Web 3 Marketing To Reach Gen Z

Tessa Burg: Welcome to another episode of “Leader Generation”, brought to you by Mod Op. I’m your host, Tessa Burg, and today I am joined by Jonathan Verk. He is Mod Op’s EVP of Web3 and Business Innovation. Jonathan, thank you for being with us.

Jonathan Verk: Thank you for having me.

Tessa Burg: So we’ve been wanting to have this conversation for a long time, super pumped. Let’s start with what is your background and how did you get into Web3 and really looking at this innovation space for marketers?

Jonathan Verk: Great question, Tessa, thank you. I hope you’re having a wonderful Wednesday. So I spent 25 years, most of my career in the entertainment and marketing space. Entertainment, advertising, and marketing. A while ago I ran the main trade magazine in the advertising industry called “Boards Magazine”, working with a lot of the agencies, ad agencies and creative agencies and helping them navigate the changes that were coming their way, through our publication and through our conferences and events, really trying to bring new thinking and introduce them to new technologies and innovations that were going to be impacting their businesses and that of their clients. Following that, I became the CEO of an organization called Promax BDA, which was the Global Association for Entertainment Marketing Executives. So the chief marketing officers of all the major media companies, ABC, NBC, CBS, FOX, Turner, Viacom, Warner Brothers, Sony, et cetera, anybody involved in the entertainment space. We kind of ran alongside the Emmys. The Emmys really celebrated the content, the work itself, where we were really focused on the marketing and monetization of that content. So we were bringing, very similar to when I was with Boards, bringing new thinking and innovation, certainly celebrating the work and creative work that was going on in the space, in the promo world, in the marketing world. But really, I felt that our role as a global association was to bring in the people and companies that were innovating in the media landscape, and helping to make the connection between those CMOs and their departments and the technology companies. So we were really early back in the day bringing in the leaders of Facebook, and Twitter, and all of these big media companies, these social media companies and tech companies, and introducing them to the CMOs and helping to sort of bridge the knowledge gap between what was going on and where the media landscape was headed and the CMOs who were really going to get us there. Following Promax, I was Executive Vice President of Shazam, which we obviously sold to Apple in 2012, 2013. And after that, I launched a startup in the legal tech space, playing with the early AI and machine learning landscape. We built a legal tech platform that was basically telehealth for divorce, teaching machines how to predict and prevent conflict from happening between parents who were in a co-parenting relationship and keeping them out of court, and that was very cool. But we sold that company in 2021, and as we were in sort of that transition period, I was doing some work in politics and ended up working with a guy named Brock Pierce as his head of fundraising for his presidential campaign. Brock is one of the early granddaddies of the NFT Web3 space. He made billions. For those that don’t know him, he made billions selling… Well, he started off as a child actor. He was young Emilio Estevez in “Mighty Ducks”, and he was the first kid in Sinbad. That’s how I know and love him. But he made billions selling digital assets in World of Warcraft to gamers all over the world who were buying and selling swords, and shields, and armor, and skins, and was really the precursor to what we see now in the NFT space and this Web3 world. So he made a lot of money and ran for president of the United States, and I ended up being his head of fundraising for his presidential campaign, which was really my entree and onboarding into the Web3 space. He’s the one who taught me about crypto and NFTs, which was a pretty damn good teacher. So when I sold my last company, and wanted to get back into media, but really wasn’t that thrilled with what was going on in the space, it had become very monotonous and quite dull with the fragmented audiences. I just really thought that what was happening in Web3 was so much more exciting, especially when it came to marketers. And I knew, just because that’s where I’ve always been, I had a sense that every company, and I mean every company is going to be in Web3. It’s very, very clear, very clear to me, and very clear to many that every company is going to be playing in that web3 space in a very short period of time. I predict in the next three years or so. And I also know they don’t know how to get there. Certainly in the entertainment side of things. The typically new technologies fall on the laps of the marketing executives. They’re the ones who had to figure out the internet. They’re the ones who had to figure out interactive television. They’re the ones who had to figure out PDAs, and social media, and mobile marketing, and Web3 is no different. But it takes time, it takes a thoughtful approach. And I thought it would be smart to start an agency that helped marketing executives enter Web3. I know they’re not structured to do that internally. I know their departments aren’t incentivized to do that. And so starting an agency that would help them take those really important meaningful steps into the space, start to learn, start to build internal expertise, start to play, and experiment, succeed, fail, drive revenue, and just learn the mechanics of the Web3 landscape. So that’s what we did. We started an agency in the beginning of 2022, and started building from there.

Tessa Burg: That’s awesome.

Jonathan Verk: That was the scenic route, I gave you the scenic route. You asked for background, I gave you the scenic route.

Tessa Burg: Well, it was a very robust background, and your journey is very relevant to where we’re at today. Where we kind of saw this rollercoaster ride for Web3. What from your past experience of helping pair marketers with technology, better understand it, how does that apply today to bringing marketing executives along to the potential of Web3?

Jonathan Verk: Yeah, it’s a great question. I’ve been very fortunate to have found myself in this exact spot several times in the past. I remember when people laughed that we would be using the internet to buy things. I remember being uncomfortable putting my own credit card into a website that would go into a… I don’t know what. And all of a sudden, two days later, I’d get an animation cell from Taiwan or something off of eBay, or whatever the case may be. These waves, and they start off as laps on the beach and they turn into bigger waves, and then they turn into absolute tsunamis, and those tsunamis wipe companies out. When technology gets ahead of your marketing plan, you can really find yourself in a detrimental spot. And I’ve just, every point in my career, have found myself in this position where we’re almost acting as the interpreter. Helping marketers understand not just the technology, but the cultural relevance to the generation or the demographic that they’re trying to reach. And oftentimes because young people are really typically the first adopters, the earliest adopters, you’re looking at a generation that is absolutely going to become your customers tomorrow, if they aren’t already. So it’s hyper-critical to start engaging with that community, with that demographic, and it’s usually through that medium or through that technology that you’re able to do so. So we did this with the internet. I’m purposely keeping my gray hair out of frame so that… I have gray hair. I was there for the beginning of the internet. We were there for interactive television. I worked in interactive television for a couple of years. We were there for the beginning of PDAs, the Newton and these technologies that marketers were looking at to leverage their capacity and power. I was there for the beginning of social media. We had Zuckerberg and Sheryl Sandberg speak to our conferences way back in the day when really things were just first starting. Chad Hurley from YouTube, when literally two weeks after he sold YouTube, speaking to our community and helping them understand how these technologies are going to impact the marketing skillset and the marketing vocation. And I’ve always found it very relevant and very rewarding to help these marketing executives understand where this technology is headed. I remember one time I brought in the then CEO of a company that hadn’t even launched yet to speak with a room full of 1,000 marketing executives, people who specifically made TV commercials. This is what they did. They were either the advertising agencies or production companies that made TV commercials. and it was the then CEO of a company that was two weeks from launching called TiVo. And it was the first time many of these people had even heard of a technology that was gonna allow consumers to skip commercials. Now, I wasn’t doing this to scare them to death. And some of them were scared to death and decided to leave and go into real estate. But we were doing this to expose them to what was absolutely on its way to happening and disrupting their status quo. And Web3 is very much the, I believe, and I think it’s very safe to say, Web3 is the next phase of technology, it is the next wave of disruption, and marketers are going to have to embrace and understand what it is before they get overwhelmed by it.

Tessa Burg: Yeah, so I think a lot of people listening may be skeptical because of negative press around Web3, but you said earlier you are confident that all businesses, businesses of every type will be in Web3, in Web3 communities using Web3 tools. What gives you that confidence?

Jonathan Verk: We’ve seen the patterns before. We’ve seen the patterns before and there’s literally too many to name. Yes, definitely there are some pretty unfortunate shenanigans that have been going on in the Web3 world. It’s important to know and recognize that pictures of monkeys, and cartoon characters, and cryptocurrency, and crypto scams, et cetera, and things like Pepe and Dogecoin, that’s not Web3. It’s a part of Web3, but that’s not definitive of Web3. There are scammers and there are bad actors and bad players in every sector. The fall of FTX is no more about Web3 than the fall of Silicon Valley Bank is to the US economy. It’s not representative of the way things are, and the way that the vast majority of people in the sector are behaving and representing.

Tessa Burg: Yeah, so to make it a little bit more tangible, because I feel like the media does gravitate towards these examples. And so if you’re only hearing these soundbites…

Jonathan Verk: You think? They’ve got papers to sell, man. You like that reference to the 1980s?

Tessa Burg: Yeah, I click on the headline and then it tells me, “Oh no, you have to start another subscription.” I’m like, “I’m done with the subscriptions. I don’t need to know what’s happening in the royal family that badly.” But in this case, if other people like me are just reading headlines, and so their whole perception of Web3 is based on this, can you give us some real-world applications of how businesses are already using Web3 to build community, and engage, and start to allow people to experience their brand in a different way?

Jonathan Verk: Sure, yeah, I could run through a whole bunch of specific examples of successful Web3 companies and successful Web3, or projects that were built in Web3 that were very successful and continue to be very successful and supportive of brands. Before I get into that though, I think it’s probably helpful to talk about the way that we really view Web3, because if we’re only talking about Web3 as a technology, which is, I think, Web3 kind of has this connotation of very tech-heavy. And it is, there’s a ton of technology that’s going on behind the scenes. But Web3 is also representative of culture, and it’s representative of very specifically Gen Z and late millennial culture. And in order to understand how and why Web3 is happening, and it is becoming the dominant medium to engage with this generation, it’s important to understand what this generation grew up with, what their expectations are, what their media habits and consumption habits already are, and why they’re really gonna be the ones to shepherd in this new technology. It’s very similar, by the way, to the way that millennials shepherded in social media. Their expectation, their desire growing up in a world where they didn’t know the world without an internet, and seeing the power of interconnectability through these social media channels could flourish and connect them with other people throughout the world. Instantly and in real time, or asynchronously. So Gen Z obviously a huge, huge, huge demographic. These are folks typically born between 1995 and 2010. So it’s a pretty large cohort of people. These are folks who came to… Came of age during a global pandemic, where they were sitting in, typically, their parents’ basement. You’ve gotta paint with a pretty broad brush, but I want to make note that there’s a lot of nuance to every generation. There’s a lot of differences between the medium that we’re talking about, but broadly speaking, this is generation that came of age in their parents’ houses, isolated from their friends at a time where social engagement and person-to-person contact is most critical and most important, and they were denied that, for the most part. And this is a generation that grew up with heavy, heavy, heavy gaming and making friends with people in digital virtual environments. It’s not uncommon for people in the Gen Z generation to have best friends and their most confidential relationships with people they’ve never met, may not even know their real name. These are folks who are existing in these environments, many of them anonymously. Many of them don’t show their face, like you and I are right now. This is just the way that we grew up. But they use an avatar to represent themselves. Their digital identity is represented with an image, or a picture, or some way that they can connote and show the tribes that they belong to without showing their face or without giving away their legal name, make sense?

Tessa Burg: Yes.

Jonathan Verk: This is a generation who is super used to digital currency. They don’t spend cash. This is not a generation that even knows what cash is. Many of them have never been to a bank. They bank online and they use digital US currency, but they’re also perfectly comfortable using native currencies to a game, whether it’s Roblox. Their Robux. They’re buying and selling digital assets in things like World of Warcraft and Counter-Strike. Just two weeks ago, there was a Counter-Strike gun skin that sold for a half a million dollars. USD, real money. So there’s real things going on in here, and there are real cultural behavioral differences between generations in the past. I could go on, there’s many, many, many specific cultural touchpoints that Gen Z relates to that would signify an obvious adoption of these Web3 deployments. Now, we can talk about the technical stuff, we can talk about the blockchain, we can talk about cryptocurrencies and NFTs, and about metaverses. But really understanding that from a cultural standpoint is where brands need to be focused. A lot of people get overwhelmed and scared by the technology and the complexity of Web3. But really what we’re talking about is how do we engage this demographic? How do we connect with them, and how do we… How do we transition even our own thinking as brands from citizens being customers or an audience and becoming community? How do we create communities of people who become our biggest champions? How do we help them build, share? How do we help build shared value for that community with authenticity so that they develop and extend a loyalty to us as brands, or our clients as brands. So that’s the scenic route to your question. And your question was what are some very specific examples of the ways that brands have employed Web3 activations, yes?

Tessa Burg: Yes.

Jonathan Verk: So there’s been a couple of very, very big and successful applications. I’d say that the trend right now… I’ll start now and I’ll move backwards. The trend right now is in loyalty programs. So loyalty programs that create an engagement with the brand and the member of that community, and incentivizes them and rewards them for doing things that the brand would like them to do. There’s a gazillion ways to skin that cat, but loyalty programs are really one of the most successful and I think exciting applications of this Web3 technology that look on the surface and can continue to look on the surface, just like old traditional loyalty programs, but are built on the blockchain and give the members of the community ownership over the assets that they’ve got and the things that they’ve accumulated, whether they’re collectibles, or art, or NFTs, or currency, but it gives them ownership of that. So they can do with it what they want. So if the relationship ends with the brand, or if the brand decides to shift gears, or gets purchased. or closes down, that user still owns and has access to all of the assets that they’ve accumulated and have collected since they began in the loyalty program. There have been other applications where brands have activated. We’ve done a lot of work with NFTs and NFT rewards. We did an activation with CBS while back, where the intent there was to signal, twofold really. The brief was they have a show called “Ghosts”, which was a number one show for CBS. Non-sports, non-news show. And it was doing very well with their typical demographic, which is 55 plus, but they saw a bump with 15 to 25-year-olds, 15 to 30-year-olds. And so their brief was how do we get more of that audience? How do we expose more of that audience to the “Ghosts” program? And the answer was, look, there’s a lot of them living in the metaverse. There’s a lot of them living in this Web3 environment. Whatever term or buzzword you wanna use to describe it, but they’re living in this digital world. They’re not watching TV, so they’re not gonna see your commercials, they’re not gonna see your ads and your promos promoting “Ghosts”, but we can create an activation in one of the metaverses in which there are thousands, and thousands, and thousands of people engaging, and playing, and congregating, and communicating, and transacting. So we built a big… At the time there was a metaverse called Decentraland, which was very, very large, and growing, and growing at an explosive rate. And we built an activation there, that we launched at Comic-Con, that allowed people to come and visit. And we rebuilt the mansion that’s in the show “Ghosts”, and we created NPGs, these characters that you could engage with, and you’d solve quests. And as you completed these quests, you won NFTs, and you’d collect the NFTs, and when you’d collect enough NFTs, you could trade it in for something else. And it just created an engagement paradigm that exposed our audience or our community to the show and got them into that funnel where they would become viewers of the show. And it was very successful as an activation. It also, on an equal level, signaled to the street, signaled to Wall Street that CBS understands where their audience is going. And that’s really important, because 55-year-olds are gonna be watching TV for another little while, but the next generation is where the audience is going to be coming from. And CBS knows that, and that was their signal.

Tessa Burg: Yeah, and so we’ve covered a lot of ground, but if we were to break down even just that example with some of the history you gave, its brands should start paying attention now because this is where Gen Z lives and plays. And we see a lot of examples from entertainment, and it is often that entertainment is a first mover, but in the story, in the example you just gave, the components can really apply to any business. Go to where your customer’s at, find how they want to be entertained, engaged, access information. Some of those triggers of I get to experience something I love, something I enjoy, but in a different way, can be very universal for other brands, CPG brands trying to get in.

Jonathan Verk: Oh, for sure, yeah.

Tessa Burg: Have you worked with any sort of products or brands that have taken some of these principles and applied them to Web3 as a way to get more…

Jonathan Verk: Oh, sure, absolutely. So I just gave two very small examples. I gave you a metaverse example and a loyalty program example. We also did some work with Boston Pizza on a loyalty program. That was much less.. Very, I’d go with small budget. It was a very experimental R&D budget and was very successful in engaging people and getting them collecting and coming back to Boston Pizza for more delicious pizza and collect these loyalty tokens that would open up access, and open up opportunities, and open up exclusive access to stuff. We’ve done straightforward revenue-generating programs that are strictly a collectible NFT that may or may not open up new access and create communities that would have access to things that people without these NFTs don’t have. But there are so many examples. One of the big ones is Nike is launching .SWOOSH, which is, effectively it’s a loyalty program that engages huge communities and can be used in a whole bunch of different ways, from collecting shoes and being part of Nike culture to authenticating rare shoes that you might buy on StockX or wherever. So your authentication programs. Starbucks launched a huge loyalty program called Odyssey that is extremely successful. The most successful loyalty program, Web3 or otherwise, that they’ve ever had. But it also generates revenue for the company. It’s also generating significant revenue for the company. So it’s got a double win where you’ve got customers who are engaged, coming back, collecting Starbucks badges and coming back and continuing to come back for more and being loyal to the brand. But it’s also generating revenue, because you’re selling these… Starbucks can now sell these badges, and people who are really interested in collecting, similar to the skin… The gun skin that people are paying money for. They generated $400,000 in about 30 seconds in selling one of their more recent badges. So there’s some really interesting things going on. We’re in the early days, which means that there’s some great experimentation going on, and many of these brands are catching that lightning in a bottle, and really blowing up their success. It’s really quite exciting to see.

Tessa Burg: Yeah, I think one of the things I’ve heard though, that keeps brands from participating in this excitement or even testing, is they… And this is the exact same concern I remember. So I’m an elder millennial, so when I first entered the workforce, I was automatically an expert in social media.

Jonathan Verk: Yeah, yeah, totally.

Tessa Burg: Only person who had used it. But I remember getting some of the same feedback that, well, it might damage our brand, or we don’t want our brand to appear next to this other type of content that’s being generated. What are some things that you’re doing in your approach that help brands get more comfortable with protecting, and that security and data? I feel like sometimes people, it’s not so much that it’s technical why they won’t get in, it’s because they don’t know what could happen to their brand, their data, and their privacy once they’re in there.

Jonathan Verk: It’s a fair concern, especially for older legacy brands. It’s a fair concern, like it was a fair concern when social media and UGC started to really explode. But I think in retrospect, most marketers would say that the trade-off was weighted. Getting in early, and starting to experiment, and starting to learn how to avoid putting your brand into those positions and into those spots, and knowing how to get out of those predicaments when they do arise, ’cause they do, is more important than avoiding it entirely. The fact of the matter is there’s not a brand out there of consequence that isn’t involved in social media in some way. At this point. Now, 20 years ago, that’s exactly the sentiment. Like, “Oh, I’m gonna wait, I can’t do this. What if my ad shows up in a whatever.” I really didn’t pay too much attention to… ‘Cause there are plenty of brands that are experimenting. There’s an overwhelming amount of people who are playing in this, who wanna play in this space, and just need sort of the guidance and support to do so. But I think that the trade-off is heavily weighted in getting an experiment, develop the expertise, learn the medium, develop internal institutional knowledge so that when the wave comes, when all of a sudden… I remember the moment when Facebook, and Twitter, and Instagram, and Snapchat, it was like a tidal wave, and a lot of companies, a lot of brands were left dangling in the wind trying to get in, and they really didn’t know where to start. And they had not only lost ground to the companies that had gotten in earlier, but now they’re overwhelmed by the crushing expense of trying to play catch-up, which again, I don’t think the trade-off is there.

Tessa Burg: So we’ve covered a lot of ground. I think tons of people have questions. I generally feel like there’s an opportunity for us to create a community to give people access to you. But if they wanted to shoot you a message, where can they reach you today?

Jonathan Verk: Ooh, good question. Well, we were recently acquired by a company called Mod Op. Go there. So my number, and maybe we’ll post it down here, my email is [email protected]. J-O-N-A-T-H-A-N dot V-E-R-K @modop.com. Or just call Tessa and she’ll let me know that you called.

Tessa Burg: Nobody ever hesitates to direct message me.

Jonathan Verk: I’m just kidding, don’t call Tessa.

Tessa Burg: But thank you so much for being our guest. If you wanna hear more episodes of “Leader Generation”, right now, it is on LinkedIn. You have to search the “Leader Generation Podcast”. It will be up on modop.com soon, M-O-D-O-P.com. And look forward to another episode where we’ll explore more about Web3, AI and machine learning, and all things tech and innovation in marketing. Or our next episode actually, we will have some guests from Google who will be talking about their advances in machine learning and AI, and how those are impacting media and measurement across the digital landscape. But thank you, Jonathan, for joining us, and we’ll be talking again soon.