What does web3’s content-community-commerce flywheel mean for brands?
Myosin co-founder Blake Minho Kim’s piece on Direct to Community marketing lays out the seminal shift in rewards that web3 will bring to brand-consumer relationships moving forward. The most exciting part of this opportunity is the ever-present business term, the flywheel. Generally, a flywheel is defined as a collection of small wins for a brand that build on each other over time and eventually gain enough momentum that growth almost seems to happen by itself. For brands that use web3 to link content, community, and commerce, each one contributing to the next to drive momentum, the return on investment will be extraordinary.
Marketing’s shift toward consumer power
In its earliest iterations, marketing was focused directly on commerce: how do we get consumers’ attention in order to sell more Coca-Cola bottles and Clorox bleach? Marketers quickly realized that effective content, from snazzy ads to clever jingles, helped drive this commerce.
Then of course, social media opened up a Pandora’s Box for brands, giving them a direct, two-way comms avenue with their consumers and potential consumers. This was the beginning of “community” for brands online. Social media gave buyers a new way to interact with brands: to take to Twitter with complaints, to show off our lewks in brand hash-tagged #OOTDS. And for influencers, social enabled the monetization of one’s content-making abilities by partnering with brands. Many call this the read/write era, a back-and-forth unknown in the earlier printed magazine age.
This collection of customers and potential customers, most often found on social media platforms, has become a jumbled, public mass of fans, detractors, content creators, critics, and, of course, buyers.
Consumers, after having their voices heard over Twitter et al for almost 20 years now, want more agency. The next evolution of that desire is community-driven conversations that culminate in direct influence over product and thus, commerce. The fanbase moves both as one amorphous beast, giving and taking from the brand, and as a collection of individuals having experiences with products, loving a lipstick, hating a new sneaker design, feeling fly in jeans, etc. Savvy brands will let thisThis communal experience can have serious sway within a brand, whether it happens in person, on Discord, or in other emerging locations.
The Content, Community, Commerce flywheel
Together, these 3 Cs make up the intangibles that drive the consumer-brand relationship. Each is defined by the flow and exchanges of information and goods, from the tweet that drives a sale that drives a referral that drives a TikTok video. This is the flywheel.
In the physics sense, a flywheel needs mass to increase its momentum. While earlier iterations of these efforts were able to grow brands, it’s web3 and tokenization that will really provide the necessary mass to increase successful brands’ footprints in all three arenas.
Some of web3’s benefit is the removal of platforms. Many customer community relationships are owned by the platforms like Meta, Instagram, TikTok, who are extracting more value than anyone else in the equation. Because of this platform tax, and because the social media landscape is ever-changing, it’s in the best interest of any consumer brand to fully own their customer relationships.
But the biggest driver of benefits in this web3-driven flywheel is tokenization — the adding of these consumer relationships to the blockchain. The blockchain assigns public value and ownership to consumer rewards, enabling consumers and brands to forge a deeper, more transparent relationship.
Thanks to NFTs and other token mechanics, brands can turn their communities into something to which their members buy in — either directly, by purchasing an NFT as access to a community, or through loyalty rewards, which convert the amount members spend into influence over their position in the community. Blockchain technology ushers in a new era of community in which groups that feel more like owners than buyers, in turn changing their behaviors. Consumers become more engaged, more motivated by long-term goals, and more selective in the brands they choose to interact with.
Brands that don’t pursue these richer consumer relationships risk losing their customers to companies that offer a more fulfilling value exchange. They’ll be held hostage by ever-changing data privacy laws, opaque ad tech pricing, and the whims of social media.
Digital goods blur the line between product and content
This discussion forces us to define each piece for this new paradigm. Starting with, what is content? As it’s a visual piece of art, easily Instagrammed, I’d argue a Tiffany’s Cryptopunk necklace qualifies as content. What exactly is a Tiffany’s Cryptopunk necklace? Cryptopunk is an early and popular NFT collection, currently valued in the tens of thousands of dollars each. They partnered with Tiffany to sell an NFT that was redeemable for a bejeweled pendant made of someone’s Cryptopunk, accessible only to those who held the original NFT.
This example is, of course, commerce and community as well. It illustrates the key intersection in this flywheel, where eyeballs on community-created, hyper-branded goods contribute to the visual storytelling, as well as the “in the know” experience of being part of the community.
Many of these content plays, particularly when they concern digital goods, also mean commerce. Digital goods are almost inherently both content and a good; sometimes their utility is solely that they are content. (See the ruling from the Hermes v. Metabirkin case that argues that a physical luxury handbag “is just as much about cultural status [as function], whether in the physical world or metaverse spaces.")
The utility of digital goods as content is an opportunity for brands to benefit from greater intangible brand value, as these digital goods will function almost exclusively as brand markers. Brands that succeed in creating desirable digital goods will have knock-on positive effects beyond the direct revenue those items drive. The community, by showing off their digital product that functions as content, acts as one big media blitz. This isn’t dissimilar to logo-heavy fashion, with anyone rocking a Gucci-branded tee acting as an unofficial brand ambassador, but the move to digital goods changes the rules of exclusivity. NFTs allow for the exclusivity of goods that can technically be easily reproduced, e.g. JPEGs, imbuing them with intangible and tangible value in the form of community, identity, and resale.
Tokens create more kinds of value for community members
Brands selling additional value to their most ardent fans isn’t a new technique. What IS new with web3 is the addition of more tangible value from being a superfan for the consumer, both because there is often a resale possibility with tokens and because the idea of community and how it will affect the brand is much more explicit in web3-driven brands. The OG example is Bored Ape Yacht Club, which is both an exclusive community with events, cultural/commercial creation, and a token that creates the potential for significant financial upside for holders.
Bored Ape owners buy into the community, usually for a significant sum. As a member, they can use their Bored Ape as a PFP, create franchises and merch using their Ape, like a fast-food restaurant or a comic based on their Ape, and, crucially, participate in the community. This might mean parties or a private Telegram group, whatever manifestations the owners want to make their group of collectors feel like they can now interact in a pleasing way. The Bored Ape brand benefits from the value of the community, e.g. better parties make the Bored Apes more valuable. Those “better parties” also give the owners more value (assuming they enjoy good parties) AND make their Bored Apes more valuable on the secondary market, which in turn drives more royalties to the original creators. Everyone wins.
The token or NFT powers this mutually beneficial relationship, as the NFT owners have public proof of their membership, which is also available for resale when they choose to no longer participate. The Bored Ape creators benefit financially, first from the proceeds of the original sale, and then off royalties for subsequent sales. One possible downside of financialized communities is that popular ones might attract speculators, who often contribute negatively. But I believe thethere are multiple benefits for a financially engaged community, from greater customer retention, better alignment of goals from the brand and consumer’s perspective, and a more direct line of communication between creator and token-holder, outweigh the risks.
Community agency drives unique collaboration between brands and consumers
As Jeff Kaufman of Jump says of this new web3 paradigm, “Brands can move from single-player to multi-player.” Community members can become content marketers, social media managers, referral evangelists, Discord (or other platform) stewards, etc., driven by the incentives tokenization provides.
Taking advantage of community to create engaging content, whether that’s a robust Discord space or community-built products and campaigns, requires that brands relinquish some control. There’s no stronger group to keep a brand’s community flourishing than an engaged base of superfans, incentivized by both community status and potential financial upside.
But this process is not without risk.
Only brands with the tightest understanding of their visual identity, product suite, and unique value will be able to pull this off while remaining true to their core. For new brands, that may not be as much of a concern, but for publicly-traded heritage brands, this path offers a unique way to engage Gen Z consumers and combat the customer acquisition upheaval and privacy considerations that dominate marketing budgets. All eyes are on Nike and their .Swoosh community, which looks to harness members' enthusiasm to potentially design sneakers and other merch. The community isn’t given free rein to do anything they like with Nike’s IP — rather, there are carefully crafted competitions that give talented members of the community the opportunity to influence, say, an Air Force 1 design and earn royalties from it. It goes without saying that the winning designs are available for purchase, but we’ll say it anyway to bring the point home.
The flywheel brings it all together
In these examples, Cryptopunks x Tiffany’s, Bored Apes, and Nike’s .Swoosh, we see a unique wweb3 evolution to traditional commercial practices. These communities have been given more opportunity to co-create with their brands as a reward for their loyalty. Being able to purchase those co-created items is both an additional insider’s reward, as well a commercial benefit to the brand. And lastly, those purchases act as further proof of commitment to the brand, cementing their status in the loyalty scheme. Each one of these actions builds upon the others, drawing consumers deeper into the worlds of their favorite brands and rewarding them for that effort. This is the flywheel, where each action positively impacts the next until, piece by piece, they’ve built a web3-driven marketing machine that grows on its own.
What should a modern brand do with this information?
web3 provides a direct line between brand and consumer, and an opportunity for ownership that materially changes the relationship between the two. Increasingly if fans don’t benefit materially from their contributions to a brand, it’ll be seen as an exploitative relationship and will be subject to greater consumer capriciousness. Tokens, NFTs, or DAOs make it easier for brand owners to commit to long-term, mutually beneficial relationships with their fans. This relationship begets the content-community-commerce flywheel. Each piece enhances the value of the others, made possible by a ownership model based on the blockchain.
The flywheel of Content, Community, and Commerce provides an unprecedented opportunity for brands that can link these three already powerful aspects of marketing strategy. The flywheel created by the Direct-to-Community marketing strategy is the future of marketing, and brands that can create hyper-branded goods that function as content, provide meaningful rewards to community members, and create engaging content in concert with their customers, will have a significant advantage in the market. The brands that best leverage their communities to receive feedback, create better products, and build loyalty will be the future’s most successful. The future of marketing is community-driven, and brands that understand this will thrive.
Get in touch with Myosin HERE if you’d like to understand how a robust community, effective tokenomics, and web3 loyalty might help power your marketing strategy going forward!