Bubble or not, NFTs are fast becoming unignorable for brands.
Unless you’ve been living under a rock for the last little while (and honestly, who could blame you) you’ll have noticed that this 3 letter acronym has joined the pantheon of internet shorthand – alongside legends like LOL, BRB and WTF.
But WTF is an NFT? And why should digital marketing and advertising GAF?
Right this way 👇
NFT stands for non-fungible token.
A fungible token is something like sterling. A network that has an equivalent and can therefore be directly exchanged.
A non-fungible token means there’s no equivalent. It’s a representation of scarcity and of value and possibly the only way to guarantee authenticity and ownership of digital media/art.
How it’s done is by creating thousands of copies on the blockchain of a chosen cryptocurrency (a blockchain is basically a digital ledger of transactions). These act as receipts, proving that the NFT in question is original and owned by X.
But NFTs face plenty of criticism and scepticism.
‘Mining’ NFTs is when the cryptocurrency that supports them (usually Ethereum) maintain their blockchain to make sure they have secure records of ownership and transactions. This usually happens during sales and resales of tokens and is done using a network of computers employing cryptography.
The energy usage in doing so is astronomical, so to keep costs down, ‘dirty’ energy, i.e. energy that comes from fossil fuels is often used.
However – the issue is one that is known to the crypto community. You can make sure that mining is done using clean energy – and compared to the environmental impact traditional banking practises have had – or literally mining for gold – the energy cost involved in NFTs has been described as ‘a rounding error’.
Some opponents claim that this new crypto boom is anti-democratic and only serves to make the rich richer.
But again – traditional forms of investment don’t?
You could argue NFTs democratise the ways in which creators can sell and keep earning because blockchain is public. They always know who owns what.
Plus if we take Bitcoin, the amount of super-rich with large holdings is reducing, as the amount of people with smaller holdings is increasing.
Many think the crypto/NFT world is a bubble that’ll burst.
And it may well do. But all the signs suggest it’s following the same mathematical models of how other networks develop and appreciate in value exponentially.
55% of the world’s top banks now have some crypto exposure and increasingly more brands are starting to tip their toes into the world of NFTs, brand coins, and even the metaverse.
Few could forget the moment when Andy Murray finally won his first Wimbledon title, ending 77 years of waiting for a British male champion.
8 years later he has landed +$170k, auctioning off footage from the moment of triumph as NFTs.
This raises an interesting idea.
What if brands could sell their most iconic ads as NFTs?
They’re branded assets so will always retain an inherent value, plus this way a company could monetise a dormant asset whilst gaining brand ambassadors in the collectors.
To promote the launch of Marvel Mightys, Marvel is releasing a Captain America themed NFT collection, repeating the strategy they used when introducing new Spider-Man content, which sold more than 60,000 examples in less than a day.
This collection features five NFTs of differing rarities that will be randomly included in digital packs for an affordable $13 each.
Here we see NFTs in a new light. Not only are they a scarce and valuable asset – but they also become campaign assets too. The PR of the novelty, the literal buy-in fans can enjoy, plus all the benefits that come with being a highly recognisable brand anyway make it a highly sound strategy.
Back in 2019, Nike registered the patent for ‘CryptoKicks’ where blockchain can be used to attach digital assets to sneakers.
When a pair of “CryptoKicks” is bought, an NFT unique to the shoe comes with it, ensuring the shoes’ authenticity, even if it’s resold.
“CryptoKicks” owners will also be able to “breed the digital shoe with another digital shoe to create ‘shoe offspring’ and have the offspring made as a new, tangible pair of shoes.” – tapping deeply into the power of personalisation – gold dust for creating customers for life.
Being able to ‘NFTify’ physical assets you have, is an unbelievable opportunity for brands. You can create scarcity, demand and revenue on previously static assets. Nike wants to for trainers, but what if you make, say, cars and want to give your audience the chance to own a ‘timeshare’ in a limited edition model?
The possibilities become endless.
This one’s a bit nuts. But it speaks to the increasing legitimacy and accessibility of NFTs.
In the collection’s own words:
His Holiness XIV Dalai Lama is making his first appearance in the NFT space with these 10 limited edition photos. Those who hold these photos will receive blessings, prosperity, and peace. OM MANI PADME HUM!
Burberry have created NFTs that you can use to customise your character in the game Blankos Bloc Party.
And Louis Vuitton have upped the stakes by making their own game, where the first few users will be rewarded with NFTs by playing.
Financial value aside – being in this space is crucial for luxury brands famous for tapping the zeitgeist, and being ahead of the curve.
“It’s all about culture, and NFTs are having a cultural moment. I don’t think there’s anything wrong with leaning into moments in culture and experimenting. We have to be playing with all of these things.”
Rachel Waller, Global VP of Channel Innovation, Burberry
And so ends a fairly whistle stop tour on NFTs and their potential uses for brands.
From minting your own existing assets – to creating new ones that give your communities new buy in and ways of sharing in the increased value– all the way through to leading the way in the still nascent metaverse – you don’t have to like NFTs, use them or believe that the bubble won’t burst.
But the one thing you can’t do is ignore them.
These products are only growing in popularity, so having a working knowledge and position on the area will keep your brand relevant and always open to potentially lucrative new revenue streams.
That’s why in part 2 we’re going to be putting our crypto where our mouth is, and taking our own first steps into minting some NFTs.
Until then, G2G.