NFTs – Hype or Game changers in marketing?

If you have spent your entire 2021 without hearing about NFTs even once – Congratulations, you must have achieved digital ‘Nirvana’! If you have heard about NFTs, depending on where you are on the spectrum from “Huh, do I need to care about it yet” to “Wow, this is where the future is”, read along to find out if your position changes!

Let’s start with the basics – What is NFT? In simple terms, NFT is a digital collectible. NFT stands for Non-Fungible Token. Non fungible means something that cannot be replaced, or in other words is unique. A Non-Fungible Token or NFT is a blockchain based, cryptographically authenticated digital file that allows collectors to uniquely own limited quantity digital artifacts. An NFT can be anything digital, but typically it includes art, music, video game items, trading cards, sports moments, Memes, virtual fashion, and other digital collectibles. 

While the first NFT was created in 2014, it wasn’t until 2021 that NFTs truly dominated the news. If Jack Dorsey’s first tweet that sold as an NFT for $2.9 Mn, Beeple’s NFT art piece titled “First 500 days” that sold for $69 Mn, or Nyan cat animation that sold for $600,000, left you scratching your head, you are not alone! While NFTs are far from mainstream, we have seen several brands jump on to the bandwagon. For example, Taco bell sold Taco themed gifs and images as NFTs, where all the proceeds went to the Taco Bell Foundation. Nike has started using NFTs to confirm the authenticity of its shoes. When you buy Nike shoes, you will also get a digital version of the shoes in your digital locker. Coca Cola also launched an NFT auction of digital collectibles with the proceeds going to Special Olympics.

With top brands getting into NFTs, the question that arises is whether other brands should start paying serious attention to NFTs or treat it as a passing fad.

Even with the hype surrounding NFTs, I believe that NFTs present a real opportunity for brands. NFTs tap into the human needs of exclusivity, ownership and authenticity. If used well, NFTs can help create unique brand experiences, increase brand awareness, encourage customer engagement, and create more interest in the brand and products. For brands, this is could be an opportunity engage a core fan base by creating exclusive experiences, turning users into investors, and generate additional revenues.

Brands can use NFTs to:

• Provide personalized gifts and vouchers to their customers
• Collect data, reward crowd funding, or source ideas and co-create with customers
• Programmatically distribute mobile advertising campaigns across various digital platforms
• Create and distribute limited digital memorabilia for milestones
• Collaborate with and support artists and charities
• Run lead generation contests and memorable ad campaigns

Brands can really elevate the customer experience, by using NFTs creatively in their marketing. Here are a few ways in which they can do that:

• Brands can include an element of surprise in their NFTs. This can drive up both anticipation and entertainment for the users. In fact, the concept of NFT mystery boxes may be catching on. A mystery box may have an NFT with variable rarity levels, keeping the element of surprise.
•  They can link the release of their NFT to an important date captures a key moment in the brand’s history. By letting fans own a piece of it, they can let their users collect items that have both emotional and artistic value.
• Brands can turn physical products into limited edition digital versions to create additional revenue stream.
• They can combine physical gifts with digital artwork or vice versa to delight consumers. Many brands offer physical products or services bundled with their NFTs, driving up the utility value.
• Brands can link NFTs with a social cause to raise funds in a way that would not only reinforce brand image, but also drive higher engagement and loyalty.
• Brands can do exclusive airdrops for their loyal communities to create buzz and chatter.

Despite the initial promise, NFTs have their challenges. Since NFTs are bought with cryptocurrencies, which consume high amount of electricity producing huge carbon emissions, the environmental impact of NFTs may be at odds with the sustainability efforts of brands. Further, the collectibles market may end up being a limited use case, which may not be a game-changing opportunity. High minting fees, unclear laws around ownership and taxability, and volatility in the crypto market may further add to the woes.

So, what should brands and marketers do at this point, when it comes to using NFTs for marketing?

Brands can start small, to minimize their risk, yet capture early mover’s advantage. They must clearly define their objective and use a test and learn approach for their NFT campaigns. Being open to experimentation and being agile in their marketing efforts will be key. They should also tie their campaign to the brand purpose, and use the NFT campaign to tell their story, and live up to their brand promise. This would ensure that their campaign yields long term benefits instead of looking like a mere publicity stunt.

In summary, we can all agree that we can’t ignore NFTs at this point. While NFTs by themselves may not seem like a big opportunity yet, but with the rise of blockchain, metaverse and web 3.0, we might have an entire ecosystem and uncover many more use cases. There are already several communities and influencers evangelizing NFTs. In fact, we have an entire generation growing up, that is willing to spend more money on digital assets than physical ones.

We don’t know what the future for NFTs holds, but if you are a brand or a marketer, I would suggest that you dip your toes in the NFT waters.

(Article originally published at: https://www.linkedin.com/pulse/nfts-hype-game-changers-marketing-neha-verma/)