Web3 is changing the landscape of digital marketing. Quests are native web3 campaigns that can help businesses acquire and retain users leveraging web3 assets. In our experience of tech provider in the web3 marketing industry, we identified some principles that may help you craft effective quests.
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What is radically new about web3 marketing?
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The ability to track what is happening on any website – as long as users leave on-chain imprints.
This feature allows web3 companies to leverage a new kind of direct advertising model, where in users are not only engaged but also rewarded for advancing through the marketing funnel within their own applications.
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The most common form of web3 marketing is now in the form of task-based campaigns that help users familiarize themselves with new applications while being incentivized with rewards as token or NFTs.

The general principle of quest is PFA (Pay For Actions ) instead of the traditional CPA (Cost Per Action) model. This shift ensures that users are directly compensated for their participation.
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While quest-based marketing is nascent, we already have gathered data about best practices, dos and dont's that can be useful for anyone in the web3 space.

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How to build better web3 campaigns

Acquisition vs Retention

Acquisition quests mostly leverage traffic from third party websites (such as Tide, Galxe, Layer3) to onboard new users in the app. The obvious disadvantage is a less than ideal UX, with users hopping between platforms to mint NFTs and rewards.
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On the other hand, for activating and converting active users, a branded and integrated experience on your website is often the superior choice. Some projects opt for in-house development, while others employ Tide SDK and widgets to provide native experiences.

Distribution

While some marketplaces may provide traffic, it is far from guaranteed that your ideal user will be the same as a quest platform active user. Therefore, leveraging partner projects (and offer cross rewards) and KOLs is necessary for the quest to succeed.

Another strategy is to leverage social tasks for the reach out: while this tactic shows good “social proof” on your twitter profile, it is actually penalized by twitter algorithms. Having mechanisms that reward engagement based on number of impressions and followers is also a way to boost distribution.

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Designing Quests for Maximum Engagement

• Variable rewards. Recent research highlights that it's not just the reward itself that engenders users satisfaction, but the anticipation of the reward. If the reward is uncertain,the satisfaction triggered when craving the reward is way higher. Maybe I’ll get the rarest soulbound token. Maybe I’ll win the raffle. Example: Magpie introduced variability in its Magpie mafia collection.

• Investment. The more effort we put into something, the more likely we are to value it. Users that spend time doing quests are more likely to re-activate in the future as current users. Design quests to facilitate the initial learning curve of your product, thereby incentivizing continued engagement. Effective quests are an easier onboarding for users.

• Based on merit. Quests can act as a coordination mechanism between Web3 dapps and users, facilitating identification and rewarding of top users. Implementing impression-based compensation for social media engagement or rewarding on-chain actions can enhance this concept.

• Progress. XPs, points, leaderboard, and badges are everywhere for a reason. Humans like and appreciate to see metrics of progress and where they stand next to the others. That’s why embedding user leaderboard or XPs can be vital in driving more engagement.

• Scarcity: As anyone in the NFT community knows and as a lot of research have shown, humans value scarcity. You want to make sure that the reward mechanism has at least some scarcity. Aim for less, high-quality mints to avoid dilution of your brand.

• Reward distribution timeline. There are a lot of quests competing for the same users. Most of them, offer non transparent or non valuable rewards. Distributing the rewards in the very first day of the campaign helps spreading the word of mouth about your quest dramatically, as users will know you are for real. In the Subli campaign for Optimism, we noticed a 100% increase in participation after the first rewards were distributed.

• Sybil protection. Campaigns are flooded by bots. Our estimate is that in campaigns that do not have sybil protection, 80%+of users are sybil. At Tide we implemented different audience systems and Gitcoin Passport integration. While sybil protection adds a UX friction, the Cost Per Action will be much better.
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Closing thoughts

The current incentive landscape of Web3 companies can be seen as exploratory and potentially risky. It's plausible that the next market cycle will reshape rewards systems, aligning them more closely with Web2 principles—iterative, data-driven, and focused on cost and revenue. Quests, in this context, could evolve to refine airdrop mechanics and eventually find application in the Web2 realm.

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