Tech talk: IR opportunities in the metaverse

‘That little chat on the way to the elevator? If you can have that on the sidelines of an investor meeting in the metaverse, I think we’re getting much closer to the real experience,’ says Sebastian Steffen, senior vice president of IR and finance strategy at adidas, talking about the future potential of the virtual world for investor relations.

As a trendy consumer company with a young customer base, adidas is already active in the metaverse, selling non-fungible tokens (NFTs) to innovative customers already versed in everything virtual – something that, for the average late millennial or older, can be hard to get your head around.

Steffen explains that as part of adidas’ constant research, which covers future fashions, materials, silhouettes and more, the global brand also looks at where its customers are spending their time. ‘Is it on the basketball court, is it on the soccer pitch? Or is it just hanging around somewhere with their friends?’ he asks. ‘That all influences the products they might want.’ Through that research, adidas discovered that consumers are spending more of their time online, through gaming or, for some, in the metaverse.

Steffen points out that, to a large degree, the company’s marketing efforts target ‘the pinnacle of the consumer triangle’. Collaborations with artists such as Kanye West might represent a small proportion of the business but they ‘influence how the brand is perceived,’ he adds.

The same goes for the metaverse. It is less about how many consumers are there than whether the right ones are there – and the answer to that is clearly yes, Steffen says.

Whole new world

Banking giant JPMorgan says all companies should be considering their own metaverse plans. In a paper titled Opportunities in the metaverse, published after it had launched its own Onyx Lounge in virtual world Decentraland in February 2022, it writes: ‘Business leaders and boardrooms around the world are now asking themselves: what is my metaverse strategy? What am I supposed to be doing in the metaverse? What is the metaverse anyway?’

Should IR professionals be asking themselves the same things? While JPMorgan cites Ariana Grande’s Fortnite concert as an example of the seemingly ‘limitless’ opportunities offered in a virtual world, it’s not all fun and literal games.

The bank points to Microsoft’s plan to create virtual workplaces, with a list of ‘household names’ including Walmart, Nike, Gap, Verizon, Hulu, PWC, adidas, Atari and others that are all entering the metaverse in different ways.

What JPMorgan says it is seeing is a convergence of trends as technologies evolve: blockchain, NFTs, digital currencies and Web 3.0 alongside augmented reality and virtual reality.

The fall 2020 edition of Tech talk heard from IR pioneers at British property and investment firm SEGRO about how the company had sent out virtual reality headsets to investors so it could go ahead with its 100th anniversary celebrations despite Covid-19 restrictions.

Steffen says adidas had considered doing something virtual when Covid-19 threatened its March 2022 Innovation Day plans but concerns around confidentiality and potential IT issues meant it didn’t happen.

‘The time was not right for an event like this [at adidas] but I definitely see huge opportunities,’ he says.

Even something as simple as reducing the amount of kit – everything from soccer boots to T-shirts, footballs and more – that Steffen has been carting around to investor days for years could be changed through virtual. Given a headset and haptic gloves, investors and analysts not able to attend an in-store event could still experience a new product, for example.

The human touch

Then there’s the great potential for corporate access, though Steffen, a 20-year IR veteran, says even the most advanced virtual meeting is never going to replace that personal interaction with investors.

‘These kinds of events or communication via the metaverse won’t be able to completely replace that physical interaction,’ he says. ‘But there are limits to how often I can travel to Australia to talk to investors, there are limits to how often I can go to the US, even – and even when in the US, I have to pick a couple of cities I can visit.

‘Being able to combine the physical experience with another experience that is still better than being on the phone or staring at a screen – that’s where the big potential is.’

As well as technological advances, the tipping point for Steffen is all about reaching the right levels of engagement and interaction. ‘An important part of our Innovation Day is that in the evening we have a gathering where people stand together and can just casually talk to each other and also have the chance to casually talk to the CEO and CFO,’ he says.

‘That is the level of engagement needed to be able to make such events work in a virtual world.’

For those not yet braving the world of avatars and virtual products, it might all sound too far-fetched – and Steffen agrees that it can feel like a bit of a leap, but the potential is certainly there.

‘My avatar talks to an avatar at an investment firm – that might sound silly today, but it’s probably closer than many people think,’ he concludes.

This article originally appeared in the Summer 2022 issue of IR Magazine.