Tech Forum: Michelle Phan on the Intersection of Gaming, Crypto and Shopping
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When Michelle Phan began uploading videos to YouTube in 2007, the platform was in its relative infancy. User-generated content hadn’t yet been established as a vital tool for brands to effectively connect with consumers, and the idea of content creation as a profession was a far cry from the burgeoning field it is today.
Given social media’s ever-growing influence over consumers’ purchasing decisions, however, user-generated content has now cemented its central role in digital marketing, and brands have been tasked with reimagining their strategies accordingly if they wish to thrive in the era of the metaverse, cryptocurrency and increasingly gamified shopping experiences.
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So said Phan, who founded makeup subscription service Ipsy in 2011 as well as Em Cosmetics in 2015, and is widely regarded as the first makeup influencer on YouTube, at the Fairchild Media Tech Forum, in conversation with WWD managing editor Allison Collins.
“When I first started [uploading videos] in 2007, there was no industry — it was still very much the wild, wild West. There were just a handful of creators that existed back then on YouTube, and there weren’t any brands that had a presence on YouTube,” said Phan.
Around 2014, what Phan refers to as the “creator economy” began to take hold, fueling the rise of influencer marketing as brands began tapping user-generated content as a means to relate to consumers via experiences that seemed less manufactured.
According to Phan, the more recent rise of concepts like tokenization and Web 3.0 will fundamentally change not just the relationships brands have with consumers, but those between content creators and their audiences, creators and social platforms and even those between creators and their own content.
“The evolution of the creator space that I can see in the future is that creators are going to own their relationship with their viewers and followers,” Phan said. “They’re probably going to own it through some sort of tokenization, whether it’s on a blockchain or through a game — it’s going to be different than what we know of today, where I still have to rely on the platform to show my content for me to go on there and connect with my viewers.”
In addition to foreseeing increased opportunity for creators to have direct access to relationships with their viewers, Phan believes shopping experiences will become more gamified, identifying online platform and storefront Roblox as one means to that end.
“If you look at Roblox, a lot of Gen Alpha are playing on it, and it’s like their version of social-media-meets-games,” Phan said. “There’s a whole economy within Roblox where you go in, you buy their money and you use that money to buy other people’s user-generated content games.”
Roblox has proven itself the ideal avenue for brands to dip their toes into the metaverse, with companies including Gucci, Netflix, Nike, Vans and others flocking to the platform for recent activations.
Inflation may also play a role in fueling the popularity of virtual goods, which tend to be cheaper than their physical counterparts for both consumers and manufacturers alike, Phan said, noting that virtual goods have higher profit margins.
For brands interested in delving into virtual goods or the gaming community, Phan said collaborating with creators will likely prove to be a fruitful first step, considering creators have already done the work of fostering a meaningful connection with their audience, and can thus alleviate that responsibility from the brand’s shoulders.
“When [consumers] see a brand, it’s a slight turn-off,” said Phan. “I’ve always been an advocate for working with creators — when you collaborate with a creator, you already have access to their community, and [consumers] love collaborations.”
In 2020, Phan branched into Instagram AR filters as a way to connect with her Em Cosmetics audience and drive product awareness. One of her biggest reasons for diving into filters? She already was a frequent user of them herself — and she knew her consumers were, too.
While Phan encourages brands to test out new stomping grounds when it comes to leveraging technology into contemporary strategies, she also advised against trying out too much, too soon, warning that while newness can bring consumers in, poor execution can inhibit their shopping experiences, thus driving them away.
“You want to put yourself in the shoes of your audience and ask yourself, ‘Am I really going to navigate through this store that’s really nice and is in 3D and buy all this stuff, or no?,’” said Phan, emphasizing that overcomplicating what should be a straightforward purchase process can backfire in a major way.
An avid tech investor, Phan exercises caution when deciding where to put her money, looking to SEC-approved crypto projects and only investing in products that she would use personally.
Phan also stated that brands that harness the power of live platforms in community building; listen in on the chatter of micro communities on platforms like Discord, and, lastly, pay attention to what women in tech spaces are doing and saying will be poised for greater success in the face of mounting economic uncertainty.
FOR MORE FROM WWD.COM, SEE:
The Metaverse: Beauty’s Next Frontier
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How do Brands Attract Women to the Metaverse?
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