Web3 is shifting brand engagement from its top-down, extractive nature to be more symbiotic. Traditionally, brands had a corporatist nature advocating for the control of values by executive teams, which poorly aligned most valuable contributors. Top community members who harnessed on-ground insights were not tapped to become contributors but pushed out to be customers of dictated values.

Brands 1.0 and 2.0 follow mass media, direct-to-consumer (D2C) playbook religiously, manufacturing the same standardized identity, and are falling out of relevance as their executive teams do.

Web3 is now presenting an opportunity for optimal retention and engagement— Brands 3.0

Blockchain-powered brands, brands 3.0, will transform D2C into collaborative and bidirectional engagement (C⟷B) which will thrive on contributions from a global talent pool segmented with reputation and incentivized with ownership economy —Turning customers into contributors, stakeholders, and co-creators.

Future of Brand Engagement: The Why, The How, The What

To truly turn customers into stakeholders, new mechanism designs will depend on how contribute-to-earn quests are complemented with non-fungible and fungible tokens and tiers, creating socio-economic systems based on proof of engagement.

I will dive into Brands 3.0’s Golden Circle in three parts:

1. (The Why) Brands 3.0 — Turning Customers into Owners, is this article.
   1. Delving into why brand engagement will be redesigned, and how the evolution of brands is following same patterns as evolution of the Web.
2. (The How) Brands 3.0 — Proof of Engagement (PoE), delves into the technological foundation and mechanism design needed for the shift in the engagement paradigm.
   • Nobody quite has been able to design the right mechanics around reputation, contribute-to-earn, and multi-tribal identity with a usable interface yet. The unlock’ll be the design of Proof of Engagement (both as status and financial upside) without hyper-financialization of the brand
3. (The What) Brands 3.0 — Proposed Mechanism Design, dive into applications and results achieved on early genesis experimentations and the future — mobilizing communities.

First, What is a brand?

Your morning coffee, the sweater you are wearing, your online persona, the concert you are planning to go to, the musician you have on repeat, the software you love… and so much more are essentially brands – piecing meaning, utility, and belonging together.

Brands are the set of reputations, expectations, and experiences around products, services, and creators — and they operate with social consensus.

From the wise words of Headless Brands —

Brand is a cultural phenomenon that emerges only when these things come into contact with people. A brand lives in the minds of those who are aware of it. As a brand grows, it becomes more than a set of first impressions and associations. Its reputation precedes it. In this way, a brand operates as a consensus system.

For a brand, a strong reputation and community are hard to build and easy to destroy. There are over 30,000 new products introduced every year, and 95 percent fail –– falling out of relevance.

Community ⟷ Brand Symbiosis

A similar pattern to how the web has evolved over time can be seen in brands*. Since brands are catching up by integrating web evolution, we can extrapolate the past and present to define the future of what Brands 3.0 will look like.*

Brands 1.0 — Read Only | Post-Industrialization Prescriptive Branding

• The earliest version of brands was prescriptive and dogmatic. Top-down, read-only campaigns were used to dictate customers to believe pre-conceived slogans that advertised brand could bring happiness and perform better.
• Brands 1.0 was the “read-only” web – a brand that was rigid, utility-focused, and not interactive in any significant sense. Early branding and advertising were one-to-many. Mass-produced interactions through radio, newspapers, tv, and banners with no controls and forms to engage back for the customers.
• Since top bottlenecks were still mass production and global distribution, customer needs, values and relevance were secondary, thus not important.
• Brands 1.0 was the first status and community formation based on one’s neighborhood. Buyers were not able to globally engage, but the first form of communities around brands was formed where logos and packaging were used as the first symbols of community.

Brands 2.0 — Read & Write | Rise of Interactivity, Social Connectivity, and User-Generated Content

Web2.0 eliminated the cost to build a brand, powering the formation of micro-brands and customer networks as communities. However, with the standardized, top-down playbook of D2C, now it is more costly than ever to drive retention.

Brands 2.0 describes the current state of the brand engagement economy, which gave more content and usability for end-users compared to the earlier one-to-many brand incarnation.

Brands 2.0 also refers to the shift in the definition of “brand”. Instead of only products or corporations, any experience, service, creator, and product that have carved out its own niche and community in an increasingly overcrowded market became a brand.

Rise of Brands 2.0 redefined engagement economy, yet it was still unscalable:

1. Connected | Customers → Followers

Increased use of social media connected local nodes of brand communities to one another, creating global connectedness to contrast brands. Customers got overwhelmed by top-down content resulting in disinterested views of advertising.

Customers shifted into followers who could react but not act.

2. Interactive (Comment & Influence) | Customers positioned themselves as experts.

Brands 2.0 created the participation to comment, and react on brand experience. This gave rise to one-in-a-million users becoming influencer for the brand by creating user-generated content. Influencers became the ambassadors pushing the brand narrative.

Influencers were the first proof of concept of the need for community input and contribution back to the brand. Yet, the influencer’s fame was the proof of work within that social network dictated by centralized algorithms, and this proof of work is not always aligned with the brand’s needs.

Same influencers started promoting many brands, repeating one-to-many marketing.

3. Direct-to-Consumer Engagement | Brands following the D2C playbook

Brands have exhausted attention and consumption economy. Now, all brands are blending in, executing the same D2C and products are taking ownership of the community, and data.

State of Brands 2.0

Existing Web 2.0 take the ownership of the community away from the brand–– they are at best, saturated and, at worst, actively deteriorating.

It has never been more expensive to acquire customers, and fans or challenging to retain them. D2C acquisition costs skyrocketed by 60% over the last decade (with competition on ads, saturation in market, and declining effectiveness of Facebook “look alike audiences” following Apple’s App Tracking Transparency IOS 14 update). Thus, It has never been more important to incentivize customers.

Now, there is a pressing need for brands to bypass the platform-centric marketing world of web2 and reclaim ownership of their digital consumer relationships to beat numbers in retention and lifetime value (LTV).

Brands 3.0 — Own | Turning Customers into Owners (C⟷B)

With crypto, it is now possible to create the new engagement economy infrastructure that powers the social and financial stake in a brand as a tool to drive followers and customers to become contributors to brands they use in deeper ways.

Brands 3.0 refers to an infrastructure where instead of the brand being written and controlled by only a small group of experts, it is developed and shaped in full view of everyone, encouraging maximum participation — turning customers into co-creators, and stakeholders.

From building communities with DAOs like Friends With Benefits to building scalable utility, access, and status in a brand-membership experience like Poolsuite, past year’s web3 brand-building showcased the proof of concept for Brands 3.0.

Brands 3.0 core primitives that will transform how we interact and form brands:

1. Staying Relevant | Dynamic Product-Market Fit.

By decentralizing taste, curation, and incentivizing giving quality insights and feedback, brands can create dynamic product-market fit and stay relevant through decades. These inputs do not necessarily give full ownership to the community but create bottom-up channels to harness value and contribution from community members.

2. Unlocking Maximum Retention and Life Time Value | Contribute-to-earn.

In status quo, customers cannot differentiate between brands as followers anymore. They harness deep untapped insights and emotions for brands that if scalably harnessed, can help bring universal data to unlock brands’ next engagement steps.

In Brands 3.0, consumers are powered to contribute back to brands by giving feedback, insights, co-creating experiences, events, derivatives, and many more…. essentially “building on top of the brand” through configurable bounties.

1. Unlocking True Loyalty | Proof of Engagement.

In Brands 3.0, proof of engagement is the blood, tear, and work to get the status. It is the new proof of work by competing on quests and tiering up for reputation, exclusivity, and access to earn one’s standing in the ecosystem.

Instead of pushing customers’ purchase notifications, Brands 3.0 creates sustainable and authentic loyalty by aligning customers’ incentives to earn brand reputation and access.

Building the Engagement Economy Infrastructure Powering New Era of Brands

Now, the opportunity is to design accessible products and protocols for

Brands 3.0 –

The new layer of brand engagement economy that will bootstrap acquisition and retention through better economic and social alignments:

• One that would scale into bringing life to brands with dynamic insights, engagement, and loyalty based on social reputation and financial incentives.
• One that outlasts purchase-indexed retention marketing, e-commerce, or chief marketing officers.
• One that turns customers into owners.

Thank you to Marty, Jaclyn Chan , Andreas Larsen, Alex Masmej, and many more for early conversations about future of brand engagement economy :)

If these ideas excite you and you want to build together or exchange ideas, dm me at @0xGokce -

and checkout kalder – We’re building web3-powered engagement tools for brands to define brands 3.0 frontier, say hi.

And for all those who want to be early adopters, co-creators, or inspirators of this idea –– I’’ll make this a collectible carrying through ownership & engagement economy ;)