After making its entry in 2014, from being experimented widely, NFTs have made a breakthrough over the last year making to the headlines of early 2022 as the most sought-after item in the digital world. As NFTs started selling for insane amounts of cash, it became the sudden internet craze, rising in popularity in split seconds at a rapid pace.
For example, it only took Jack Dorsey to post a simple 5-word tweet even with misspellings which later sold off for a screaming 2.9Million dollars! (Source: cnbc.com)
The highlights of NBA were sold as NFTs to Basketball fans worldwide for millions of dollars and the digital artist Krista Kim sold her artwork “Mars house”, the first sold digital NFT home, a form of virtual art for over $500,000 (see image below)
But why are people insane enough to pay over $600,000 for a mere piece of something you can easily find online for free ???
Here is why.
The rise in technologies such as blockchain allowed data to be decentralized creating a more transparent and secure approach over web2.0 removing the middleman from almost any industry. This enabled the creator economy- the third era of the web, where almost anyone could be a creator where they own and be fairly compensated for their hard work. This underlying blockchain technology, which NFTs run on, opens up many possibilities that enhance the brand-customer relationship. NFTs could be very promising in the future of web 3.0 and marketing, which we will be discussing later on in this article
What are NFTs and why can they be so valuable?
NFTs also known as a Non-fungible token is a certificate of authentication for anything digital or in the real world. Just as a deed for a piece of land that certifies your ownership of a physical asset, an NFT certifies a person’s ownership of any asset, digital or physical. There are a million amounts of artworks, GIFs, memes, images, videos, etc on the internet, but an NFT allows a single person to claim his/her ownership of that digital asset which makes it one of a kind and irreplaceable raising its inherent value. These digital assets are stored on the blockchain, for everyone to validate the proof of ownership, similar to the programming behind cryptocurrencies. This is why it is called non-fungible which means not replaceable. Just like the famous “Girl with a pearl earring” (see image below) which is one unique item to the whole world, the prices of NFTs are determined by the creator himself in a buy and sell auction.
Are NFTs only for artists and creators?
No, not just artists and creators, brands can also be active in the space by participating in auctions and selling NFTs. Popular brands such as Coca-Cola and Starbucks have auctioned off their branded NFT collectibles to fundraise for a social cause – as a means of giving back to the society, thus contributing to its brand equity and image.
How NFTs relate to Marketing
Unlike other industries, NFT’s use in Marketing isn’t always about selling assets for unbelievable amounts of cash. Other than raising money for a social cause to gain brand exposure, the uses in Marketing are different and still under exploration.
Think about the possibility of trying out products in a 3D world. Brands can go above and beyond to deliver an immersive and meaningful experience that allows customers to interact with the products in a virtual environment.
Did the Metaverse come to your mind?
The metaverse is a virtual world that connects all kinds of near real-life experiences together. If you can’t wrap your head around the concept you can watch these Sci-fi movies – Blade Runner, The Matrix, or Snow Crash.
With Facebook’s recent rebranding to Meta, the buzz about the Metaverse woke up again.
NFTs In the Metaverse: creating new and unique experiences
NFTs are digital assets and the metaverse will help people experience them in a virtual setting. These are coined as Metaverse NFTs: the virtual items people get to experience once they enter the metaverse. Just like in the real world, people can interact and socialize using their avatars.
Remember Meta (Facebook) launched a feature to create a customizable avatar for your profile picture some time back?
Your avatar can wear your favorite Gucci NFT shoes and NFT designer clothing. Similar to video games and crypto collectibles you can claim ownership of the items in the Metaverse in the form of NFT.
So, How about branded NFTs like the GUCCI NFT shoes?
Have you thought about Branded NFTs? A branded NFT surely guarantees an enormous commercial value for branded items for the foreseeable future of aftermarkets. Due to this hype and the fear of missing out on these rare limited edition items, combined with the excitement of owning a branded NFT; frenzied fans of famous brands will rush into the metaverse to grab a piece of the latest one of a kind.
This sensation is going to be multiplied and more impactful than the FOMO effect Apple creates on buying the latest Apple product. Once the latest Apple iPhone version is released the extremely loyal Apple buyers rush to the department store to own it and won’t mind spending a hefty amount of cash after selling their old version in the second-hand market. They are on their toes to discover the new features and show it off to their family and friends. Whereas the other tiers buy the second and third-hand iPhones also sold at a relatively higher commercial value and share the same excitement!
But unlike iPhones, NFTs are one to the whole world and nothing is equivalent to it. This will provide a unique utility experience for you while being excited to own the token that represents it.
So, seemingly for most brands, the starting point of utilizing NFTs are in the form of limited edition collectibles. Loyalty-driven Brands founded on innovation, especially in gaming, lifestyle, luxury, and even fashion seem to be the first adopters of NFT campaigns of such type.
NFTs in the form of loyalty programs
Earlier we talked about how loyalty-driven brands are in the forefront of incorporating NFT into their mix. When innovative brands get a sniff of what NFTs can bring to their customer-brand relationship, it is no wonder they are trying to capitalize on it.
Think about loyalty programs. An NFT that represents the unique data profile of every single user gives way for brands to deliver hyper-personalized brand experiences after being able to target using the finest data. This way, the right mix of offering whether it is in the form of rewards, gifts, products, etc will find the right customer who actually needs it, exactly at the right moment, creating a meaningful experience like never before which ultimately increases customer lifetime value. This level of personalization is sure to reach many potential customers making brands stay top of mind.
Is NFT a mere Fad?
While the current NFT hype is from a bunch of discord-obsessed Gen Zs, on TikTok and Roblox, NFTs have so much potential to grow in the future.
As of now, NFTs remain a thriving market with spending amounting to around $22 billion which is a 94x increase from last year! In spite of that, more and more brands will strive to grab the NFT pie.
Will your brand do so too?
Let us know in the comments below!
Credits to sources
- Google Trends