The article describes the transformative power of NFTs, how they can be applied in a digital world, and their effect on marketing.
Table of Contents
Various aspects of our lives have undergone unprecedented digital transformation in recent years. From education and work to leisure activities and daily errands, almost every facet of our daily routines now relies heavily on digital technologies. This shift became especially noticeable with the rise of the first digital-native generation, Gen Z, who significantly influenced and shaped our current digital realities. Recently, we have witnessed the creation of NFTs and metaverse, which are considered the future of the digital world. So, it is no surprise that many brands and companies started paying more attention to the newest technologies to attract the attention of digital world users. Metaverses and NFTs have swiftly become the new frontier of marketing strategies, offering innovative ways for businesses to engage with their audience. It is widely believed that these new digital technologies will continue to shape the future of marketing, opening up endless possibilities for creative and personalized interactions in the digital age.
What Are NFTs?
Non-fungible tokens (NFTs) are revolutionizing digital ownership, securely recorded on blockchains. In 2021, NFT sales rose from $94.9 million to an astonishing $25 billion. These digital certificates authenticate ownership of a wide range of assets, including art, in-game items, virtual land, and music. It offers diverse possibilities, enabling ownership retention, trading, cryptocurrency earning through “play-to-earn,” and asset monetization via smart contracts. Despite their immense potential, various industries are still exploring how to effectively leverage NFTs.
The main features of NFTs are listed below:
- Blockchain-Based Ownership: NFTs are typically created, bought, and sold on blockchain platforms, with Ethereum being the most common. Each NFT is associated with a specific item, piece of art, collectible, or digital content.
- Unique Digital Assets: NFTs can represent a wide range of digital assets, including graphic art, GIFs, videos, music, virtual avatars, tweets, and more., it acts as a digital collector’s items that can’t be replicated.
- Exclusive Ownership: NFTs grant exclusive ownership rights to the holder. Only one person can own an NFT at a time, and the blockchain ensures the verification of ownership and transparent transactions.
- Metadata: Creators can embed metadata in NFTs, including information about the item’s origin, ownership history, and even the artist’s signature. This metadata enhances the item’s authenticity.
- Monetization: NFTs have revolutionized how artists and creators monetize their work. They can sell them directly to consumers, eliminating the need for intermediaries like galleries. Creators can also program royalties ensuring they receive a percentage of future sales.
What NFTs Are Used For?
While NFTs are still perceived by many as ‘funny pictures,’ they hold a much more valuable and even revolutionary concept. It holds the power to authenticate, monetize, and provide users with true ownership of digital assets, transforming how we perceive and interact with digital content. It can be used in a variety of ways, some of which include:
- Art. Artists can sell their digital art directly to collectors as NFTs, gaining full control over their work and royalties from future sales. The market has seen multimillion-dollar sales of digital art pieces. While NFTs can continue with the integration of traditional art and AI, more data-based NFT artworks by innovative artists such as Refik Anadol have started, and their art dimension has already reached a completely different place.
- Collectibles: Digital collectibles, such as virtual trading cards or in-game items, can be tokenized as NFTs, allowing for buying, selling, and trading among players and collectors. Especially card games, where the collection is very large and has been around for a long time, are the leading ones. Currently, a very new and blockchain-based game company is focusing on this business, but it is expected that the real leap will be when the companies that dominate the gaming world, focus on NFT.
- Charity Fundraising: Brands and organizations have used NFT auctions to raise funds for charitable causes. For instance, themed NFT art auctions by brands like Charmin and Taco Bell garnered significant proceeds for charity.
- Entertainment: Memes, iconic GIFs, and sports highlights have been turned into NFTs and sold for substantial sums. NBA Top Shot, which offers highlight NFTs, generated over $500 million in sales.
- Celebrity Memorabilia: Celebrities like Snoop Dogg and Lindsay Lohan have joined the NFT trend, releasing unique memories, artwork, and moments as securitized NFTs. In essence, NFTs provide a new way for creators to monetize their digital content and offer collectors a means to own and trade unique digital items. The NFT market continues to evolve with endless possibilities across various industries.
How NFTs Are Used in Marketing?
The field of product and services marketing is one of the first to adopt innovative ways to reach potential customers. These strategies encompass a wide range of approaches including interactive marketing strategies, advergames, marketing in metaverse and other digital solutions. NFTs have also attracted the attention of marketers due to its potential of being a means to reach Gen Z and digital world users.
Marketing and brands are leveraging NFTs in several ways. Notably, NFT artwork has received significant attention, but its applications extend to branded collectibles, virtual experiences, and exclusive access passes for events. Brands are even experimenting with NFTs to enhance customer engagement, strengthen their identity, and gain consumer insight.
2021 was a significant year for NFTs as many industrial brands recognized their potential. These digital assets, which include music, historical moments, and more, have become a flexible marketing tool that provides a feeling of ownership and exclusivity similar to physical items. In the time diagram below, we can observe how much interest many different industries showed in NFTs in 2021, the year when crypto and NFTs were at the top. It is clear that NFTs will continue to play a crucial role in shaping the future of marketing and brand engagement, with 2022 expected to solidify their significance.
NFTs can be used as a marketing strategy in a variety of ways, including:
- Creating exclusive experiences and communities. Holders of NFTs may be given unique access to activities, communities, or content. For instance, some businesses have used NFTs to grant holders access to first-look product launches, backstage passes to performances, or private Discord servers.
- Rewarding customers and brand ambassadors. Some companies have found ways to use NFTs to incentivize customers and brand ambassadors. For example, they offer early access to products, discounts on future purchases, or a share of profits through NFTs.
- Raising awareness and generating buzz. NFTs are a popular way to build hype for a brand or product launch. Many brands have created limited-edition collections of digital art or given away NFTs to early adopters.
For example, Gucci and Superplastic have partnered for the ‘SuperGucci’ NFT collection, blending Gucci designs with Superplastic characters Janky and Guggimon. The collection includes 250 unique NFTs, released in three phases, each accompanied by an exclusive handcrafted ceramic sculpture, demonstrating both brands’ commitment to the metaverse and NFT innovation.
- Driving sales and revenue. Brands can increase sales and revenue by using NFTs. Ownership of physical products or services can be sold through NFTs, and exclusive content or experiences can also be accessed through them.
Burger King has partnered with Sweet NFT Marketplace to launch the “Keep It Real Meals” NFT campaign, featuring digital collectibles tied to their “Burger King Real Meals” initiative. Customers can unlock NFTs for various rewards, a gamified NFT experience, and collect sets to earn special 3D Burger King NFTs and limited prizes.
However, one of the big four audit firms, Ernst & Young’s surveys, highlights significant insights into the adoption and perception of digital assets, particularly NFTs, in marketing. Notably, 90% of executives express interest in digital assets but face challenges in establishing viable business models to extract value from them. Furthermore, 95% of respondents view digital assets, including NFTs, as currently over-hyped, anticipating eventual stabilization. Despite uncertainties, companies across industries are actively experimenting with NFTs for marketing purposes. Luxury brands are creating NFTs of iconic designs, while a beverage company is constructing a metaverse brewery. Car manufacturers are minting NFTs of vintage car drawings, and broadcasting companies are offering NFT collectibles. While these initiatives may not yield immediate financial gains, they have the potential to strengthen brands, enhance consumer engagement, and provide valuable consumer insights.
The Future of NFTs in Marketing
The potential for NFTs to revolutionize brand-customer connections and product promotion is clear as their role in marketing continues to evolve.
- NFTs will become more integrated with the metaverse. The virtual world known as the metaverse, operates on blockchain technology. NFTs will play a crucial role in representing ownership of digital assets such as avatars, buildings, and land. As the metaverse gains popularity, brands will have new opportunities to market their products and services to users through the use of NFTs.
- NFTs will be used to create more immersive and engaging marketing experiences. Brands can use NFTs to offer interactive experiences that allow customers to engage with their products on a deeper level. For example, a clothing brand might employ NFTs to develop virtual dressing rooms that enable customers to try on clothes virtually before buying. Likewise, a food brand could leverage NFTs to build virtual restaurants that allow customers to taste-test meals.
The numbers also suggest that NFTs popularity will be growing over the upcoming years, according to the data provided by Statista.
- By 2027, it is expected to have a total revenue of $3,162M with an annual growth rate of 18.55%.
- In 2027, the NFT market is expected to have 19.31 million users.
NFTs are becoming extremely popular among internet users not only as a form of entertainment and art but also as a means of promoting products and services. This means businesses can use NFTs to connect with customers in a real way. With blockchain tech, they can show their products are real and build trust. NFTs are changing how companies talk to people, making advertising more interesting and honest.