Since the beginning of 2022, the marketing industry has been filled with heated discussions on the Metaverse, Web 3.0 and of course, NFT. On one hand, it seems like these topics oscillate between science fiction, ambiguous speculations and possible scenarios of what is yet to be achieved. However, we have seen the first marketing campaigns of haute couture houses in virtual reality, and observed with confusion, major NFT purchases of many public figures such as Reese Witherspoon and Gary Vaynerchuk.
All things considered, despite the pervasive uncertainty, one thing we know for sure – there is plenty of space for discovery and experimentation. In fact, as the NFT market is still to be explored on a mainstream scale, becoming a trailblazer in the digital marketing of the (not so distant) future, is something relatively realistic and doable. So, can we finally cross off the outdated statement that everything has already been done and have some fun?
What Is an NFT?
Starting from the very basics, NFT stands for a non-fungible token. Non-fungible (non-interchangeable) assets are things like unique trading cards, songs, digital art or generally, any common goods that because of their distinctive qualities and value cannot be simply traded for something else as opposed to dollar bills or bitcoins. One dollar bill has an identical value to the other dollar bill, but an NFT of classic meme character Nyan Cat does not equal an NFT ticket to a prestigious fashion event, or an NFT of original Banksy artwork. NFTs are also similar to cryptocurrency in the way that both of them are stored on the blockchain, a digital ledger, but this is where the similarities end.
You might think, why would I pay for an NFT of a meme that has been spread across the entire internet and can be easily downloaded with one click? Well, the exclusive value of NFT lies not necessarily in the particular object, but in the purchase of the original digital asset with a specific encryption key, and a detailed record of the ownership. For this reason, Jack Dorsey, the CEO of Twitter, was able to sell an NFT of his first tweet from 2006 for nearly 3 million USD, despite the fact that anyone can access it at any time globally.
NFTs have been popularised mainly thanks to CryptoPunks, CryptoKitties and The Bored Ape Yacht. All of the above are available on Ethereum, a blockchain with the second most popular digital currency after Bitcoin, Ether.
Initially aimed for collecting, purchasing digital commodities like CryptoKitty or Bored Ape over time gained prominence similar to entering an elitist membership club with exclusive access to private concerts and events. Snoop Dogg (on Twitter, known as Cozomo de’ Medici) even called himself a grand patron of the digital arts, not only actively investing in full sets of rare BAYC (Bored Apes), but other famous NFT collections too.
Why Are People Buying NFTs?
In the simplest terms, NFTs can express support towards a brand, platform or person, hold a personal sentimental value, serve as an investment for long-term business objectives or simply, be part of a bigger collection of unique items, similarly to those accumulated through traditional auctions of art and antiques. However, while some NFTs are designed solely for trade or admiration, others can also be used for gaming, for instance, in the form of personalised avatars or custom-built equipment in virtual reality.
But if games make you think about purchasing NFTs only as a playground for teenagers, NFT-friendly platforms like Upland will encourage you to think again. Upland, nicknamed by the founders an Earth’s Metaverse, enables you to create your own world and flip virtual properties navigating the trade thanks to the basic economic principles of supply and demand. The platform uses its internal coin, UPX, but it is powered by the EOS blockchain ensuring the ownership of its users. Upland is an intersection of the real and virtual worlds with its Play-To-Earn gaming model, where you can enter an open marketplace generating your own tokens with UPX and earn real-world money using USD.
Most importantly, the explosion of NFTs reflects the potential of the decentralised ledger for not only digital art but also e-commerce, finance, and even music, representing a multitude of opportunities for investment, engagement with consumers, authentication and protection of the products, traceability of transactions and a lot more.
Creating Value & Scarcity for Digital Goods
The exclusivity of NFTs lies in their limited edition, who minted (‘generated’) and previously owned them. Over the past few years, the NFT market has attracted a lot of celebrities, artists and entrepreneurs raising the stakes of purchase and fuelling the trade. For instance, one of the largest NFT markets, NBA Top Shot, enables you to purchase moments like Jordan Poole’s Layup Base Set in Series 3, or an NBA All-Star VIP Pass NFT.
However, the uniqueness of digital collectibles is not only about the creator but also the owner. Because of the use of blockchain technology, each user has access to a detailed record of the ownership. The NFT, therefore, is more likely to have its value increased when previously owned by a famous public figure. In recent months, the rarefied group of NFT holders extended to such prominent names like Eminem, Mark Cuban, Serena Williams and Neymar Jr.
NFTs are also easily tradable, facilitating the purchases and subsequently, impacting the gradual increase in value of some of the minted digital assets, especially when created by celebrities or sold as limited editions. On top of that, NFTs stand out from other digital collectibles because they are not as easily copied as other digital files and their authenticity can be effortlessly verified.
If you’re still not entirely convinced about the exceptionality of NFTs as opposed to other digital collectibles, think of an NFT as a rare and well-known artwork such as Van Gogh’s The Starry Night. You can easily obtain a perfect copy of The Starry Night anywhere in the world. You can print it, buy a cookie-cut replica, or download it online and save it as your desktop wallpaper. But there is only one original piece, in the Museum of Modern Art in New York City. What if you were able to become its owner? That is the beauty and magic of NFT ownership.
Commerce & Engagement Opportunities for Brands
Some brands have been considering using the NFT system as a verification of authenticity of their products. For instance, Nike secured a patent for blockchain-compatible sneakers, CryptoKicks, this way, blending the real and the digital realms together. Each bought pair of physical shoes would be sold along with an NFT token, a digital asset with information of their ownership. US Patent Office granted a patent for CryptoKicks at the end of 2019.
But businesses can benefit not only from adding some nice tweaks to the existing physical product. Upgrading the strategy can also entail producing a line of digital products in the form of NFTs. In 2021, Dolce & Gabbana launched an NFT Fashion collection Collezione Genesi (Genesis Collection) using a Polygon blockchain. Genesis Collection comprised nine unique pieces that have been sold for nearly 6 million USD.
NFT is also a great opportunity for deepening the relationship between brands and consumers. In 2022, one of the key areas of development for Youtube is to incorporate new technologies including NFTs, enabling users to purchase unique digital items produced by their favourite creators. Snapchat’s new ad formats also prepare for the capabilities of the internet of the future by constantly advancing their beloved avatars, BitMoji, which attracts NFT fans who make purchases mainly to update their Twitter profile picture or personalise their characters in the virtual reality world.
The rise of NFTs can also create new possibilities for innovative monetisation and greater control over branded content. Until now, platforms like TikTok and Netflix, while distributing any digital asset, have served as an intermediary between the user and the creator. Such distribution requires the creators to give up a certain amount of their ownership rights and power over their work. The content can also be monetised through advertisers or the traditional subscription system. Non-fungible tokens enable previous owners and creators to earn money each time their NFT has been resold. On top of that, because the ownership record is transparent to everyone, brands gain more protection over their digital assets without the fear that going viral would endanger their image.
Tokenised access management is another creative way of using NFTs. In order to enable users to unlock access to a rarefied digital experience, early fandom merch or an exclusive event, purchased as NFTs can serve as authentication and reward at the same time. This is because such NFTs not only perform a specific function such as tickets, but are also unique themselves because of their distinctive qualities.
OpenSea: the Amazon of NFT
Russell Brand, the policy editor of the Verge, in one of the interviews compared purchasing NFTs on OpenSea to buying products on Amazon. And indeed, this comparison appears to be quite accurate and justifiable as OpenSea is the first and largest marketplace for NFTs amassing digital art, photography, collectibles and even, domain names and entire virtual worlds.
According to Forbes, at the end of 2021, the platform had nearly 1.8 million users with transactions reaching 2 billion dollars a month. On top of that, OpenSea NFTs can be purchased on the Polygon blockchain by using not one, but various cryptocurrencies such as Ether (ETH), USD Coin (USDC) and DAI.
What is Next for NFTs?
According to Jeremy Gilbertson, a Metaverse methodologist and Web3 strategist, the core characteristic of future NFTs should focus on their utility. For instance, people buy NFTs to voice their emotional attachment to brands, artists and musicians. They are part of the bigger community that shares the same idols or music taste. But this exceptional sense of belonging and community does not need to end necessarily with fandoms collecting branded NFTs. The Song That Owns Itself (STOI) offers decentralised digital ownership where fans can co-own the piece and also gain profits from the revenue. Projects like STOI represent the potential for collaboration by breaching the gap between creators and recipients in the near future.
This growing importance of participation indicates that one of the desired characteristics of the Metaverse and NFTs is to involve its users to not only co-own the products, but also co-create. This way, for instance, fans would be able to contribute to the process of making music with their favourite bands by selecting the minted combinations of the presented versions of the piece, as opposed to passive consumption of one fixed song.
Another category is the evolutionary capability and the interrelation of the physical world with the virtual one. As explained by Gilbertson, the evolutionary capabilities of NFTs, in this sense, would resemble the real world where, for instance, your purchased NFT of a tree would change with each season automatically.
The other sought-after point is domain transportability within different virtual platforms and the real world alike. For instance, Tom Sachs: Rocket Factory created a platform where you can assemble your own rocket from different NFT components. Next, your unique rocket can be turned into a physical one when you opt for the Launch Option and delivered to you when recovered from the launch. As explained by the founders, Tom Sachs: Rocket Factory represents a Singular Transdimensional NFT where the ownership consists of the Completed Rocket NFT, the Physical Rocket twin and the video recording of the launch. The NFT version is updated with metadata throughout the entire process.
Lastly, NFT has immense potential for driving social impact. On one hand, technological advancements connected to NFTs could enable consumers to address major challenges and create opportunities that were not possible before. For example, Code Green uses blockchain to raise money for grassroots organisations concerning social and climate justice, as well as humanitarian emergencies and gender equality. Code Green connects donors, artists, activists and other people driven by social change by hosting charitable NFT auctions, educating them on NFTs and executing other philanthropic endeavours aimed to make NFTs inclusive, accessible and impactful.
On the other hand, the electricity-consuming blockchain system of NFTs raises a serious threat of carbon footprint which sparks further questions on how to nurture the NFT market without it becoming a peril for the climate. While some people are advocating for renewable sources of energy to power cryptocurrency machines, others are prone to give up using Ethereum and instead, support more sustainable blockchains such as Hedera, Tezos or Algorand. The other potential solutions for more eco-friendly NFTs are on their way with helpful guidelines already circulating across the Internet.
When it comes to digital marketing, it appears that NFTs are the key that could open a lot of new doors. From the fantasy-like digital clothes and exclusive immersive experiences to new business models and engagement opportunities, NFTs represent an entirely new reality that, like anything new, generates a lot of contradicting emotions.
Therefore, the best way to navigate through the market of NFTs is to maintain a well-calculated balance between verified and experimental practices. Adapting to the newly-emerging trends is a natural cycle of any successful marketing campaign, and trial-and-error will definitely be a necessary measure to move forward with NFTs and eventually, succeed in the digital space.
As the NFT marketplace is still in its early stages, it is also equally important to not abandon more “traditional” marketing strategies. With the rise of user-generated content, the demand for Influencer Marketing has never been more on-trend. Practices like SEO or Digital Ads are going to stick around too, helping you achieve your business goals, improve your content and expand the visibility of your brand.
Whether you are a new start-up or an established company, contacting GA Agency is a great opportunity to take your business to the next level. The experience, knowledge and expertise of GA marketing professionals can help you create a perfect blueprint for your brand and prepare it for new technological advancements in the future.