Why Luxury Brands are Moving to Web3
Historically, luxury brands have not been the best at adopting new digital technologies. Recall that fashion houses famously dragged their stiletto heels during the e-commerce revolution, and that fashion bloggers had a notoriously difficult time gaining access to runway shows, dismissed as “new media”.
Indeed, luxury brands have traditionally feared technology would erode their brand, its exclusivity, and its unique connections to consumers. Time rarely smiles upon luddites, however, and luxury brands had to play catch up when they finally got onboard with the first waves of online commerce and culture.
Now, with the rapid development of Web3, some luxury brands are not going to make the same mistake again, instead evolving and learning to embrace blockchain technologies earlier than other industries. Luxury brand leaders already see Web3 as a new means to foster exclusivity and forge direct-to-customer connections. And that’s just in the short term—we don’t know where Web3 will take us, but luxury leaders rightly don’t want to be left behind.
As a leading blockchain marketing agency, Lemonade encourages luxury clients to thoughtfully and purposefully enter this space with the right Web3 marketing strategy. Today, we are going to explain why, exploring 5 reasons luxury brands must consider Web3 ventures.
1.Generating Scarcity and Revenue Streams
First and foremost, NFTs are a new avenue for luxury brands to create scarcity, a cornerstone of their brand promise. Luxury brands are already experts at exclusivity and, just as there are a finite number of White Himalayan Crocodile Birkin Bags, there are a finite number of Crypto Punk NFTs. These two markets were made for each other. When paired with exclusive luxury items, NFTs can only increase their perceived scarcity and value.
When executed correctly, NFTs also become a new revenue stream unto themselves, as opposed to a way to buttress existing physical products. Consider SUPERGUCCI, Gucci’s 3-part series of 500 NFTs designed by the brand’s Creative Director, and inspired by its Aria collection. Most are currently trading in the five-figure range, and even come paired with an 8-inch ceramic sculpture.
And as the metaverse continues to expand, people will look to distinguish their avatars with unique and exciting luxury fashions, cars, and signifiers of status. Luxury will be a cornerstone of whatever form the metaverse takes.
2. Ensuring Authenticity and Quality Control
Web3 offers luxury brands a new means to track ownership, ensure authenticity, and maintain the exclusivity brands are known for.
Counterfeits have long blighted luxury fashion, well before the proliferation of “super fakes,” which have gotten so good that some are virtually indistinguishable from the genuine article. When customers spend large sums of money for genuine exclusivity, counterfeits threaten to erode brand trust and deteriorate the brand’s cache as well as saturate the market with subpar goods.
Since blockchain technology offers a complete and precise record of an items’ provenance and sales history, Web3 helps consumers understand an item’s origins and remain confident in its legitimacy. This relieves a huge pain point for consumers who don’t want to be duped, and also for brands who want to limit counterfeits and the obstructions they build between them and their customers.
The Aura Blockchain Consortium—which includes LVMH, Prada Group, Cartier, and Mercedes-Benz—takes certification a step further by promoting the use of a single global blockchain for all luxury brands. Through Aura, consumers authenticate luxury products, gain visibility into the source of raw materials, and transfer of ownership certificates.
As more brands join the consortium (it just launched in April of 2021 and has since expanded), such technologies will likely become table stakes, an extra level of anti-fraud protection consumers come to expect from the industry.
3. Unleashing Haute Couture
Haute Couture has always been a central component of luxury fashion, a space in which designers can explore their most avant garde artistic expressions. But these impractical fashions are rarely if ever worn outside of fashion shows because, well, they aren’t meant to be. They are an idea, a concept, a flight of imagination, but not something fit for actual life.
With Web3 and the metaverse, however, clothes need not be practical or even wearable, they can be as expressive and eye-popping as the designer wants because creativity is the only requirement in Web3 fashion. Whereas haute couture has historically been viewable only on runways and in museums, in the metaverse, it’s on the streets.
That’s the direction Balmain went for its first NFTs, a collection of garments engulfed in digital flames, something that would be entirely impractical in the real world for obvious reasons. It’s thoughtful, artistic and exaggerated in ways not previously possible…and you can wear it too!
The fashions can be as out-of-the-box as a designer wants and a larger, more diverse audience can access them.
In the metaverse, whatever connection haute couture had to the real world can be entirely severed, drawing IRL attention to a brand with particularly creative digital style.
4. Connecting to Younger Consumers
As they ascend into middle age, younger generations are understood to be the largest consumers of luxury goods, a leveling up right of passage that people make as they move forward on the generational march of upward mobility. Reaching younger consumers is an investment in this future, and luxury brands should get to work now on building lasting connections with them through the metaverse.
That is what Louis Vuitton was thinking with Louis the Game, an immersive adventure game the brand released to the metaverse to commemorate its 200th birthday. The game requires players to learn brand history, trivia, and fashion show high points, rewarding them with exclusive NFTs as they connect with stories about Louis Vuitton’s top notch craftsmanship, design and legacy.
Most importantly, it directly reaches younger consumers on their turf—gaming—inviting them to engage the brand in a familiar and fun setting. As they ascend to their full earning potential, these relationships will prove invaluable both inside and outside the metaverse.
5. Experiences Not Available IRL
Web3 enables luxury brands to offer their most devoted consumers experiences that simply would not be possible in the real world. This was certainly the case with the aforementioned Louis the Game, and also with Balmain’s recent Dogpound collaboration.
The NFTs Balmain and Dogpound (Balmain x Dogpound) co produced were sold with exclusive physical experiences attached to them, including IRL and digital fashion show invitations, and a meet and greet with Balmain creative director, Oliver Rousteing. Attaching these experiences to NFTs enhances perceptions of scarcity, and short of directly auctioning them off or sewing secret invitations into random polo shirt collars, this experience cannot be replicated outside of Web3.
Moving forward, the experiential possibilities for blockchain advertising within the metaverse are truly limitless. As meta technologies improve and adoption increases, brands will find new and exciting ways for customers to engage with them, in ways that even experts like us cannot fathom.
For Luxury Brands, the Right Web3 Marketing Agency is the Difference Between a Coup and a Dud
As enticing as all of this sounds, luxury brands must be purposeful and meaningful in their Web3 ventures. Merely launching an NFT just to say you did simply will not get it done. NFTs specifically and Web3 ventures more broadly must be connected to brand identity, they must be exciting for consumers, and they must be unique.
The time to step into Web3 is now, but tripping on the way in can be catastrophic because a flop in the metaverse is just as dangerous as a flop in the real world. Brands launching NFTs that quickly depreciate in value also stand to see their brand value depreciate in consumers’ eyes.
Luxury brands cannot afford to sit out another digital revolution, but they must carefully consider their Web3 strategy well before launch. Having an experienced Web3 marketing agency in the room like Lemonade can be the difference between a coup and a dud, between a genuine entry point into the future and a giant step backwards.