Web2.5 in action: Consumer packaged goods (cpg)

In no other category has the bridge between physical and the digital worlds been so strong as in CPG. Heavy hitters such as Coca-Cola and McDonalds have jumped into the fray, beginning the process of unlocking and amplifying deep IP and dedicated brand communities. These brands are depending on trusted web3 partners to help them bridge the gap between web2 and web3 communities, combining future-oriented knowledge with deep brand expertise to make their first foray into the metaverse. 

Mattel & Hot Wheels: Digital Consumer Engagement

When global toy brands come to play in the metaverse, you know it's a game on for web3. Born in a California garage in 1945, Mattel has since become the global leader in toys with deep IP in a range of iconic product lines including Barbie, Hot Wheels, Fisher-Price, American Girl and Mega. 

In mid-2021 Mattel leapt into NFT land with a Hot Wheels NFT release that blended its iconic physical cars with hot-off-the-press NFTs on the WAX blockchain. Hot Wheels is a brand known for its avid attention to detail and rabid car collectors, while brand owner Mattel has a long history of experimentation at the intersection of art and play. 

The initial Hot Wheels drop was a success, with all 16,926 NFTs minted. Featuring their Garage of Legends series, the drop used packs of four (12,081) and ten (4,835 total) NFTs that featured an animated iconic design of the brand’s cars. The brand divided the total mint into four levels of scarcity, with NFTs in the top two premium levels redeemable for a physical version of the corresponding Hot Wheels car. This allowed each collector to have a 5% chance of receiving a special vIRL (virtual + In Real Life) token during the mint.

Bone Shaker” NFT by Mattel released on WAX blockchain

This vIRL token is an interesting play, with a burn mechanism we’ll likely see more of in space. Burning the token creates an NFT state change. In the Hot Wheels NFT case there is only one stage change (burned or not burned), but moving forward in the overarching NFT space there is potential for innumerable state changes with redemption value at each one. This also introduces an interesting dilemma of having early (non-redeemed) states potentially gaining more overall rarity than those NFT redeemed at each level for short term utility.

Web2 brands have one huge advantage in the race to web3. They can unlock, remix and amplify deep IP and an already dedicated brand community. Hot Wheels took full advantage of this trend by activating their pre-existing Hot Wheels community for the NFT drop. This can be a double-edged sword though, as pre-existing demographics don’t always match up with the web3 native. 

Taking special care to onboard community members into the web3 ecosystem is an integral part of the transition process. This can be done in two ways. The first is a set of robust educational materials, and the second is to build on a more accessible system altogether. The Hot Wheels project chose the latter, building on WAX, a purpose-built NFT blockchain that offers a one-stop shop for listing and ownership. While most blockchains require a crypto wallet and funds, the WAX ecosystem offers account creation through Facebook and Google, making it easy for beginners to get started quickly and easily.

Mattel Hot Wheels 4 Pack and 10 Pack NFTs represented by garage doors, detailed information on right of each picture

Fresh Hot Wheels 4 Pack and 10 Pack NFTs

Web2.5 Trends in CPG

2021 saw CPG and food and beverage brands such as Budweiser and Pringles begin their foray into web3, with some brands leaping in more brazenly than others. Key wins in this space were centered around artistic collaboration and allocation of profits to key non-profit project partners. 

As with the rest of web3, the key to these successes was in finding nuance in delivery. The most successful brands picked the right strategic partners while activating pre-existing brand messaging through NFTs. Nivea was able to smoothly execute on a multi-channel approach, partnering with Italian artist Clarissa Baldassarri to create a line of free, touch-inspired NFTs. Through curated videos and a clear call to action, this artistic collaboration helped elevate both Clarissa’s story as well as the global Nivea initiative of using touch to inspire togetherness.

But finding nuance in CPG isn’t always easy - whereas other categories such as fashion and creators have built-in appeal, consumer brands trying to peddle digital versions of their physical products may not hit the mark.

Take McDonald's McRibNFTs for example - “digital versions of the fan-favorite sandwich” (according to their press release) didn’t turn out to be such a tasty treat. These ten NFTs were awarded as part of a sweepstakes. To be in the running, Twitter users needed to follow @McDonalds and retweet the sweepstakes invitation. Unfortunately, post-announcement a racial slur was found to be recorded in blockchain code. Indeed this project would likely have been more successful with both ongoing community involvement and iterative utility beyond a rotating golden-bordered sandwich. Addendum to this McRib story - at the time of writing McRibs had just been transferred into both BoredApeYachtClub and VeeFriends OpenSea wallets - showing that perhaps even “failed” web2.5 projects have a place in the historical ledger.

The Coca-Cola Bubble Jacket Wearable NFT by Coca-Cola includes a unique unlockable version that can be worn in Decentraland.

While other brands went mass-market, Coca-Cola ventured into the Metaverse with a single NFT; a digital “Friendship Loot Box" that once redeemed became six separate NFTs, some of which were tied to physical goods (a fully stocked retro coke machine), some with digital utility (branded Decentraland wearables). Coca-Cola is no stranger to the collectibles world, and their partnership with Tafi, a digital avatar design studio helped elevate this industry pedigree while re-imagining their “real-world” brand IP into digital success. Selling for more than $575,000 on OpenSea, all profits from the loot box were donated to the Special Olympics, showcasing yet another major brand non-profit partnership coming to the space.