Non-fungible tokens (NFTs) made quite a buzz this year and have quickly turned from something obscure and geeky to hotly desired items of digital consumerism.
Take for example the Nyan Cat meme which cashed in close to $600K earlier this year. That’s quite the sum for a digital cat that has a pop tart as a body and leaves a rainbow trail as it glides through space. And Nyan Cat is only one example in many of how NFTs have become mainstream, very cool, and highly sought after.
NFTs have opened up a whole new type of economy that allows digital creators, artists, brands, and others to offer unique and irreplaceable digital assets that only have one owner at a time.
For brands specifically, NFTs hold the possibility to offer a whole new set of experiences to their customers, to build their communities in new ways, and to increase brand awareness and loyalty.
So what are NFTs, and how are brands making use of them?
NFTs: A brief introduction.
Non-fungible tokens are unique digital assets, or collectibles, that are created using the blockchain. Each NFT has its own unique identifier and metadata that distinguishes it from any other.
Every NFT is cryptographically authenticated via the blockchain which guarantees that the owner is always known since they are recorded on the digital ledger.
NFTs are most often bought and sold using the Ethereum (ETH) cryptocurrency. But since they are unique digital assets, they do not have a precise equivalent in value to anything else.
Much like a rare gem is not equivalent to any other rare gem, since it is unique, so too NFTs’ value is frequently determined via auctions or by the creators themselves.
But NFTs are much more than simple “digital assets”, whether they are artwork, music, photography, VR pieces, or anything else. A whole community has quickly sprung up around NFTs, made up of artists and creators who feel empowered by the possibility to offer their creations independently, and support themselves through that.
Naturally, given the exposure, brands are also attracted to the NFT trend, and for good reason. But there are a few things that you need to keep in mind if your brand wants to join the party.
What brands and marketers can do with NFTs.
An important element of any good marketing approach is to offer meaningful experiences to followers and consumers that are beyond your brand’s products or services. This helps you to create communities and establish relationships that turn into loyalty and support, and increase customer lifetime value.
NFTs offer this exact opportunity. While they may not lead to immediate ROI they can play an important part in supporting all the other efforts that are aimed at generating conversions and sales. Using NFTs, you can:
- Create new and unique brand experiences: NFTs can become a part of your brand storytelling, breathing life into it via something tangible that customers can own and which represents their experience of the brand.
- Increase brand awareness and loyalty: A whole new level of personalization becomes possible with NFTs due to their uniqueness that can generate both greater awareness of the brand as well as loyalty and advocacy.
- Encourage follower interaction and community building: Your brand can generate buzz by opening the door to user-generated content, suggestions from your community about the type of tokens they’d like to see and own or offer them as rewards in crowdfunding campaigns and contests.
- Build your brand’s image and support social causes: Modern consumers put great emphasis on whether brands represent their values. You can demonstrate your brand’s dedication to social causes by using NFT revenue to support charities. Alternatively, you could invite artists to create tokens for your brand and to support them both with the exposure and the revenue generated by their creations.
- Generate interest in your brand and its services or products: Of course, one of the purposes of NFTs is to increase conversions and drive revenue. Interest in the brand is naturally generated as it enters the NFT space and provides these new experiences to the community.
Speaking about a community may sound surprising but it is important to emphasize. NFTs have generated a whole community around them that is strongly centered around mutual respect, authenticity, and support for artists.
Brands that see tokens simply as an opportunity to diversify their marketing strategy but without recognition for artists or the ethics in the community are at risk of being ignored or criticized. For this reason, entering this space requires that you do so carefully and while participating as equal members of the community rather than in an instrumental fashion.
A further word of caution is also due. While there are attempts at making NFTs less energy-intensive this is currently largely not the case. By using tokens, you need to consider their environmental impact and possibly seek ways to mitigate some of their effects.
How brands are using NFTs.
Every day there are new examples of brands using non-fungible tokens as part of their marketing and social media strategies. Following are only a handful of notable examples of how brands have capitalized on the NFT trend.
Early this year, TacoBell, who are known for their sometimes daring digital marketing stunts, put out 25 NFTs to mark the occasion of returning potatoes to their menu.
As such, they were the first fast-food chain to jump on the NFT trend. Within 30 minutes all NFTs had been claimed with one of them being sold for as much as $3,646, and currently being resold for as much as 10 ETH.
What’s more, TacoBell announced that all profits from the initial sale, as well as revenue generated from resales (since the brand receives a small royalty), will go toward its Live Más Scholarship program.
ASICS Sunrise Red
Like TacoBell, Asics was the first company in their industry to ride the wave and give NFTs a try. Their Sunrise Red campaign which launched in July offered a number of limited-edition digital sneakers as well as several Gold Edition items on auction.
In this case, too, the brand’s mission was not to reap the immediate benefits of the campaign. Instead, Asics stated that the NFTs were its first step toward “building a future where digital goods inspire physical activity.” All of the proceeds from the campaign were invested in the ASICS Digital Goods Artist-in-Residence program to support the artists who created the NFTs.
The company also made sure to point out that they understood the environmental impact of the campaign and that they were purchasing carbon credits to offset the emissions.
Robert Mondavi x Bernardaud NFT Collection
The Robert Mondavi Winery has teamed up with the French luxury porcelain house Bernardaud to create a limited series of wines in exquisite Limoges porcelain.
Each of the 1,966 wines has an NFT attached to it, created by artist Clay Heaton, to verify its origin and authenticity, and act as a certificate of ownership. After obtaining the NFT, individuals will also receive their bottles from the winery.
Apart from their artistic value as digital representations of the wines, the NFTs are also intended to act as a safeguard against counterfeit wines.
Non-fungible… toilet paper? Yes, toilet paper producer Charmin played with the acronym and offered a total of 6 digital toilet paper NFTs. These were available as unique items and all of the proceeds collected by the brand were donated to the Direct Relief charity.
What’s noteworthy here is that the company did not create many editions of each NFT but instead opted for single editions. This makes each NFT significantly more valuable due to its one-of-a-kind status and is likely to attract higher bids.
What NFTs mean for the future of marketing.
The above are only some of the many examples of how brands, organizations, and artists are making use of the NFT trend. Non-fungible tokens have opened up a whole new marketing field for brands. This allows them to find new and creative ways of engaging their followers, to increase brand awareness but also to create new sources of revenue.
NFTs are a win-win situation for both brands and consumers, enabling the latter to own a unique piece of a brand that isn’t one of its products which they can also resell at a profit if they wish.
Of course, the question of NFTs’ environmental impact is an important one, and brands will need to consider how they can strike a balance between the trend and its consequences. Given the great interest in tokens, it can be expected that more environmentally-friendly ways of creating tokens will soon be developed.
That said, NFTs seem to be here to stay, and they offer a great many marketing possibilities!