Technological advancements have been moving at warp speed, and the blockchain has thrived as a result. The letters N, F and T have taken over the internet as the non-fungible token market tripled throughout 2020. There is a booming interest from members of the public who want to invest and trade rare digital assets, so much so that the virtual goods market is expected to reach $400 billion by 2025.
But what are NFTs?
What are NFTs?
An NFT is a non-fungible token.
What does that mean?
Tokens are tradable assets that operate on a blockchain (a database that records every transaction in a permanent public ledger). These tokens have a monetary value and can also be of use to holders by providing them with access to exclusive assets. The value of tokens fluctuates based on demand.
Fungible means an asset can be exchanged for something of equal or similar value, for example cryptocurrency. Cryptocurrency can be traded for goods of an equal value.
Therefore, non-fungible assets cannot be exchanged or traded at equivalency.
So, an NFT is essentially a one-of-a-kind digital trading card. Notable NFTs include Nyan Cat, which sold for 300.00 ETH (about £424,000), the Charlie Bit My Finger video that sold for £500,000 and the first ever tweet from co-founder Jack Dorsey that sold for more than £2 million.
Most NFTs are part of the Ethereum (ETH) blockchain. ETH is a cryptocurrency with a blockchain that supports NFTs by storing extra information that makes them work differently from an ETH coin.
just setting up my twttr
— jack (@jack) March 21, 2006
The popularity of NFTs has resulted in celebrities, new networks and brands creating their own NFTs to get in on the hype.
How brands are using NFTs
NFTs are incredibly versatile. They can be used by brands to represent digital files such as art, audio, video and even virtual worlds or fashion. The versatility of NFTs has given brands a new way to tell a brand story and interact with audiences.
By using NFTs, brands can create unique brand experiences, increase brand awareness, encourage audience interaction and engagement, and create a trending interest in their brand and products.
While NFTs lend themselves to premium brands that rely on exclusivity, other sectors and creators with strong personal branding will thrive in the digital space.
Gucci’s Aria NFT
Gucci is no stranger to the digital realm, having partnered with Roblox and dipped its toes into digital sneakers. However, the Italian fashion label has now delved into the online-only art world of NFTs. Gucci auctioned an NFT inspired by its AW21 collection Aria. The four minute film, appropriately called “Aria” was auctioned as part of the Proof of Sovereignty NFT sale hosted by Christie’s.
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The NFT sold for $25,000, but Gucci used the opportunity to show its charitable side and donated the profits to UNICEF USA to support its COVAX program.
By creating the Aria NFT, Gucci has created a new way to sell a collection’s story, which creates excitement within the Gucci community as it means die-hard fans can buy and own an exclusive part of Gucci’s story. In addition, the fashion house has supported an important cause, contributing to a positive reputation.
Nifty’s x Space Jam: The NFT Social Platform
Launched alongside a partnership with Warner Bros., Niftys.com is the first social NFT platform dedicated to bringing digital collectables to mainstream audiences. The partnership offers limited-editing NFTs featuring characters from the live-action/animated film Space Jam: A New Legacy. The NFTs include beloved Looney Tunes characters and basketball champion LeBron James.
Space Jam: A New Legacy is one of the first major motion pictures to create excitement using digital collectables. The platform launched on July 12 with over 90,000 collectables available for the film, and within 24 hours they were all sold out. There were 5 rarity types of collectables available: common, uncommon, rare, epic and legendary. Each type had a more limited number of NFTs available.
After signing up for a Nifty’s account and sharing a social media post, users were given two NFTs of varying rarity. Users could then try their luck at getting a rare collectable by purchasing a $2.99 NFT.
Proud owners of Space Jam NFTs were quick to share their new digital collectables on Twitter, creating an organic buzz around the upcoming film release and new platform.
— DABERNIE (@therealbernando) July 12, 2021
Fast food restaurant Taco Bell commissioned a series of GIFs and images based on its food to join in the NFT craze and to support the Live Más Scholarship. Within 30 minutes of putting their NFT(aco Bells) up for sale on Rarible, all GIFs had sold out. The GIFs started at a bidding price of $1 but sold for thousands of dollars each.
— Taco Bell (@tacobell) March 8, 2021
By creating and selling NFTs, Taco Bell generated a huge buzz on social media and mainstream media. By driving brand awareness and supporting a good cause, Taco Bell increased their relatability to and likeability from customers. The initial announcement Tweet received over 3,200 engagements, which is significantly higher than its average.
Kings of Leon NFT Album Launch
In arguably one of the most bizarre and creative album launches of all time, Kings of Leon released their album “When You See Yourself” in the form of an NFT.
Creating three limited-edition types of tokens, Kings of Leon created a tradeable collectible. One type of NFT featured a special album package, the second offered live show perks and the final type of token featured exclusive audiovisual art.
Using NFTs to create limited edition collectibles is a creative way to foster brand loyalty. Alongside this NFT album launch, Kings of Leon created a series called NFT Yourself where people could bid on one of six “golden ticket” experiences, which offered fans four front row seats to the show of their choice during each tour for life.
RTFKT Digital Sneakers
Designing an NFT can, understandably, help brands disrupt a market. RTFKT was a little-known Chinese virtual sneaker brand before it designed an NFT sneaker for Chinese New Year and became a digital fashion powerhouse.
The virtual, pure gold sneaker was auctioned off on Chinese digital marketplace Treasure land and sold for over £20,100. While this is impressive in itself, it doesn’t even touch the £2+ million generated in another NFT collaboration with artist FEWOCiOUS.
Limited edition NFTs are a great option for creating limited memorabilia to celebrate special milestones or holidays. Brands can use these NFTs in marketing campaigns around those seasons.
The opportunities from NFTs
Brands, celebrities, bands, news networks and films have all begun testing out how NFTs can work for them. From becoming a new revenue stream, building brand awareness to supporting causes from token sales, what can NFTs do for brands?
NFTs are a great way to deliver quirky and exclusive brand experiences for your customers. By creating limited edition NFTs that contribute to brand experiences and provide access to collections, brands can foster a loyal fanbase and create an illusion of individuality and exclusivity.
Although NFTs are being used more frequently, they are still a novelty to many people and are considered quite exciting. This means they have the potential to create a huge buzz online and on social media for general brand awareness, campaigns and product launches. Brands can create enthusiasm for a launch by giving users access to limited tokens. For online or in-person events, brands could offer customers different levels of access. For example, for 300 tokens customers would be granted general admission to an event, for 500 tokens they would receive a gift and for 5,000 they could have exclusive backstage access to the event space and products.
Brands can tell a brand story through collectible assets that are in short supply and exclusive. People have already shown they are willing to pay large amounts for exclusive NFTs, so die-hard brand fans will jump at the chance to own a part of their favourite brand’s history. In addition to this, brands could monetise their best performing ads again and again by turning them into NFTs. Popular and funny ads perform well online, so customers would want to buy and own a notable ad in a brand’s history.
Fashion, footwear and accessory brands could create digital versions of their most popular products and sell the NFTs on digital fashion marketplace. Brands could collaborate with digital creators to sell digital items on marketplaces such as Artisant.
Creating an exclusive digital collaboration satisfies brand super fans as they have a new way of supporting a brand. In addition, by collaborating with a digital artist they are authentically entering a new type of market and opening a revenue stream that supports a niche.
Considerations for Branded NFTs
While the NFT market is incredibly tempting at present, if too many brands attempt to enter it, NFTs could become tiring and boring. Only projects that are created well will stand out against the masses. How can brands guarantee their NFTs are a success?
As with any campaign or launch, brands need to build NFTs authentically. Any NFT created by a brand needs to be a digital representation of its values, whether it’s the digital collectible itself or donating to a relevant cause. NFTs need to be carefully thought out so they can provide real and additional value to customers and community members. Building an authentic brand NFT could take time, but it will undoubtedly solidify a genuine connection with true fans and audience members.
Brands also need to make sure an NFT is what their communities really want. Positive connections drive sales much more effectively than the prospect of owning a cool digital item. NTFs are generally well received on social media platforms, but brands should still make sure NFTs are relevant to their community. A way to make NFTs relevant to a community is to collaborate with creative influencers and artists. Not only does this expose the NFT to a whole new following and audience base, it reinforces that NFTs are suitable for the brand.
Any campaign, event or launch needs a build up. Even if a brand is creating an NFT for the purpose of promoting an event or launch, the announcement of the NFT itself should be a focus for a brand on social media. Suddenly dropping NFTs could seem random and out of place to audience members, but by creating a hype, audiences will be excited and more inclined to check out the digital art.
The future of branded NFTs
NFTs are still new and exciting, but their practical use is somewhat limited. Initially NFTs seemed like an art fad, designed for people to show off their crypto-knowledge and money. However, people have shown interest in them and are willing to spend huge amounts of money on them, indicating NFTs will be sticking around for a while.
NFTs give brands a new avenue to create memorable experiences for customers. They’re an exciting way to engage and interact with new and current audiences. The new economic model allows both consumers and brands to benefit from success in a way that hasn’t ever been available.
While NFT technology is still new, brands should keep a close eye on it as those who truly understand the benefits of NFT marketing will come out on top.
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