Back in January, I indulged myself in some speculation about how things would be if the whole world became, essentially, a virtual billboard. “We’ll be able to live entirely within a story, or set of stories, created by brands,” I wrote. Imagine my surprise when just a few weeks later I sat down with a group of very smart people who explained how they were executing something not dissimilar from my crazy vision.
Except, of course, they are doing it in a much more less intrusive and interesting way. Meet Varius. Meet the “vatoms.”
The vatoms were introduced to a large audience of retailers at this year’s NRF Big Show and EXPO when a flutter (swarm, if you prefer) of digital butterflies was released in the conference space. But Varius isn’t just about party tricks. The mission is bold: after the Internet came apps; after apps come vatoms. It’s a whole new way of envisaging digital engagement, linked to a very traditional model of media buying. It also involves blockchain, so hold tight.
I saw those butterflies myself; not at the conference, but in a New York restaurant, where one of the Varius visionaries projected them around the room. You viewed them, of course, on his phone. You’re familiar with this: think Pokemon Go! But what on earth have butterflies in a digital landscape got to do with marketing and media?
I spoke with Mike Gamaroff, CDO for Varius, about where the concept came from. “Everyone knows that digital goods don’t carry with them the same perception of value as physical goods,” he explained. “You can’t touch them, and they can just be copies of a copy of a copy. This leads to the existence of an online eco-system which brands can only participate in by displaying brand communications, or ads. But what a brand really wants to do is have the consumer really experience the brand in an intimate and value-sharing sort of way.” That doesn’t work on the Internet as we know it, which is why, Gamaroff says, it has become “somewhat of a waste land of advertising, where users want to do what they want and the ads are in the way.”
The idea for vatoms originated with the possibilities created by blockchain; in particular, crypto-currency. Here you had digital objects (e.g. Bitcoin) which functioned very like a physical object: “It’s scarce, it’s hard to find, and it can be shared and sent from one person to another.” Money, however, isn’t the only compelling use case. “For me, I wasn’t interested in the finance aspect. Could you give people other things they do see value in?”
What was required was an actual platform on which brands could create and distribute these objects. This, in turn, meant that the digital objects would be on a network — would be, Gamaroff said, “sentient.” The objects would serve as tracking devices, and when present in users’ “wallets” could be modified by their brand originators. Brands would be able to engage with customers, via these unique objects, without the overheads of sending physical goods or samples. A simple use case would be grabbing a digital soda from an interactive billboard, taking the digital object into a corner store, and redeem it for a real soda. But that’s almost over-simple: the objects can be packed with offers, discounts, tickets, codes, and useful information. The owner of the object can also give it to someone else, or drop it on the street (Pokemon-style).
Now we see how these digital objects, these vatoms, differ from Bitcoins. “A Bitcoin is nothing, you can’t even see it. These objects can be very sophisticated games, for example. First you had websites. Then you had apps, which were much more personal, and more like a utility. Digital objects are an evolution from that. They’re kind of micro-apps, but contained within self-aware, networkable objects.”
Included in that self-awareness is GPS-based location data. “When you combine that with the geo-spatial mapping world, you can drop these objects in the street and pick them up; which means you can create really engaging brand experiences.” Just like the butterfly show.
Nevertheless, Varius doesn’t ever track users. It tracks the object in the user wallet. Users opt in by picking up an object. If they redeem it for a good or service, the ownership terminates. This also creates an attribution point. “The main use of GPS has been to track people’s locations through apps, and I just don’t think that’s very sustainable. Moving all the tracking into the object is not only good for the consumer, but good for privacy.”
One key question for Gamaroff is whether this technology offers any unique metrics to the ad industry. “If I send something to my friends by posting it on Facebook, as soon as they decide to take it and share it — on Twitter, or by text message — there’s a break there: there’s just no way to link it up. There’s so much fragmentation in attribution. We can act as a layer above the Internet. It doesn’t matter which method I use to send an object to you; we can always tell where the object is going. If you can do that, you have a really clean view of how things are being shared.”
But surely one drawback is that the objects are indeed unique? There’s no opportunity, by definition, to share multiple copies of them. “If a brand wants to distribute a million objects, that does mean a million unique objects, but scarcity is one of the things which main the objects special. Distribution is entirely controlled by the client; they can decide how many of these objects go out. They’re paying for it like media, and brands do limit the number of ads they buy. Something can still go viral, but yes, the objects can run out.”
Perhaps surprisingly, Gamaroff insists that deploying digital objects doesn’t require any big change in media strategy. “It’s a new way of thinking when it comes to the value of a particular piece of digital content, but what we’ve taken great care about in devising our business model is to ensure that a digital media buyer who currently buys ads will be able to transact with digital objects in the same way. They can specify the scale that they want, and deliver a metric they’re familiar with: cost per acquisition (CPA). The media plan for vatoms looks a lot like a media plan for banner ads. It’s a simple matter of proving out to agencies that our results will be better in CPA. All they need to do then is allocate their spend. It’s not to be seen as an experimental or incremental idea. It’s a media proposition.”
But it’s one of the most unusual media propositions I’ve come across in some time. Get your butterfly nets ready.