Guest post by Kent Lewis, President at Anvil Media
I was recently asked by an editor of a financial publication about NFTs (non-fungible tokens), and it caught me flat-footed, as I was hardly an expert on NFTs at that point. You can check out the brief article on Investing.com yourself: NFTs are “the next evolution of overbuilt and underutilized platforms.” The brief interaction got me thinking about the viability of NFTs for brand marketers.
The result was an April 1st press release from my agency, Anvil Media Helps Brands Engage via NFTs. While the first half of the press release is primarily an April Fool’s joke, the potential of NFTs is genuine. This article explores what NFTs are, why they matter to marketers, and what brands can do with them.
What are NFTs (Non-Fungible Tokens)?
According to Wikipedia, A non-fungible token (NFT) is a unit of data stored on a blockchain (a digital ledger) representing a unique digital item. An NFT is a cryptographic token, but unlike cryptocurrencies such as Bitcoin and many network or utility tokens, NFTs are not mutually interchangeable, i.e., not fungible.
NFTs are based on blockchain technology and work similarly to Bitcoin (and other cryptocurrencies). Instead of cash, they are assets like art or music. They can take many digital forms, including images, animated GIFs, music, videos, social posts, games, trading cards, events and even virtual worlds. A non-fungible asset is completely unique and is neither replaceable nor divisible.
Why do NFTs matter to marketers?
What makes NFTs valuable is that they are unique, trackable and can be easily bought and sold. For the first time in history, digital assets can be protected from fraud, forgeries and fakes. Assets “minted” on the blockchain have a clear and transparent provenance that cannot be duplicated or copied.
NFTs also create monetization opportunities, as each NFT token includes a history of ownership, which is easily accessible and verified via a distributed network. In essence, digital assets can now be uniquely created (minted), distributed, managed and measured via NFTs. That means marketers and brands can create, manage and monetize digital assets like never before.
What are the benefits NFTs provide brands?
Beyond the ability to create new digital products and brand extensions, NFTs provide brands a host of new possibilities when it comes to marketing.
For starters, NFTs allow for attribution and provenance not available today in digital marketing. For example, NFTs allow advertisers access to the source and “history” of every communication made, allowing for better attribution and fraud reduction. NFTs also provide copyright protection unavailable before blockchain.
Brands can create content that has viral protection without concern for theft or manipulation. The early-stage use of NFTs by brands provides exceptional PR buzz levels that boost awareness, although that will not last. Inherently, NFTs offer more opportunities for brand engagement and experiences. While non-NFT content is ubiquitous, NFTs are truly scarce (for now, at least).
What are the challenges brands face with NFTs?
While we are still in the gold rush phase with brand NFT efforts, early forays highlight challenges with campaigns. Most of the brand efforts in the NFT space are publicity stunts: selling digital art for insane figures like Beeple’s $69 million NFT masterpiece.
Most early adopter brands didn’t think through what the NFT asset represents and what it enables its owners to do; they were just testing the waters. More practical challenges for marketers include costs (minting NFTs can be expensive and greater than the value of the NFT itself). Additionally, creating NFTs requires energy, resulting in a large carbon footprint (which may rule out eco-friendly brands).
Most importantly, laws and regulations haven’t kept up with the technology, including IP, copyright, licensing and taxation liabilities. However, today’s most significant challenge facing those entering the NFT markets is the likely crash that will ensue in the coming months, as the market corrects post-honeymoon.
What are some early examples of brands using NFTs?
Although NFTs have been around since 2017, they’ve only recently gained notoriety, particularly in the arts, entertainment, arts, gaming, sports and collectibles industries.
Trading cards have become big business in the NFT space since CryptoKitties were first minted. According to USA Today, NBA Top Shot has sold more than $200 million worth of NFT cards and related collectibles so far. An autographed Luka Doncic Dallas Mavericks NBA rookie trading card sold for $4.6 million in one of the more significant transactions.
What are the key applications for NFTs for brand marketing?
There are a host of NFT applications brand marketers can leverage to achieve greater awareness, engagement, customer retention and incremental revenue. I’ve outlined just a few of the most obvious opportunities NFTs provide brands below:
Brand Awareness: The most obvious benefit of creating NFTs is generating brand awareness. Brands have generated a ton of free press as early adopters: Pringles CryptoCrisp, Taco Bell taco gifs, Pizza Hut pixelated 1 Byte Favourites and Charmin NFT(P), among others.
The natural evolution of awareness-building may be interactive contests (digital treasure hunts, etc.) and promotions (earn an NFT by taking these actions) to get in front of prospective customers. One popular application for generating awareness and goodwill is utilizing NFT assets to raise funds for charities.
Celebrities like Lindsay Lohan have generated significant funds by attracting wealthy early adopters to invest.
Brand Engagement and Perception: A more practical use of NFTs for brands is to increase brand perception and engagement via the creation and distribution of limited-edition digital collectibles, experiential events and memorabilia.
Most conversations around NFTs today are around the creation (often via collaboration) of limited-edition assets. The more powerful application of NFTs for engagement relates to creating unique events or communities.
For example, $RAC, a social token issued by recording artist RAC, grants token owners access to a private Discord group and gives them early access to merch drops.
Luxury brands are early adopters, as they see the value of expanding reach to new markets while maintaining their status. Fashion brand Gucci created virtual sneakers to allow prospective customers to try them on virtually before purchasing IRL. Still, NFTs and VR technology use solidify the brand’s forward-thinking and leadership in the fashion and footwear industries.
Luxury watch brand Jacob & Co. auctioned off a one-of-a-kind NFT digital watch on ArtGrails. The highest bidder will receive all the physical accouterments that come with a high-end timepiece, like a certificate of ownership and a case. This is just the beginning of what is possible.
Customer Engagement and Retention: Fundamental NFT applications for customer engagement and retention include gamification, badges and associated incentives. Effectively, NFTs provide a foundation for passive loyalty programs that can collect customer data and build in the rewards with little effort from the brand or consumer.
Today, NFTs can contain product information, future discounts for purchase and other information like source materials. Down the road, NFTs could allow customers to resell products they own and receive future loyalties if that product is resold. More importantly, NFTs are ideal for controlling access to assets like websites and events, including product releases.
Product Extension: The most exciting opportunity for brands and other content creators is to explore incremental revenue streams.
At a basic level, NFT allows content creators to better measure and monetize their assets. Simultaneously, service-based businesses can create tangible assets and license or monetize royalties based on use.
Consumer brands with younger audiences may leverage the energy around online gaming, as Fortnite demonstrated what is possible, generating revenue from the sale of digital goods within the game. Current examples of NFT games include Ubisoft Rabbids, F1 Delta Time and Microsoft’s Azure Space Mystery.
The Nike CryptoKicks is a relatively evolved concept of integrating the digital with the physical world. These NFT sneakers allow users to ‘breed’ their own custom sneakers that may then be manufactured in the real world. The rest of the fashion industry will be following suit, despite Nike’s initial patents.
Tokenizing Time: As an agency owner, I’m always looking for ways to get away from the billable hour. NFTs offer a new way to generate revenue based on time.
IDEO CoLab Ventures investor Reuben Bramanathan tokenized his time where one $CSNL token equaled one hour of his time and was freely traded. Brooklyn Nets guard Spencer Dinwiddie reportedly plans to release a digital token for others to invest in his contract, essentially creating NFTs for his future income.
This trend will expand to musicians and other professions as well.
A natural extension for brands in the publishing or event industry is the use of NFTs to create individual access tokens that allow various levels of subscription, membership or event access. These NFT tickets or tokens may be bought and sold by collectors that value the experience or even the event’s nostalgia.
Beyond gaming, there is also a virtual world ‘metaverse’ NFT application: real estate. SuperWorld is a virtual recreation of Earth, where everything on the surface is for sale (from the Taj Mahal to The Great Wall), and users can create and place additional assets on the planet for sale. Brands can create their own virtual world or engage in SuperWorld to host virtual events, ala Second Life from more than a decade ago.
Whether you are a brand strategist, creative, product marketer or developer, NFTs provide a unique and compelling opportunity to increase brand awareness, engagement and incremental revenue streams. Start exploring NFTs today before the opportunity passes you by.