Lara Smit explores how marketers can unchain the uses of this blockchain technology.
As talk about the metaverse gains traction, marketers need to evaluate how they can participate in new digital trends. One of the ways that they might do this is through non-fungible tokens (NFTs). Why? Well, these tokens are offering brands the ability to develop, control
off of digital assets — a concept that has, until as of late, been impossible.
The notion of marketing digital assets and non-digital assets, using NFT’s may be daunting, but the possibilities are endless.
Massive brands like Louis Vuitton, Coca-Cola, the NBA and Nike are taking the initiative with the NFTs trend. This is why it might be worthwhile to know what NFTs are, how they fit into marketing and what the benefits of using this new technology are.
Curious to learn more? Then you’ve come to the right place.
Here’s the tea on everything NFT:
Non-fungible tokens — better known as NFTs —
What’s the lowdown on NFT?
are digital tokens that certify the ownership of virtual assets. They use blockchain technology, like cryptocurrency, to create unique codes for each asset that document their ownership. This simply means that these codes are created and saved on thousands of different computers across multiple
locations. They are then ‘minted’ into a token that can be purchased and resold. Pretty mint, right?
What sets NFTs apart from cryptocurrencies is that they are non-fungible. This means that each token is unique
in relation to another. On the other hand, with cryptocurrency, the value of ten Bitcoins, for example, is equal to another set of ten Bitcoins.
How do NFTs fit into marketing?
NFTs can be used in marketing when it comes to:
- opening up niche markets
- increasing brand engagement
- creating exclusive products, and
- selling and reselling items.
So, how do each of these apply to marketers? Let’s take a deeper dive:Opening up niche markets
NFTs have become particularly
popular in the art industry after a digital artist known as Beeple sold a collage that he named Everydays: The First 5000 Days
for a whopping $69-million. Crazy, right?
Furthermore, luxury clothing brands like Burberry and Louis Vuitton have used NFTs to promote their brands in the virtual worlds of video games.Burberry
teamed up with a game called Blankos Block Party
to create characters and accessories that can be sold to gamers as NFTs. Louis Vuitton
took a different approach and created its own mobile video game called Louis the Game
as a celebration of its 200th
anniversary. The brand experimented with NFTs by allowing players to collect 30 free NFTs that were distributed throughout the game. These NFTs included ten pieces of artwork created by Beeple.
Additionally, the NBA has turned to NFTs as a means of profiting off of fan culture with the creation of NBA Top Shot
— an NFT marketplace where fans can purchase, trade and sell highlight clips.
In an ironic twist, NFTs have also become their own niche, which means that it will cause its own attraction and it has an audience that doesn’t want to miss out on this trend. Increasing brand engagement
As evidenced by NBA Top Shot
, NFTs can have an intrinsic value and meaning to consumers. Fans don’t just feel like they own a highlight clip of their favourite player — they feel as if they own what the clip represents, which is an important moment in NBA history.
In this way, NFTs allow consumers to feel as if they own a small portion of the brand and its history which, in turn, makes them feel involved in, and engaged with, the brand.
Brands like Taco Bell
have also increased their brand engagement using NFTs by selling them to accumulate funds for non-profit organisations. Using NFTs in this way allows their consumers to develop a strong and positive brand affinity. This is because customers feel
as though they are working with these brands to contribute towards positive and
meaningful causes.Creating exclusive products
By minting a product into an NFT, it makes the product one-of-a-kind and, therefore, exclusive.
An example of this is seen through Nike’s creation of Cryptokicks
. They sold Nike sneakers with a corresponding NFT that could be used to verify ownership and authenticity of the sneakers.
They then took this even further by allowing customers to splice sneakers that had different designs to create their very own, unique hybrid that is authenticated
through its own NFT.Selling and reselling items
One of the biggest advantages of NFTs is that they can be created for any
asset. The most obvious way for brands to profit from NFTs is by minting products and selling them. However, NFTs also allow brands, as the creators of the NFTs, to earn a percentage of the resale price of a product.
This means that the brand will continue to generate a profit from their product, even after it has been sold to someone else.
An example of a brand generating a profit from their product being resold is seen again with Nike’s Cryptokicks.
If a customer has bought a pair of NFT-verified sneakers and chooses to resell them, then Nike receives a percentage of the resale value. Pretty cool, right?
A case for and against blockchain technology in marketing
There are undeniably numerous benefits that come from using NFTs. Not only do they allow brands to monetise digital assets, but they do so in a secure
way that protects these assets from being stolen or manipulated. This is because NFTs serve as a type of verification of authenticity that cannot
be replicated — protecting products from forgery.
However, NFTs do come with a few disadvantages. As mentioned, NFTs are their own niche and customers that don’t fully understand them, and this could make them apprehensive of using these tokens.
Another argument against NFTs is that they are unsustainable
as a large quantity of energy is required to create, store, sell and resell them.
Additionally, not all consumers will be willing to engage in this trend, whether they understand it or not. There is also, of course, the risk that the hype surrounding NFTs is temporary and the strong rooting from its advocates may subside to a dull roar.
Despite the danger of NFTs losing their hype, they carry a lot of potential for brands to market their products. Furthermore, they create an access point for brands seeking to enter into the metaverse.What do you think the future prospects of NFTs look like for brands? Let us know in the comments section below.
If you would like to know more about how blockchain technology influences marketing, check out our article The impact of blockchain in digital marketing
*Image courtesy of Vecteezy