Differentiation and exclusivity are critical to the success of some of the world’s biggest brands. By offering something new, these businesses become not only more profitable but also more competitive and recognizable.
In the past two years, non-fungible tokens (NFTs) have experienced massive value growth, and brands have quickly taken notice. Technology-savvy businesses have become early adopters of NFT strategies, demonstrating that they have immediate benefits and enormous potential for the future.
However, many powerful people in the business world do not yet fully understand how to capitalize on the significant value that NFTs create. Because they are such a new concept and opportunities abound, it is critical to learn more about NFTs, their uses, and how your brand can get on board with an NFT marketplace.
What is a Non-Fungible Token?
Defining the word "fungible" is essential to understanding the concept of NFTs. If something is fungible, it can be exchanged for something of equal value. For example, you can exchange one $10 bill for another because their value is the same. Cryptocurrency like Bitcoin is also fungible and can be evenly exchanged.
Something that is non-fungible, on the other hand, cannot simply be traded for another item. This is the case with NFTs, which are valuable in large part because they are unique data assets.
NFTs exist on a blockchain, which makes them extremely difficult or impossible to replicate. Blockchain technology creates an immutable record of ownership, which has important benefits. It offers a high level of transparency and makes it easy for NFT owners to verify and prove the authenticity of their items.
What is the Blockchain?
The rise of cryptocurrencies, and now NFTs, has been made possible by blockchain technology. To better conceptualize the blockchain, consider the following scenario.
Imagine that you have a ledger in your office. In it, you can record every important transaction, including sales, transfers, and purchases. However, this ledger is special in that whatever you write in it can never be changed. It is a permanent, immutable record.
Now imagine that this ledger can also be seen by other people, particularly those who have been on the other side of each transaction. This is the concept of blockchain technology.
The blockchain records transactions and puts them into time-stamped blocks of data. It is a decentralized system using nodes of computers across the world. Once data is time stamped and added to the chain, it is irreversible and secure.
How Brands Leverage the Value of NFTs
NFTs present brands with a singular opportunity to set themselves apart from their competitors. Consumers are willing to pay higher prices for products from brands that they perceive as extraordinary. Rarity equates to value, and NFTs are products that are wholly original. For that reason, powerful brands have begun to incorporate NFTs into their marketing strategies.
In March of 2022, NFT company Party Horses announced that it had selected Maker’s Mark as its “official bourbon partner” for the year. Through this partnership, Maker’s Mark was able to not only generate interest and publicity but also create practical value and exclusivity.
Working with well-known designers, Party Horses created commemorative Maker’s Mark labels. Along with the minted NFT, buyers also receive a limited edition bottle of Maker’s Mark bourbon and access to events, such as an exclusive pre-Derby concert. This collaboration is an excellent example of how NFTs can extend beyond the digital space.
Mattel’s foray into NFTs quickly illustrated how effective they can be as a means of expanding a brand’s customer base. In 2021, Mattel released NFTs based on the Hot Wheels toy line. They first sold limited edition Hot Wheels NFTs for a respectable $300,000 and followed up with a release of 90,000 Hot Wheels NFTs, which sold out in minutes. Regular packs of the NFTs went for $15 each, but they immediately sold for more on the secondary market.
The leadership at Mattel has stated that NFTs will be a source of revenue growth for the company in 2022. The company’s president and COO, Richard Dickson, says that NFTs present a pathway to develop “high-level engagement” with iconic brands under the Mattel umbrella.
In particular, the company has additional famous names like Barbie and American Girl Dolls that they have yet to leverage in the space. While these product lines are typically associated with children, NFTs allow Mattel to reengage the interest of tech-savvy collectors who are nostalgic for their childhood toys.
As part of this trend, in June 2022, Mattel announced a partnership with OnChain Studios. The brand will release ‘Cryptoys’ NFTs and bring its tremendous IP assets to the metaverse.
Budweiser had a memorable entrance into the digital marketplace with its first series of NFTs, dubbed the Budverse Cans: Heritage Editions. The series is comprised of 1,936 unique NFT collectibles, a reference to the year Budweiser started using cans.
The NFT collectibles were grouped into two collections, Core Heritage and Gold Heritage. Budweiser minted 1900 Core Heritage NFTs and priced them at $499. The other 36 NFTs, in the Gold Heritage collection, sold for $999 each.
With total sales of just under $1 million, Budweiser’s NFTs sold out in a single hour. Through NFT sales, the brand was able to embark on a new, unexpected avenue of revenue growth.
Sales of NFT artwork have become popular among restaurant chains, including Burger King and McDonald’s, but Applebee’s seized on the opportunity to tie digital assets to real-life experiences. In December 2021, the brand held a weekly event called Metaverse Mondays.
Each Monday during the month, Applebee’s sold a new NFT that depicted an Applebee’s meal. The buyer of each asset received not only the one-of-a-kind artwork but also a restaurant gift card with up to $1,500, enough to buy a year’s worth of that particular meal. Vasya Kolotusha’s Applebee’s NFT titled Chromatic Feast sold for $1,337.
Other restaurants and chains are following Applebee’s lead and using NFTs in unique ways. For example, Starbucks is set to launch a new NFT-based rewards program in September 2022. Developments like these are great indicators of what is to come for food brands in the digital world.
Benefits of NFTs
NFTs have created new ways for brands to interact with potential and established fans online. They can offer custom content that has financial, artistic, and practical value, broadening their customer base, increasing brand awareness, and strengthening brand loyalty. There are many ways for brands to tap into these benefits.
Brands across industries create new revenue streams with NFTs by offering ownership of historical content, specialty videos, or collectible assets related to the brand. Organizations and businesses can expand revenue by extending the value of their products and services.
CNN has been an innovator in using historical content, offering the chance to have ownership of historical moments from its broadcast history through its Vault by CNN website. Additionally, the company offers artwork and curated collections, such as postcards from the war in Ukraine.
Web3 and the Metaverse
Web3 enables brands to tap into new markets and audiences receptive to newer forms of advertising, including social media, gaming, and influencers. NFTs allow brands to create authentic digital communities that resonate with their core demographics: millennials and Gen Z.
In the Web 3.0 environment, a brand might give a special NFT as a reward or include it as an item in a charity auction. The NFT can then grace the wall of the customer’s virtual environment.
As Web 3.0 matures and becomes more mainstream, you can expect to see NFTs continuing to expand beyond digital imagery into mediums like virtual fashion or real estate. NFTs are also an excellent way for businesses to offer rewards for games in the metaverse. They can also sell tickets to attend virtual concerts.
Gucci has established a presence in the metaverse by launching their recent collection in the Roblox game. Avatars can buy Gucci glasses, bags, and hats using NFTs. Because the younger generation dominates the metaverse, Gucci is cultivating a primary demographic and fostering brand resonance.
Companies have employed NFTs to distribute specialized digital content that has raised money for charity, fostered social media interaction, and rewarded customers. A considerable benefit of NFT promotions is the flexibility to innovate and create something notable, setting the brand apart and attracting new audiences.
For example, Nike purchased RTFKT Studios solely to create collectible, desirable, virtual sneakers. In February 2021, a collaboration with teenage artist FEWOCiOUS sold 600 pairs of real sneakers paired with NFT sneakers in six minutes, netting $3.1 million.
One of the best-known providers of collectible NFT content is the NBA, which grossed more than $200 million in sales in 2021. The NBA’s crypto-collectibles, referred to as Top Shots, are highlights from memorable games. Because they use blockchain technology, Top Shot NFT buyers can easily prove the authenticity of the asset.
NFTs have also become a dominant force in the art world. Brands like Aorist have created online marketplaces that allow artists to integrate technological advancements into their work. On the opposite side, buyers and collectors can view and purchase revolutionary and one-of-a-kind NFT artwork.
Marketing of Social Responsibility
One of the more controversial aspects of GPU mining is the effect on the environment. Brands must consider how to appeal to their ecologically and socially conscious demographics by denoting that they use carbon neutral or negative blockchains.
Many of today’s most prominent NFT marketplaces use blockchains with very high levels of energy consumption. However, the development of less energy-intensive proof of stake blockchains has made it possible for companies to join the NFT market while maintaining their eco-friendly values. GAP, Kia, Honda, and the NBA TopShot marketplace are just some brands that have made a choice to use this new technology.
Confirmation of Authenticity
An undeniable record of ownership and authenticity also helps brands combat counterfeit goods that destroy product and brand value. Breitling is an early adopter of this approach, providing each watch with its own NFT. Premium services, tradability, and traceability are the three primary benefits that Breitling attributes to owners using the “passports” for their watches.
With the inclusion of an NFT, the owner of a Breitling watch can clearly and immediately demonstrate proof of ownership. Furthermore, if a customer wants to resell an item in the future, an NFT makes it easy to prove authenticity to the new buyer.
Although they are built on progressive and complex technology, NFTs are in many ways still in their infancy. The full extent of their uses as a brand-building, revenue-generating, and customer engagement tool has not yet been realized. As more brands leverage NFTs in their marketing strategies, the result will be increasing innovation in their potential uses.
With the success demonstrated by companies like Breitling, more luxury brands will begin using NFTs to create a record of ownership for product releases, especially limited editions. Customers can also expect more brands to mint luxury product designs, make ad campaigns more memorable and engaging, and innovate to reward customers. The future of NFTs looks very bright across all sectors, including consumer products, media, sports, collectibles, and art.
NFTs are now a must for every company's marketing strategy, but businesses should plan carefully to make sure their efforts are successful. Anterdit provides secure, intuitive, and scalable white-label NFT marketplaces. In addition, Anterdit offers advisory services with a team of Web3 and industry experts so your company can leverage NFTs for greater customer engagement and brand awareness. Contact us today for a demo.