Shayna-Radhika Patel with some useful reminders for anyone advising on metaverse brand advertising
While the hype around the metaverse may have cooled, brands (particularly in the fashion and retail industries) are continuing to engage with their consumers using metaverse environments, sometimes known as “direct to avatar (D2A)” marketing. They are also still investing in “space”, “land” and “displays” in metaverse environments allowing users to see billboards, signages, video presentations and interactive art. Brands, such as Gucci, are also acquiring virtual buildings and stores which have games inside to play, virtual walks, displays and more. With this in mind, here are 3 top points to consider when looking to advertise in metaverse environments…
1. Make sure you and/or your client brand is clear on what is actually being “bought”
In the “physical” world, “ad inventory” is generally bought through media agencies. For example, out of home (“OOH”) advertising in the physical world (such as physical billboards, posters and other forms of advertising experienced outside of the home) is well established with a network of OOH media owners who sell their “ad inventory” (e.g. space on billboards) for advertisers to display their advertising. There is no need for advertisers to actually buy physical space in order to advertise in the real world.
In the metaverse, “land” or “space” is often mis-labelled as something to be “bought”. However, rights acquired when purchasing virtual “land” or “space” are, in most cases, either:
i. purely contractual in nature; or
ii. a mixture of contractual rights and a limited licence to use certain existing IP rights owned by the metaverse provider.
This position is largely governed by the metaverse provider’s terms and conditions. The metaverse provider’s terms and conditions will generally govern the restrictions associated with the right so it is important to read these and fully understand how and what rights are being acquired.
Generally, the position is not dissimilar to an End Use Licence Agreement (EULA), similar to those used when signing up to a social media platform or purchasing a video game. Note however that, at the moment, the degree of sophistication of metaverse platform terms and conditions is generally much lower.
Metaverse provider terms and conditions are generally standard and non-negotiable, and “purchasers” will need to enter into these standard terms and conditions, which are unlikely to offer the typical protections or safeguards that a brand would expect to see (see below). However, some providers have been known to cater for bespoke/negotiated arrangements where the other party has sufficient bargaining power.
At present, there is no formal legal recognition of virtual “land” within a metaverse. The concept of “ownership” itself, when it comes to virtual assets, is also inconsistent from provider to provider and benefits from little or nothing by way of regulatory protection.
2. Get comfortable with the risk (or inform your client brand of them)
As mentioned above, engagement will generally be on the basis of standard terms and conditions, which in most cases are non-negotiable, and typical protections or safeguards in respect of IP use and ownership and liability will therefore also be non-negotiable. Given the fairly early stage of metaverse environments, many metaverse providers’ terms and conditions also contain a large number of disclaimers against the continuing availability and permanence of the “land” or “space” purchased.
These positions should be understood in advance, to assess the risk appetite. Agencies engaging with metaverse providers on behalf of their client brands need to communicate these risks clearly to their clients and ensure their client agreements reflect any associated risk and/or appropriately exclude liability.
And, of course, as with real world advertising and traditional (web 2.0) digital media, brand safety risks should be recognised and considered. More than ever, brands want to know that the environment in which their advertising is appearing is not detrimental to their brand/reputation. It is possible that adjacent “displays” or “land” could be purchased by others engaging in illegal, offensive or inappropriate conduct. Brands should therefore consider whether providers have “acceptable use” policies and whether they are being enforced, particularly given the increased attention given to online safety (see below).
3. Don’t forget – “real” world laws STILL apply!
Advertising regulations (such as the CAP Code) will still apply to advertising content in the metaverse, as they would in other media. For example, advertisers will need to ensure advertising is obviously identifiable as such and that information is not misleading. If you’re looking to conduct influencer marketing through avatars, the same advertising rules will apply. Similarly, where promotions (such as prize draws and competitions) are conducted through or using a metaverse environment, advertisers should ensure that the related promotion rules are followed.
Likewise, data protection laws will also apply and metaverse platforms could potentially be caught under the proposed Online Safety Bill, which continues to evolve. The bottom line is that “real” world laws will continue to apply to the use of these metaverse environments and will need to be interpreted and accounted for accordingly.
Shayna-Radhika Patel is an associate in the Media and Entertainment group at Harbottle & Lewis, with experience in the commercialisation and use of various technologies including AI, blockchain, the use of NFTs and the metaverse, particularly in the context of brand engagement, digital marketing and advertising.