NFTs, which are mostly viewed as digital artwork, rose to prominence in 2021 and are often used as profile pictures on social media. This craze was driven by a crypto-millionaire, Discord-using Gen-Z audience and is much motivated by FOMO. However, the blockchain technology that is the basis for NFTs offers many opportunities for businesses – both now and in the future.
Adopting an NFT marketing strategy not only shows that a business is forward-thinking but also prepares them for what could be a drastic shift in the transaction process, loyalty schemes, membership programs, and item authenticity.
Non-fungible tokens (NFTs) are non-interchangeable, completely unique assets. Usually, these are digital assets – however, they can also be a digital representation of physical assets (more to come on this later). As mentioned, they are most famously known for their usage as digital art.
Essentially, an NFT is used to establish ownership of unique items. Officially, there can only be a single owner of an NFT at any one time, and the record of ownership cannot be changed unless it is sold via a smart contract on the blockchain to another person.
NFTs are classed as unique items thanks to blockchain technology. The way the blockchain works is a piece of code (or block) is assigned to every asset. This unique bit of code is then used to track an NFTs transaction history, such as when it was sold, how much it was sold for, the wallet it was transferred to, and so on.
As blockchain technology evolves, becoming more usable and accepted, NFT influence and use cases will continue to gain momentum. This is something many brands are already capitalizing on, with Nike, Gucci, and Adidas just three examples.
Although NFTs for brands are in their early stages, they are a powerful marketing tool for generating brand awareness in the younger, more tech-savvy generation. Additionally, while this emerging technology is growing in popularity, businesses are in a position to establish themselves as a leader in the space.
Detailed below are a few examples of how NFTs are already being used and potential strategies brands could adopt in the future to move with the ever-changing digital space. Some of the world's most renowned brands are backing NFTs to be a success and a mainstay for years to come – you should take notice of them too.
Digital & Physical Product Bundles
With the emergence of digital art and the metaverse comes the launch of digital products. One way NFTs and brands come together perfectly is by bundling physical products with a replica digital product. For example, if an individual were to purchase a product online, say a new pair of sneakers. This person has to wait for their sneakers to be delivered. However, brands could provide digital NFT replicas of the items, which the customer would receive instantly.
Although Nike and Rtfkt’s first drop ‘Cryptokicks’ is purely a digital product with no physical replicas, it’s expected they will eventually step into the realm of providing product bundles. If you're unaware, back in 2021, Nike became a pioneer of the digital fashion movement with its purchase of Rtfkt – a brand purely focused on digital sneakers.
Build Engaged Communities
If there’s one thing NFT projects can brag about over traditional businesses, it’s their highly engaged communities. When a community of inspired members buy into a project, believe its cause, and enjoy the utility it offers, it makes for a place of great innovation and engagement.
This particular trait is something brands can harness for their future development and current marketing efforts. Currently, in the world of Web2, businesses have access to an abundance of consumer data. With Web3, this will likely change as tech and finance move towards a more decentralized model that gives power back to individuals rather than corporations.
If you’re questioning how to use NFTs in your business or if it's even applicable, this is most likely the major benefit. Essentially, NFTs empower you to make an exclusive members club for those customers who are your biggest advocates.
Loyalty Cards & Rewards Schemes
Ok, so loyalty cards and reward schemes exist currently. But they’re heavily reliant on your data, shopping habits, and spending more money. If you’re at all familiar with NFT projects, you’ll have heard the term utility. Essentially, utilities are the added benefits you get from holding an NFT and becoming part of a project. For example, this could be exclusive products for members only, VIP access at events, early access to future NFT drops, and much more.
A great example of this is Adidas and its ‘Into The Metaverse’ campaign. They are giving NFT holders access to exclusive products that will be released throughout 2022.
The added value NFTs bring to customers is what makes or breaks their success. If you provide your target audience with rewards they actually want, and exclusive benefits, purely for them, then you’re onto a winner.
Give Power To The People
Understanding your customers, knowing their wants and needs, and understanding their persona has always been crucial elements of marketing and product development. Well, NFT projects are famed for giving power to the people, giving holders a voice, and developing the assets, utilities, and items they want to see. In conjunction with your engaged community, you can harness their interest in your brand and leverage their knowledge to create even better experiences for your customers.
By giving voting powers to NFT holders and members, you can use their insights and opinions to formulate new developments for your NFT project. Also, discover what products they want you to release, learn about their values, what makes them buy from you, and much more.
What makes this so successful is they feel as if they're making a difference to their favorite brand, and you get the insights of your most valued customers.
High-Value Item Authenticity
Have you ever purchased a high-ticket item such as a Rolex or sporting memorabilia and been issued a certificate of authenticity? Usually, this is a signed piece of paper. How trusting must we be as a society to believe something that is so easily forged and spend thousands of dollars on an item? Blockchain technology and smart contracts make this a thing of the past.
Blockchain technology works by assigning unique code to a specific item. Once this code has been created it cannot be replicated or tampered with. Also, it's tracked forever. So, every time an item is sold, the transaction is recorded and stored, bringing 100% certainty to authenticity and ownership debates.
Support Worthy Causes & Show Their Values
Did you know people are more likely to buy from brands they share values with? Corporate social responsibility and sustainability are big factors when making a purchasing decision, especially for younger audiences. NFTs are a relatively inexpensive way to increase brand awareness while supporting important causes and displaying the values of your company.
Recently, Coca-Cola released an NFT collection called Friendship Lootbox. In total, the collection sold for over $575,000, with the proceeds benefiting Special Olympics International. It was a single collection, with the winning bidder to receive four digital NFTs and a customized, fully-stocked Coca-Cola refrigerator.
Another way of supporting charitable causes is to include a secondary sales percentage in smart contracts. As NFTs can be sold on the open market, digital assets can transfer hands (or wallets) as regularly as physical items. When the time comes that a holder of your NFT wishes to sell it, you can specify a percentage of those sale proceeds to be donated to a particular cause. As this is stipulated in the smart contract, these criteria must be met before the sale can proceed.
Well, now you know how brands are using NFTs. As technology evolves, businesses are finding more ways to include these emerging digital assets into their value proposition. They’re the perfect tool for increasing brand awareness, creating new revenue streams, building stronger relationships with customers, and providing target audiences with more reasons to purchase.
While commercial adoption is still on a small scale, NFT future use cases will see businesses making it a key part of their sales and marketing strategies. If your target audience is Gen-Z and millennials, you need to believe the hype, it’s not a fad, and it won’t go away anytime soon.
Furthermore, the technology will become further ingrained in society, so if your audience isn’t quite at the NFT stage yet, they will be soon. We suggest educating yourself and making plans because using NFTs marketing will soon be commonplace.
If you’re exploring how to use NFT for your business, get in touch today, and we’ll be happy to assist.