Are NFTs effective as a marketing tool for brands?
NFTs, or non-fungible tokens, have already revolutionized the market, drawing many multinational brands to try their hands at tokenization of their products and services as virtual assets in the age of the digital era, where the task of marketing virtual and intangible products and services is keeping marketers on their toes. A popular term in 2021, NFTs have been purchased by numerous corporations, from renowned performance clothing manufacturer Nike to global beverage giant Coca-Cola, as well as by famous musicians like Marshal Mathers, better known as Eminem, who see the potential that this cutting-edge innovation is bringing.
So what exactly are NFTs, and why are businesses interested in using them to better market themselves? Non-Fungible Tokens, or NFTs, are distinct cryptographic tokens that exist on a blockchain network and cannot be copied. Tokenization of physical assets allows companies to manufacture, sell, or exchange them in a safe and efficient setting and removes the chance of fraud by representing real-world goods like art or limited-edition products.
While the majority of businesses are progressively using NFTs for marketing, each company has a unique goal in mind. Some see the possibility of marketing their limited-edition products as NFTs to create new revenue streams, while others utilise NFTs to collect money for social or environmental causes. Others use them to tell the brand narrative and connect with younger people in the metaverse.
How to utilise NFTS for marketing and charitable endeavours
It’s interesting to note that McDonald’s, a well-known fast-food franchise from the 1950s, has a reputation for bringing back past goods after discontinuing them for one reason or another. To further understand, Indians might recall how they used to enjoy potato wedges in the early 2000s, but that item was withdrawn and has just recently returned to McDonald’s locations in India. Similar to how McRib, a dish that is popular across the world, was long off the shelves, McDonald’s advertised its short-term return offer through NFT. The restaurant chain distributed a small number of MCNFTs to generate hype over the item’s brief reappearance. Since breaking the announcement, only individuals who shared the brand’s invitation tweet have had access to the collection of the 10 MCNFTs. By the beginning of 2022, it had received over 90,000 retweets, which is a staggering quantity.
Brands are giving their consumers unique brand offer rights in the form of NFTs, taking gated premium offers to a new level. As an illustration, the large beverage company Anheuser-Busch hosted the #NFTBeerFest event at its main brewery and permitted entrance to certain NFT holders from its subsidiary firm, Budweiser. Budweiser Heritage Can or Royalty Collection NFT holders had free admission, entertainment, and other perks at the festival.
NFTs are an excellent method to sell virtual goods, but not limited to this. Decentraland, a metaverse platform, staged the first virtual fashion show in the metaverse. Luxury clothing companies like Dolce & Gabbana, Tommy Hilfiger, and Forever 21 were among the labels that took part in the immersive Fashion Week. The platform not only increased visitor engagement with the companies but also made it possible for guests to purchase NFT swag that was only available during the event.
NFTs enable brands to generate money for charitable purposes in addition to giving them a competitive advantage. The market leader in sunglasses, Ray-Ban, had the idea of including a digital rendition of its fabled Aviator sunglasses in a first-ever NFT. The NFT was created by renowned German proactive 3D artist Oliver Latta and sold at auction on the NFT marketplace OpenSea, with all revenues going to the Italian Art Trust.
The Italian fashion company Gucci was the first to employ NFT-based marketing for the benefit of society as a whole in order to offer relief to the crumbling global medical business against the backdrop of the Covid-19 epidemic. It advertised its recently created NFT using inspiration from its Winter and Fall collections of 2021 in Christie’s online auction. A staggering USD25,000 of the NFT’s final selling proceeds were given to UNICEF USA to support the organization’s COVAX campaign.
Notably, the United Nations International Children’s Emergency Fund (UNICEF) also started selling its collection of 1,000 NFTs in an effort to raise money to support schoolchildren’s access to the internet all over the world. Additionally, MAC Cosmetics is raising money for charities that support the fight against HIV and AIDS by selling collectable NFTS.
Should you consider NFTs for marketing?
NFTs expose the holder to the possibility of total loss because they do not have a fixed value. This may deter a lot of potential investors from making an investment. Consequently, for this area to flourish, a governing body is required.
It would take some time for the brands to fully comprehend how the NFT process operates, especially in India where the concept is still in its infancy. Similar to how it is generally accepted for any technology, the early entrants in the market will have to contend with the challenges of market development while the late entrants learn from the mistakes made by their predecessor companies to avoid making the same mistakes.
However, if you don’t put yourself to the test, you won’t fully realise your potential. Therefore, it is advisable to keep tabs on how many businesses are reaching out to their target audience using NFTs in order to draw inspiration for your own NFT-based marketing plan.
In the Web3 and Metaverse eras, when virtual reality is becoming more widely used, notably in India, NFTs are important to monitor in order to consider potential branding strategies.