There is nothing that can leave you confused and wondering, “Uh, what’s all this?” like a flood of blockchain news. That’s how I’ve felt while hearing about NFTs being sold or about Grimes receiving over $6 million for selling her art.
In the year since blockchain technology and web3 news hit the airwaves, the situation has only gotten more complicated. You will see pictures of Apes being sold for so many dollars and an endless supply of hacks on how to create and sell NFT projects.
However, I am sure all this news has left you wondering “What are NFTs?”
What is an NFT?
A non-fungible token.
Non-fungible simply means it cannot be replicated or replaced with something else. For example, Bitcoin is a non-fungible token.
How do NFTs Work?
The Ethereum blockchain has the majority of NFTs, however, other blockchains have their own versions of NFTs. Like bitcoin or dogecoin, Ethereum is a cryptocurrency, but its blockchain also keeps account of who is owning and exchanging NFTs.
Is this the Future for Collecting Art?
Yes! People really do hope so. NFTs are created to give you something that cannot be replicated: ownership of the piece (although, like with actual artwork, the artist may still retain the copyright and reproduction rights).
Do You Buy NFTs using Cryptocurrencies Only?
A lot of NFT marketplaces accept cryptocurrencies such as Ethereum. However, anyone can ask you for whatever currency they want.
It’s without a doubt that they have been getting a lot of attention but the reality is, that space has been filled with fraud. However, there are legitimate, successful NFT projects out there like The Bored Ape, and they use unique marketing strategies to generate consumer loyalty, interest, and excitement.
How Brands Use NFTs For Marketing and Business
The conversation between businesses and customers has changed over time.
Up until recently, advertising was a one-way procedure in which companies communicated to their audience via billboards and television commercials. Now it employs a two-way strategy where both consumers and businesses use social media to start a conversation.
Through the addition of the ability for customers to voice their opinions and cast votes for upcoming brand-related events, new product lines, and prospective future services, digital assets like NFTs provide a further progression of that relationship. This makes it possible for businesses of all sizes, including microenterprises, to use loyalty NFTs to fully align incentives with consumer preferences at scale—something that wasn’t previously doable. Thanks to Web3 and blockchain technology, businesses can use NFT technology to build their brand and create a loyal customer base.
Its only a matter of time before they become the mainstream technology. Here are several ways NFTs can be used in marketing and business:
We all love a good giveaway, right?
There will come a time when businesses are doing their giveaways using NFTs. This is because NFTs are more valuable, tradeable, and give customers a sense of exclusivity in your brand.
NFTs as Authentication Tools
We all hate it when you see counterfeit products of your merchandise, right?
Luxury brands and other brands will use NFTs to authenticate their products and give their customers a sense of exclusivity.
There has been a significant change in how consumers “pay” for items in recent years. For instance, you can now purchase tickets to your preferred sporting event or concert using an NFT with Bitcoin.
For example, Dallas owner, Mark Cuban has seen that this is a great strategy to sell tickets and wants in on the action. Unlike regular paper tickets, NFTs can have a lot of value to their owners.
A cool way to create hype around your products or services is by giving an NFT launch promo.
Imagine if Marvel’s Doctor Strange: Multiverse of Madness had a limited edition of their NFTs for their movie coming out. Just imagine how much those NFTs would be worth right now.
Raising Funds for New Projects
Many businesses are using NFTs to kickstart funding campaigns.
MetaBrewSociety released NFTs to raise funds to buy a beer brewery. Every NFT holder was given exclusive benefits such as claiming a certain amount of canned beer from the brewery every year. Additionally, each holder had a say on how the brewery will operate, the brewing methods to be used, beer prices and land purchases in the future.
Supporting a Good Cause
The Norwegian Cruise Line collaborated with an artist to create six NFT art pieces to celebrate the launch of their Norwegian Prima Class. Each of the pieces was put up for auction, with the first starting at $2,500. The cruise line intends to give all its proceeds to Teach for America.
In a press release, the brand stated that they used NFTs because it is a cutting-edge technology that reflects how they approach their products and services. In so doing, the Norwegian Cruise used the hype around NFTs to create a buzz about its launch.
The video industry has seen the hype surrounding NFTs and is wondering, “why sell a plain old thing when you can sell it as an NFT?”
One of the best markets for NFTs is the world of contemporary gaming. This is because of the intricate graphics and skins/outfits that popular games like Fortnight employ for their avatars. This implies that you can produce and market NFTs in the form of virtual items used in video games, such as pets and skins for avatars.
According to reports, the gaming startup Mythical Games received $75 million to develop a platform that substitutes NFTs for avatars and enables users to buy, sell, and trade NFT characters.
Additionally, the gaming sector makes use of NFTs to build and maintain a devoted user base in addition to marketing its games and products.
Cons of Using NFTs
The major setback of using NFTs is its environmental drawbacks. I am sure you are wondering, “how does a digital asset affect the environment?”
Well, depending on how complicated it is, creating an NFT uses a lot of energy (electricity) and can produce catastrophic levels of greenhouse gas emissions.
Another major drawback is there is still unknown information on NFTs. Like cryptocurrencies, they are subject to high volatility as they are unregulated by any entity. Similarly, they don’t have a set value, therefore you run the risk of losing all you invested.
It is challenging to entice consumers because so many of them are still uncertain and dubious about it from a marketing standpoint. Early adopters typically bear the brunt of the effects of any new technology, whereas late adopters learn from the mistakes of their forebears.
Are NFTs a Worthy Marketing Investment?
NFTs can be hard to sell to brands, especially since not so many people understand them and their high volatility. It’s quite unclear and early to determine if they will have a large-scale impact on businesses. However, NFTs offer the best ROI of any channel in the media mix, according to 39% of people who use them.
For many marketers, NFTs are still an undiscovered territory but one thing for sure is that they are definitely worth keeping an eye on.