NFTs: why companies are including them in their marketing strategy

Welcome to the Brand Runner podcast where we discuss marketing trends and tech. I’m your host Fabien, let’s get started. Today I would like to talk about an interesting new trend we see in marketing and advertising. We saw a craze in the past couple of years with art NFTs, with Board Ape, Beeples, crypto punks and the likes, which allowed any user to buy quote on quote a unique digital file representing an artwork.

While the quality of these artworks led to many controversies, as in a sense these are often just pixelated images, this raised the NFT market cap to over 2.3 billion dollars. Soon, brands and companies joined the NFT train. I wrote about this a while back and predicted that soon we would see companies like Starbucks offer a loyalty program. Link in the show notes for those interested in reading the article.

Why is this a big deal? I will talk about it in a little bit, but first let’s talk briefly about what are NFTs in an explain me like I’m 5 fashion. And if you already know, you can skip this part. So what are NFTs? NFTs stands for non-fungible tokens, and they’ve been making the headlines lately.

You might have even seen a few yourself as some of them made the news selling for 10 millions of dollars and used as Twitter avatars. An NFT can have many shapes or forms, but at the end of the day all it is is a certificate of ownership for a digital asset. It’s a way of buying someone’s digital files and proving that you are indeed the owner. That’s it. That certificate lives online forever and is instantly verifiable on the public ledger.

Think of it as a picture that has a unique number of points and whose owner can be verified instantly without fraud.

This recently caused NFT marketplaces to bloom, 800% for OpenSea alone, one of the leading NFT marketplaces. We also saw the rise of a lot of unusual users, making lots of people skeptical about its true value. Artifact raised $3.1 million from shoes you cannot even wear. And this was eventually acquired by Nike last year. But…

The true added value of NFTs reside in the fact that they are programmable. You may think, ok great, but how does it relate to marketing? This leads me to my next point. So how can it be used in advertising and marketing? Truth is consumer behavior is changing. True, it’s always changing, but now more than ever. The web we are experiencing today is much different than what it was just 10 years ago.

The internet is transitioning to what we call Web 3.0. Web 2 meant you could buy physical stuff online, things like ordering your books on Amazon or other stuff on eBay and getting them delivered straight to your physical address. Web 2.0 is the interactive and social web most of us have known so far. There are many other differences between Web 2 and Web 3 going beyond the scope of this podcast.

but from a consumer behavioural standpoint, if there is one thing you should remember from this is that Web3 means you buy digital stuff in the digital world.

If it sounds a little abstract, bear with me and you will understand the opportunity here. Looking at brands, here are what some of them have been working on. We like to collect things. ownership is just part of human culture. Let it be the series of toys in a cereal box when you were a kid, Pokemon or baseball cards, or even these pants you want in four different colors. Gotta catch em all, as the saying goes. The same applies to NFTs.

A first example and early adopter is the household brand Nike. Nike is already getting ready to enter the metaverse by filling four virtual goods trademarks to brand NFTs. Entitled CryptoKix, you will be able to buy Nikes to dress your digital self in the metaverse. We’ll talk about the metaverse in a different episode.

Company-side, this would lead to revenue diversification, and it is very possible to imagine we’ll see a line for digital goods and physical goods on Nike’s future balance sheet. More recent in date, Starbucks announced the launch of their reward program as NFTs on the Polygon blockchain. It’s called Starbucks Odyssey. Here, the perks are not clear.

but they didn’t mention from a virtual espresso martini making class to access to unique merchandise and artist collaborations or even trips to Starbucks Hacienda Alsacia coffee farms in Costa Rica. Another consumer example is Budweiser with its Budverse. Based on the year it was founded, Budweiser created and sold a series of

Originally priced between $500 to $1,000 per token, the most expensive one is now for sale at $130,000. These will give their owners special perks and exclusive benefits. Another interesting use that forecasts what we will see in loyalty programs is to package different goods depending on the NFT purchased.

This is exactly what the music band Kings of Leon’s did when they released their album When You See Yourself in March 2021. Bringing in around 13.7 million dollars shortly after its launch, this unique album released allowed fans to choose from 3 different types of token. They could choose between a special album package, benefits from coming to live shows or exclusive audiovisual art. There is even a golden ticket.

The holder can redeem 4 front row tickets to any Kings of Leon Headlines show anywhere in the world once per tour along with meet and greet, backstage pass and limo service. For life! Originally sold for 50 ETH, so $3,700 at the time of recording, it is now on sale by the original buyer for $360 NTH, which is about $1.3 million.

NFTs are essentially smart contracts and therefore programmable. If this condition is met, this happens. It could be summed by if John owns this specific NFT, he can get two VIP tickets to the Dodgers game at the play-off.

By now, maybe you guessed it, the kicker here is that NFTs can be transferred and resold, and that is the other real value of the NFTs. In theory, an NFT could confer you unique rights from a lifetime supply of Popkin spice lattes to the ownership of a house, and that can be transferred. And this can create a parallel market for these unique collectible items, giving real life changing benefits.

So why are companies starting to get into NFTs? There is certainly a gimmick with web3 and saying in a press release, oh, we’re dropping an NFT for the launch of XYZ. But beyond that hype, there is a reality. And it’s the way consumers consume. And that is changing. Companies need to adapt and embrace that transition.

With ransomware ramping, security leaks and hacks, Web3 also provide a better future for privacy and security. NFTs indirectly fight fraud through web decentralization. At the end of the day, NFTs allow for a new form of brand storytelling and consumer interaction under the form of a strong engagement with their consumers.

These are two keys to a strong marketing strategy. It is still in its infancy at this point, but as mentioned, we can already see a lot of mainstream brands dipping their feet into it and developing huge efforts in this field.

That brings us to the end of this episode. We hope this episode on NFTs and brand marketing was beneficial to you. Please rate any reviewers on Apple Podcasts or the podcast app of your choice. This was Brian Werner.

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This episode only represents Fabien’s own opinion and personal thoughts.