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The metaverse has become inseparable from Web3 culture. Companies are racing to put out their own metaverses, from small startups to Mark Cuban and, of course, Meta. Before companies race to put out a metaverse, it’s important to understand what the metaverse actually is.
Or what it should be.
The prefix “meta” generally means both ”self-referential” or “about.” In other words, a meta-level is something about a lower level. From dictionary.com:
“-a prefix added to the name of a subject and designating another subject that analyzes the original one but at a more abstract, higher level:
a prefix added to the name of something that consciously references or comments upon its own subject or features:
a meta-painting of an artist painting a canvas.
The key aspect of both definitions is self-reference. Logically, the term “metaverse” then should be “a universe that analyzes the original one, but at an abstracted level.” In other words, the metaverse will be an abstraction layer that describes our current physical world.
The metaverse should be an extended reality, not a whole new one.
And that’s why the trend has been heading toward a metaverse that’s built on crypto. Crypto, just like the world, has a kind of physical nature to it. You can’t copy a Bitcoin or an NFT. Just like the coffee cup on your desk can’t occupy the same physical space as the cup next to it. The space itself is singular and immutable and can’t be copied. Even if you make a 3D-printed replica, it’s not the same cup. So crypto is very well suited to building an immutable layer that describes the real world. In crypto, we can build models of the real world that carry over many of its properties.
The natural opportunity will be in digital twins. Digital twins create a universe of information about buildings or other physical assets and are tied to the physical world. In other words, they are that meta-layer. By integrating blockchain technology, in the form of NFTs, all data and information surrounding the physical twin can be verified and saved, forever, all tracked with the asset itself. When you think about it, digital twins are the metaverse versions of the physical twins, and the technology enhances features of the real world.
Validation is the key to metaverse truth
When evaluating crypto/blockchain’s relationship to the metaverse, it’s important to remember that crypto is about verification and validation. So when considering blockchain’s relationship to the metaverse, it makes sense to think about it as a digital space that can be validated.
So in the metaverse, it’s time to expand on what an NFT is and what it can hold. NFTs cannot be copied because they are tied to the validation and verification process in time, which is what makes them nonfungible. As the capabilities of NFTs grow, they are becoming a new information dimension that is tied to the real world.
NFT domains are going to be core to this idea. They become a nonfungible data space, uniquely tied to us and our activity on Web3. In the metaverse, these domain NFTs can represent a house; recording and validating every visitor, repair, event, etc. And that record and that infrastructure can be sold not just with the house but as a core component of the house, increasing the value.
By clearly defining what a true metaverse is, both for developers and investors, we can start to move toward a meaningful version of it.
Leonard Kish is cofounder of Cortex App, based on YouBase’s distributed date protocol.
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Media Buying Briefing: M&A shows no signs of letting up despite economic headwinds
Here’s a question: With inflation running rampant, interest rates surging and an economic downturn lurking around every corner, what will happen to the once-red-hot mergers and acquisitions marketplace in agency land for the rest of this year and into 2023?
Those who expected a cooling-off in M&A as a result of the darkening clouds were in for a surprise last week when The Brandtech Group put out a terse statement saying it’s entered exclusive negotiations with French investment firm Fimalac to acquire Jellyfish Group, a digitally focused marketing services agency run by Rob Pierre, in which Fimalac owns a majority stake.
Though none of the parties would comment on the proposal, it seems it’s not just private equity firms that are out to buy agencies in these challenging times. The Brandtech Group, run by ex-Havas leader David Jones, has assembled an interesting assortment of services to become, as Jones told Digiday back in June, “the Salesforce of marketing.”
But the company has been light on the media side of its holdings, which makes a Jellyfish acquisition seem smart, said an executive at a media consultancy who declined to speak on the record. “As much as they’d love to pursue the big global accounts, they’re not going to get anywhere near it because of their size,” said the exec. “With Jellyfish, they would have a very sizable, very scalable, global media offering, albeit digitally focused, to compete with the Stagwells and S4s, who they probably haven’t been been able to get close to. This fundamentally gives them scale and credibility in that media buying and implementational space.”
Beyond Brandtech Group’s surprising but smart move, other investment advisors argue this could be another strong M&A market. Last year, total M&A for agency and marketing services totaled over 400 deals for nearly $10 billion from strategics and PE firms, according to Michael Seidler, founder and CEO of M&A advisory firm Madison Alley. This year so far, Q1 totaled over 115 M&A deals for over $4.5 billion, and Q2 totaled 125 deals for $1.5 billion.
That activity has convinced Seidler there is a “trillion dollar market opportunity” for the broader marketing communications world, if you lump in consultancies and ad tech. “The marketing services groups only are about 10 percent of that,” said Seidler, listing consultancies such as Accenture or Deloitte as well multinational firms like Tata, Wipro or Infosys. “So we see a huge opportunity that plays out among the marketing service groups as they start to build their development capabilities, their custom software development and strategic digital transformation.”
Ryan Kangisser, managing partner of strategy at MediaSense, points to retail media as an area where specialty shops might be in demand. “We’ve seen the growth of retail media in the U.S. and yet the expertise around that is still quite scarce,” he said. “So if there are independent businesses out there that are able to gain traction with brands, clearly there’s going to be some some activity there.”
Mark Penn, CEO of holding company Stagwell, said after the company’s earnings call that it plans to continue acquiring — part of a long-term strategy to take on the traditional holdcos. “Our strategic goals are to expand more globally and to expand our technology footprint,” said Penn. “Foreign exchange is a big factor — the strong dollar means that you can go buy 30 percent more of…some company in another jurisdiction. So if you have a 20 or 30 percent reduction in [agency valuation] multiples and a 20 or 30 percent currency advantage, at least as a U.S. company as we are, I think that may create some openings for additional M&A.”
Then there’s the private equity world, which will not sit quietly, especially as several two-to-four-year-old acquisitions approach the flipping point (most M&A advisors agree that PE firms usually flip their acquisitions within five years). Seidler noted several independent agencies purchased in that time frame could be on the block before long, including Real Chemistry, Bounteous and Tinuiti. Even PMG, which just won a large chunk of Nike’s media duties, could be a target for acquisition, Seidler added.
One other consideration that’s just as important is culture, said Doug Baxter, head of Agency Futures, a London-based M&A consultant. “Are there dynamics, both culturally and from business services and synergies points of view, that allow the power of one and one to equal five?” Baxter asked. “That’s really what you’re looking to do, is to find people who really do share a common vision, but also have ways that they can integrate their business that makes sense.”
Color by numbers
As content becomes more targeted, advertisers looking to reach diverse audiences might want to consider in-cinema advertising. National CineMedia shared stats with Digiday that show broad representation in movie seats. Some highlights:
- “Jurassic World: Dominion” delivered a multi-generational audience comprised of 41% Caucasian, 25% Hispanic and Latino, 16% Black, 15% Asian and 5% other viewers;
- NCM says it’s seeing 58% diversity demos on average for opening weekends, generating higher reach than endemic players among the 18-34 age demographic;
- Compared to linear TV, NCM says movies have the second highest reach of Hispanic consumers 18-34, behind only Univision, while claiming to out-deliver BET on Black viewers 18-34 by more than two times;
- Compared to 10 years ago, movie audiences are now 30% more multicultural, 40% more Hispanic, 30% more Black and 46% more Asian.
Takeoff & landing
- Dentsu’s iProspect promoted two longtime executives to new positions, as the performance marketing agency goes full service in media: Michelle Snodgrass becomes executive vp, head of strategy, up from senior vp; and Rachel Starr becomes executive vp, head of planning, up from senior vp. Both will report to North American CEO Danielle Gonzalez.
- Social listening and analytics firm Sprout Social is adding Instagram Reels to its video management capabilities to help brands and agencies use the platform, after having signed up Tik Tok recently.
- Independent digital agency BAM Strategy, based in Montreal, picked up work for online grocery delivery service FreshDirect, for which it will build the brand’s first loyalty program.
“The strategic decision to make Gale a creative media consultancy — to bring creative and media together — [attracts] accounts that would have gone to two separate agencies in the past. They [brands] now realize that online marketing requires such greater coordination between creative and media, that I think we’ve hit a new sweet spot in the marketplace with this combination.”
Stagwell CEO Mark Penn in explaining how Stagwell agency Gale achieved 150% growth in the last year.
- In huge ad-tech news, Digiday senior ad tech reporter Ronan Shields, with help from senior news editor Seb Joseph, broke the news that Apple is launching a demand-side platform.
- Senior media editor Tim Peterson has also broken a lot of news around Instagram, first reporting that the Meta-owned social destination is paying media companies to post on Reels, and then that it is shutting down its affiliate commerce program on Reels.
- I wrote about two new tools designed to optimize client media spend: Max Connect’s Kudos product, which helps auto and other advertisers alter their ad flights, and Disqo’s Outcomes Lift platform, which helps clients see consumer action taken after seeing their ads.
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