The NFT and Web3 world encompasses a lot of things but one of its main strengths over Web2 is consumer contribution. If a consumer can contribute to a brand or artist identity (through products, services or bodies of work) the more invested they become.
A recent report on consumer perceptions toward brands builds a strong case for decentralised autonomous organisations (DAOs) as a marketing tool. The report, conducted by creative consultancy Long Dash, found that a majority of Gen Z and millennial consumers (63%) want more influence over how brands make their decisions.
60% of this cohort said they would be interested in using company-issued crypto tokens in order to vote on decisions—a key component of DAOs. A DAO is a group that uses blockchain technology to deploy funds in an organised way. Members vote using governance tokens, which are typically cryptocurrencies native to that organisation and accrue value over time, giving members a direct share in the group’s profits.
Several brand marketers have already started incorporating DAOs in a variety of ways. Bud Light has partnered with and joined a DAO in order to expose its consumers to the Web3 environment, while L’Oréal’s NYX Professional Makeup created its own DAO for creators behind beauty-focused virtual avatars.
Long Dash’s report is further encouraging brands to explore the ways in which DAOs can further infiltrate brand to customer experience. . The findings herald the emergence of a concept Long Dash calls “consensus commerce,” in which brands invite consumers to take part in business decisions and earn rewards for their participation as co-owners.
Consensus commerce, according to Long Dash, follows the community-based model of commerce that is popular on social media platforms, wherein consumers engage with products via branded content, driving them to purchase. With consensus commerce, consumers can use the DAO structure to make decisions as a community for actual product creation—hence the emphasis on “consensus.”
The blockchain element to DAOs is also very important as it cements and records customer involvement, enabling secure voting procedures, transparent operations and trustworthy reward distribution. Gen Z and millennial consumers have shown serious interest in blockchains through the crypto space; the demographic accounts for 94% of all crypto buyers, per data from fintech company Stilt.
The report does show however that DAOs would be more beneficial for brands with a Gen Z consumer base or wanting to tap into a Gen Z consumer base as older consumers seem to be unphased. Just 34% of respondents ages 42-76 want more influence over brand decision-making, and 40% of this cohort expressed interest in using crypto-based governance tokens, according to Long Dash. Curiously, data from Stilt shows that Gen X spends more on crypto than any other generation, despite accounting for only 4.9% of all buyers.
Loyalty programs are a major area to look into regarding DAOs. Nearly three-quarters (71%) of Gen Zers and millennials want to feel more connected to communities that are related to their favourite companies. The most popular reason for this is a desire to interact with people over a shared interest. Perhaps most notable is that this craving even outweighs that for special benefits and deals that come with being a member of a company’s community (56% to 52%, respectively). Therefore, participation in a like-minded community is another area that young consumers desire, and could inform how brands integrate DAO tools into their loyalty programs.
What is a joy to see from the study is a true prioritisation for connection and community. Consumers may appreciate special promos, but their interest in connecting with other consumers working together to influence their favourite brands should not go overlooked.