process.

Tiffany & Co CryptoPunks

In May 2022 luxury jeweler Tiffany and Co announced a collaboration with leading NFT OG, CryptoPunks. The 250-item “NFTiff” collection was exclusive to CryptoPunks holders and priced at 30 ETH ($47,250 at the time). Holders of an NFTiff can transform their CryptoPunk into a bespoke pendant handcrafted by Tiffany & Co artisans. The pendants are made of 18K rose or yellow gold, and will include at least thirty stones. The jewelry is expected to be shipped to owners in 2023, although renders will be available in October this year. Despite the high price tag, Tiffany & Co’s phygital marketing campaign was a huge success, selling out in twenty minutes and generating $12.5 million in revenue.

Vogue's New World

Vogue’s New World, a partnership between Vogue Singapore, SpatialPolyCount.io and Ready Player Me is a 360° immersive dreamscape “where the future of fashion meets the frontier of technology.” Visitors to the space can interact with various elements, changing the pose of cover star Lina Zhang, and viewing a gallery of AI-generated images created by Terry Gates. Users will also be able to dress their avatars in three exclusive virtual dresses designed by Chinese-born designer Yimeng Yu.

PureArts Collectibles

PureArts are a leading manufacturer of physical collectibles, that partner with major titles in the gaming and entertainment space. In 2021 Managing Director Arnaud Perez launched a Phygital collection that encompassed both physical collectibles and NFTs. Designed by legendary concept artist Daniel Hahn (aka “Daytoner”), Master9Eyes is a great example of what most toymakers will do in the future. Collectors of Master9Eyes NFTs unlock real-world rewards, including custom merchandise and physical collectibles. The NFT side of the marketing was run via Discord and Twitter, whilst the physical collectibles side was run via the company website and trade shows such as DesignerCon. Since the successful launch of Master9Eyes, Arnaud has been in talks with members of Bored Ape Yacht Club and other leading NFT projects about transforming their NFTs into physical collectibles.

Why Immersive Experiences Work:

Phygital experiences are often more engaging than traditional marketing initiatives because they are designed to be interactive and provide a seamless customer experience. Phygital marketing can also be used to create personalized experiences that are tailored to each customer. As the attention economy becomes increasingly over-saturated, brands are turning to immersive experiences and gamification to connect with younger generations. In the future, we believe that most marketing will be immersive, and take place in the Metaverse. So even if your brand doesn’t have a Metaverse marketing strategy yet, it’s worth planning and budgeting for one in the future.

Phygital Brand Strategy

Traditional brand strategy has taught us that we need to be consistent across all touchpoints to create a cohesive brand experience. Although our current trajectory is undeniably one of increased digitalization, embarking on a phygital marketing strategy should not be rushed. It’s worth trialing experiences in single stores or virtual worlds, before committing to a complete phygital makeover. Some of the major fashion houses embracing NFT’s and the Metaverse haven’t completely re-vamped their historic stores to accommodate mobile-wielding Zoomers, as this would alienate their existing clientele and damage their brand. Instead, they’ve partnered with games and built experiences in digital worlds. They’ve also leveraged the success of existing digital brands to create unique physical items for a new generation of customers (the best example being Tiffany & Co partnering with Cryptopunks). When contemplating a partnership or collaboration with a Web3 brand or NFT project, it’s worth asking the following questions:

  • Founders: Who are the founders, are they doxxed, and what is their background? Are they in this for the long-run, or did they build this project to make a quick buck? Remember, your brand could experience significant fallout if associated with a rug-pull or Web3 scam.
  • Values: What are the core values the project represents? Are these values aligned with your brand.
  • Community: What is the community like? Are they actively engaged, and will they help you market your product? Spend some time in Twitter Spaces, Discord AMA’s and real-world meet-ups to profile some community members.
  • Specifics of the deal: Is the partnership mutually beneficial, or will one party benefit to a greater extent. Spend time working through the dynamics and expectations, and be as specific as possible when it comes to deliverables and timeframes. No verbal contracts, no hand-shake deals – they will bite you in the arse!

Phygital Commerce

It’s hard to imagine a world without e-commerce. Over 80% of shoppers now begin searching for a product online, many using voice search technology like Alexa and Siri to streamline the process. AI product recommendations enable greater personalisation, which in turn is increasing order values. According to Square and Wakefield Research, social commerce is one of the biggest digital trends in the retail industry. They also note that over one in three retailers plan to invest in livestream shopping in 2022, while 30% are going to integrate VR shopping. Despite the trend towards online shopping, other research shows many customers still enjoy in-store experiences, which leads us back to phygital commerce. Phygital commerce is about blending digital and real-world customer journeys to optimise customer experience. Some of the most common phygital commerce strategies include; Mobile app’s, AR & VR immersive experiences, buy online, pick up in-store (BOPIS), and pop-up stores.

Summary

Phygital marketing is a phrase you’re going to hear more of in the coming months and years. As we edge closer towards realising the Metaverse, immersive experiences are going to become more common. Just as early adopters of social media marketing benefitted from this particular social trend, so too will early adopters of phygital strategy. If you would like to keep abreast of the latest trends in Phygital marketing, please subscribe to our newsletter.

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