According to World Economic Forum’s authors, Aiden Slavin and Kevin Werbach (White Paper: DAO Beyond the Hype—June 2022), “Decentralized autonomous organizations (DAOs) are entities that leverage blockchains, digital assets and related technologies to deploy resources, coordinate activities and make decisions. DAOs attempt to decentralize the operation of firms and other collective entities by making functional and financial information transparent and empowering token-holding members to propose, vote on and enact changes.”

The explosion of GAFAM (Google (Alphabet), Apple, Facebook (Meta), Amazon, and Microsoft) over the past 20 years is a perfect example of super centralized ecosystems. The era of Web2 is dominated by a few players that are concentring a tremendous number of powers and protecting their position with massive organic and inorganic growth strategies. The total GAFAM market capitalization is more than the GDP of France, Japan and Germany. Google fulfills more than 90% of total global internet requests. Apple iPhone’s global market share is 33%. The Microsoft Windows system equips more than 88% of the global computer installed base. Most of these monopolistic companies are making gigantic profits by analyzing and selling customer data. They have full visibility and own and monetize our personal details.

The most famous business case is ConstitutionDAO. This digital community raised $47 million in a week to bid on and acquire one of the 13 remaining copies of the original US Constitution. This virtual special-purpose acquisition DAO was bidding in a real/“physical” auction room handled by Sotheby’s, showing the huge potential of decentralized autonomous organizations. It’s a real proof of concept.

What does it mean for your future brand strategy?

Most physical brands will need to rethink/reinvent their customer engagement strategy and loyalty programs. DAO members are committed to the brand or the project they support. They are more than fans. They act like shareholders co-building a roadmap with their preferred companies. Can you imagine the impact on your future marketing strategies? DAOs provide more transparency, more trust and allow brand experimentations to test new concepts and ideas with a strong installed base of “clients.” All DAOs’ token owners have (most of the time) proportional voting rights and decision-making power over a brand roadmap. DAOs are the perfect tool to build communities, and the community will co-create and validate (or invalidate) your future brand strategies. This is the ultimate version of a customer survey.

According to a recent report, “brands that invest in and elevate customer engagement saw increased revenue by 70%, a staggering sum that underscores the importance of developing communities and relationships. Meanwhile, customers with strong and positive brand experience are 50% more likely to try new products or pay premium prices. That’s why customer engagement is central to operational sustainability and revenue growth for successful companies.”

Can you imagine the power of customer engagement when you allow your fanbase to influence decisions about your future logo, brand design, brand action plan, events, or the influencers and celebrities that will empower your brand in the market? This is a whole new dimension for future loyalty programs.

Of course, DAOs are not perfect. In the future, they will need stronger legal status, must improve community coordination, and address potential security issues for brands and customers. But we are at the beginning of a transformative journey that will impact brand strategies for the next decades.

Are you interested in exploring this topic? Do you want to understand how to navigate emerging metaverse opportunities? What transformations can be expected?

Schedule a one-on-one brainstorming session with the Frost & Sullivan Metaverse Centre of Excellence.

The Metaverse Growth Opportunity: What Does it Mean for My Company?

Author: nicolas.votano@frost.com