Nonfungible tokens are being used by brands to explore new strategies, engage new audiences, and create new opportunities for them.
Who Has NFTs?
Sports companies help fans search for college campuses and other locations to find more than one million virtual footballs. These may include NFTs, which they can keep or sell.
NFTs are vouchers that provide authenticity to digital assets. They can then be tracked and traded indefinitely using blockchain technology.
According to DappRadar, a trader in cyber graphics, the third quarter saw $10.67 billion in trading volume, an increase of 704% over the second quarter. A number of notable NFT deals have occurred, including the sale by Christie’s of cyber art created by an artist in early 2021.
NFTs are being used by smart marketers. A fashion retailer offered 120 NFTs for $1 each, while a fast-food chain launched sweepstakes to give away 10 sandwich-themed NFTs. NFT-related promotions have been launched by national brands such as Campbell’s, Taco Bell, Charmin, and Pringles.
The Boom in the Digital Art Market
A global cosmetics and skin-care brand invited customers to participate in contests to win one or three NFTs inspired by its products.
Roxanne Iyer, Clinique’s vice president for global consumer engagement, said that consumers began to shift into the NFT space.
Digital art is booming thanks to NFTs. Here’s how they work.
This past year, nonfungible tokens (or NFTs) have been a major player in the digital art world. If they are scarce, then they are more valuable. The WSJ took pains to explain their operation and why skeptics are questioning whether they can last.
Ms. Iyer said Clinique will continue to invest in the new technology. She said that all of the things she can do in the physical world to help consumers is something she plans to do in the digital realm.
High-energized authentication is costly. A cryptocurrency purchase consumes large amounts of electricity and emits carbon dioxide.
Nonfungible Tokens Environmental Impact
Mike Proulx, research chief at Forrester Research Inc., stated that the environmental impact of many NFTs could be contrary to sustainability promises many brands have made. This could lead to consumer backlash against brands that claim to be green.
Many consumers may not see the value in owning a brand’s virtual slice of pizza, or virtual football, even though they have a certificate of authenticity.
Proulx stated that brands looking to enter the NFT space face significant obstacles. Blockchains, cryptocurrency, and digital wallets remain foreign territories for the average consumer.
Plus, there is legal uncertainty about whether NFTs grant ownership of the actual digital asset or just the token associated with it.
“Advocates for nonfungible art have an asset mindset, digital artifacts you can then bring into the kind of virtual worlds you’re exploring and living in, or playing in,” he said.
Brands are also exploring the possibility of linking digital art with the real world. One cosmetics company’s NFT sweepstakes promised winners a selection from the brand’s next decade of physical products. American Eagle’s NFTs include woven patches with the corresponding image and a gift certificate.
“Over the last few months, many successful projects have had that aspect of utility really underpinning value,” stated Avery Akkineni of VaynerNFT, a division within communications company VaynerX, who worked with American Eagle to promote nonfungible tokens.
Ms. Akkineni stated that many brands are interested in NFTs to gain media attention. However, they should take a more holistic view. She suggested that brands could offer NFT owners early access to merchandise, entry to conferences, and even the opportunity to vote on company matters.
“I believe that the niche market for NFTs is the collectible market. “It’s one that resonates right now and I believe will continue to resonate,” Ms. Akkineni stated. It’s not a game-changing opportunity.
According to Craig Elimeliah, executive creative director at WPP advertising agency VMLY&R, some consumers feel more invested in a brand if they own its NFTs.
“It’s almost like you have skin in this game,” Mr. Elimeliah said. “You might make a lot if this thing goes up.”
Treasure hunts for nonfungible tokens are an opportunity to reach younger people and pursue its larger project of using technology in order to bring consumers closer.
Alyson Griffin is the company’s head of marketing. She said, “It’s about being able to continually tell that person our story over time.”
Much like cryptocurrency five years ago, cyber art is the new kid on the block. It will still take some time for investors to get on board.