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    How some OEMs can exploit the opportunities in metaverse marketing and sales – and why they are not for everyone

    Munich, May 2022

    How some OEMs can exploit the opportunities in metaverse marketing and sales – and why they are not for everyone

    Munich, May 2022
    I

    n the first article in this series, we argued that investing in the metaverse is a high-risk, high-reward opportunity. In this post, we focus on the downstream opportunities to win the attention of future car buyers – but caution that they don’t apply to every OEM.

    The metaverse is not a single entity, but a network of open virtual worlds with immersive 3D graphics, where users can interact with each other. Each layer of its architecture and each individual world has widely varying specifications, from the network or computing platform it is based on, through the type of virtual world and the virtual tools and content that are available there, to its transactional infrastructure, human machine interface (HMI) and overall customer experience.

    Authors
    Dr. Jan Burgard

    Berylls Group CEO

    Matthias Kempf

    Partner

    This variety coupled with the potential to freely determine own access, membership, and monetization rights creates a plethora of potential entry points and business models for automotive OEMs that want to stake a claim in the metaverse. (Exhibit 1)

    Figure 1: Exemplary metaverse architecture by layer and business model  

    In the first blog in this series, we argued that investing in the metaverse is a high-risk, high-reward opportunity for carmakers. Sales and marketing – the subject of this post – illustrate the point. OEMs need to select the right approach for their business model to avoid the potential hazards. In some cases, they may even decide that the metaverse has nothing to offer their target customers or that the risks are too great to justify any downstream investment. 

    More opportunities will emerge as metaverse technologies advance

    Existing approaches by carmakers to leveraging the metaverse range from transposing physical sales experiences to virtual worlds to augmenting physical sales channels with metaverse-derived elements and technologies.  Many OEMs and even Tier 1 suppliers have already introduced metaverse features in marketing and sales to enable customers to experience a car in an immersive way without leaving their own home, for example, via gaming platforms. Some OEMs such as Honda even allow customers to purchase a car via the metaverse, and Hyundai and others are likely to follow soon.

    We see three distinct segments emerging as more carmakers include metaverse elements and technologies in their marketing and sales activities.

    • Emerging metaverses: Hyundai, Tech Mahindra, Honda and to some extent Ferrari are leading the way in using newly created or existing virtual worlds to duplicate or enhance the product and shopping experience via virtual dealerships, test drives and virtual assistance.
    • Augmented and virtual reality hybrid installations: AR and VR elements enhance the real-world experience and expand product exploration possibilities.
    • In-car metaverse applications: Nissan and Audi are leading the charge in the opposite direction by trying to bring the virtual world into the car. We will discuss their initiatives in a later blog.

    More segments may emerge as metaverse technologies advance, creating further downstream opportunities for OEMs to explore. For example, Honda has demonstrated that digital non-fungible tokens (NFTs) make it feasible to introduce exclusiveness into the virtual world by marketing and selling digital “limited editions” of vehicles. When a virtual car buyer purchases one of Honda’s NFTs, they acquire a unique token on the blockchain ledger that proves they uniquely own the digital asset. In March of this year, Honda’s Acura brand began offering NFTs to the first 500 people to pre-order its 2023 Integra model, which is being marketed using metaverse tools and technologies.  (Figure 2)

    Figure 2: Carmakers and suppliers’ metaverse activities

    The sales and marketing metaverse is not for everyone

    The sheer variety of existing downstream approaches to using the metaverse shows that the automotive industry is just at the beginning of a journey. Even Facebook’s parent company, Meta, does not expect the metaverse to realise its full potential for another ten years. With this in mind, we believe that OEMs should adopt the following medium-to-long term metaverse marketing and sales strategies, depending on their business model and target customers: 

    • Keep it real: The metaverse may not be suitable when targeting the many customers with traditional buying behavior who are not intrigued by new digital technology. For them, web and online applications are probably sufficient.
    • Virtual experience enhancement: Firstly, upgrade and extend the customer journey in a metaverse setting which includes a “dealership digital twin”; next, integrate metaverse blockchain applications; lastly, launch marketing tools in the metaverse for potential customers who enter from the “real world”.
    • AR/VR upgrading: Augmented reality (AR) is already playing a major role in product visualization and exploration, customization of options and enhancing the real world product experience.
    • Virtual replication: Integration of the metaverse and the real world that covers the customer experience, user interaction, transactions and product portfolios. Hyundai is taking the lead in using robotics to bridge the “digital divide” for customers with traditional real-world behaviours.

    Around the world, automobile customers display widely differing levels of digital literacy. OEMs therefore need to find a tailored approach when using the metaverse in sales and marketing, depending on which customer segments and specific customer behaviors they are trying to target.  In this context, it is important to bear in mind that the metaverse will not be suitable for every OEM or a necessity for all brands. Every carmaker should start their metaverse journey by first answering the question: is this really for us?   

    Over the next decade, the metaverse’s expected evolution will influence the downstream strategies of OEMs – in particular, how virtual cultures develop and worlds are regulated in different countries and regions.  For example, it is already evident that regional variations in data protection regulation will have a critical bearing on future models for virtual worlds. It is even conceivable that the dominant model will be a replica of the real world that exists in one or several virtual worlds, with the same spatial and temporal dimensions. In this virtual replica, OEMs will compete for prime retail locations and stores that sell at the same price per square meter as in the real world.

    What will not change, however, is the sheer range and diversity of automobile customer preferences and priorities around the world (Figure 3).

    Figure 3: No one-size-fits-all – Car buyers in the metaverse are the same as in real life

    The road ahead for metaverse marketing and sales offerings

    Berylls Digital Ventures (BDV) has identified five factors which characterize successful downstream strategies in the metaverse. OEMs should:

    • Seek partnerships to understand the metaverse technology landscape and explore business opportunities with promising start-ups.
    • Build capabilities with teams of external experts in fields such as online gaming, to master metaverse technology and product development, marketing, and interaction strategy.
    • Explore technology and customer behavior to understand better the metaverse’s potential and limitations and avoid the possibly substantial cost of doing nothing.
    • Adopt an integrated multi-channel approach as crucial for survival amid the metaverse’s disruption of traditional marketing and sales models. The traditional three-step sales approach or a dealer-agent model is unlikely to be able to cope with the upheaval.
    • Exploit untapped metaverse opportunities in areas such as maintenance, servicing, accidents and breakdowns, especially when using AR and VR applications in real world settings.

     

    The surest route to failure is a one-size-fits-all approach, given the complexity and variety of metaverse applications that are already available to marketing and sales teams.  OEMs need to understand where their customers are going and which metaverse activities by which start-ups are the most relevant before venturing into this space. As in the real world, so in the metaverse – the customer always comes first.

    ABOUT THE AUTHOR

    Dr. Jan Burgard (1973) is CEO of Berylls Group, an international group of companies providing professional services to the automotive industry.

    His responsibilities include accelerating the transformation of luxury and premium OEMs, with a particular focus on digitalization, big data, connectivity and artificial intelligence. Dr. Jan Burgard is also responsible for the implementation of digital products at Berylls and is a proven expert for the Chinese market.

    Dr. Jan Burgard started his career at the investment bank MAN GROUP in New York. He developed a passion for the automotive industry during stopovers at an American consultancy and as manager at a German premium manufacturer.

    In October 2011, he became a founding partners of Berylls Strategy Advisors. The top management consultancy was the origin of today’s Group and continues to be the professional nucleus of the Group.

    After studying business administration and economics, he earned his doctorate with a thesis on virtual product development in the automotive industry.