The buzzy tech concept of the moment is the NFT, the 21st-century version of the “collector’s item” that has been a marketing favorite for ages. Should your brand be investing in developing NFT-centric strategies? Here’s what every marketer should know about this emerging technology.
First, let’s start with the obvious question: what exactly are NFTs? An NFT, or non-fungible token, is essentially a one-of-a-kind, digital file that uses blockchain technology. Think of them like the blockchain version of a particular work of art. However, it is in digital form. You don’t physically own a painting that you can hang on your wall, but instead own a digital token.
This is where the “non-fungible” part of “non-fungible token” comes in. “Fungible” refers to something that can be exchanged for something else of value. Money is the most obvious example of something that’s fungible. We use it all the time to exchange for something else deemed to be of equivalent value. Something that is “non-fungible,” then, cannot be exchanged for something of equal value because that something of equal value simply does not exist. NFTs use unique identification codes that make them truly one-of-a-kind; hence, “non-fungible.”
If all this sounds like something that’s too highconcept and high-tech for ordinary marketing, think again. The NFT market is growing rapidly, at a surprising rate. According to a Forbes report, the total market of volume generated by the NFTs in 2020 was $95 million. By the end of Q2 2021, that number had reached $2.5 billion. Marketers simply cannot ignore that kind of growth.
How can brands harness the power of NFTs in new marketing strategies? There are several different approaches. Each brand will want to tailor their NFT strategy to their particular voice and goals. One popular use for NFTs at the moment is to auction them off for charity as part of a broader campaign. Recent research has shown that as many as 83% of millennials prefer brands that align with their values, so auctioning off NFTs to donate to a charitable cause can raise brand awareness, while attracting potential customers who are now more likely to be interested in a brand that acts to support important causes.
NFTs are all about individuality and one-of-akind ownership., but they’re not all the same. It’s important to think through what your ideal buyer would be looking to get out of owning the NFT, because that will drive strategy. For example, luxury fashion brands looking to get into the NFT game have considered strategies like selling NFT “clothes” that can then be worn by online avatars, or that are the “twins” of real-life, expensive garments, or that explore concepts that would be physically impossible in the real world.
Each of these strategies would appeal to a different consumer. Likewise, brands in any industry should spend some time thinking through what experience they want their target audience to have. This is because digital collectibles, like NFTs, are about the experience rather than something physical and tangible. Could your brand use NFTs to build buzz by turning popular ads into NFTs? Could you create tie-in collectible “assets” to coordinate with a real-life product launch? Could you develop a fresh revenue stream by creating a parallel line of digital goods? The possibilities are endless, only limited by creativity and understanding of the NFT market. Digital media is poised for a particular upheaval, when it comes to the rise of NFTs. Marketing professionals should be keeping a close eye on it. Most digital content is currently being monetized through “middleman” platforms, like YouTube, Netflix, Spotify, etc.. As Forbes notes, the profits from this content get diluted, first by the contract between creator and platform, then by the “meme-ifying” of content that spreads it even further without directly profiting the creator. NFT-based content, on the other hand, is by its nature unique and non-replicable, with a direct line from creator to profit without a middleman. For these creators and those looking to market them, NFTs could represent an avenue of greater control over their branding, as well as a fresh way to bring content directly to consumers.
For brands looking to stand out, getting on board with NFTs could reap major rewards, especially if these digital collectibles continue to grow rapidly. Even if they don’t overtake more traditional types of collectible goods, they’re an intriguing concept that can be used to create unique and memorable experiences – exactly what every brand should strive for in every way.