Your NFT challenge
As much as NFTs are trending, they are probably as much misunderstood by newcomers to the space. Businesses, brands and individuals are jumping on the bandwagon, but this space is really complex. In order to enter the space as an existing brand you need an interdisciplinary team consisting of designers, crypto growth hackers, blockchain developers, analysts, investors and economists. It’s rare to find these skills in one existing team and not having it all in place could be a huge risk for the brand.
Even for people with some knowledge it requires a lot of time to research, decode and understand this emerging industry and the opportunities it presents. NFTs open up a lot of marketing opportunities for all brands and this noise doesn’t help to get started.
About this guide
NFT launches are governed by a different set of principles and the crypto space is complex, therefore it’s crucial to understand the challenges in order to develop the perfect brand activation program. We want to contribute to the NFT community and we decided to help by offering this guide. The goal of this post is not to distract you with the largest NFT highlights from the recent months, but give you some fundamental, basic understanding and explain why NFTs are interesting, and showcase some of their potential use cases in marketing and brand activation.
About the author and our motivation
Together with the team I’ve been active in the crypto space since early 2016. Thanks to the experience we’ve collected we can help you and the community to take advantage of the innovation that NFTs bring today, whilst avoiding some of the typical pitfalls. We will keep updating this post as we collect feedback and learn from the brand activation campaigns.
Background on NFTs
TL;DR NFTs are
- New types of digital and universal building blocks
- Stored on the blockchain, therefore they inherit all benefits of the blockchain technology
- Synergies with other blockchain based applications
Non-fungible token (NFT) is a term used to describe a unique digital asset whose ownership is tracked on a blockchain, such as Ethereum.
NFTs are best explained as new digital building blocks. This means they are universal and can integrate with other digital systems. Think of them as a LEGO brick that you can use to build anything and can be used in any themed LEGO set.
Assets represented as NFTs can be anything from a piece of digital work (e.g. photo, music, text), utility (e.g. access), claims on physical assets or anything you want. In other words, your record (AKA token) on blockchain references any object you decide to link it to.
Thanks to the fact that the record is stored on the blockchain it allows you to verify ownership of each NFT. What makes it so powerful is that the NFTs can have some special powers on top of the visuals they are represented with (e.g. define royalties from every future transfer of ownership).What makes them even more powerful is when they are combined with other applications on Ethereum – making the interaction with the NFTs more efficient than in traditional platforms. It’s similar to the way bitcoin makes payments more efficient than traditional payments, it’s borderless and doesn’t require any intermediaries.
Example: In a traditional, centrally controlled game the game publisher owns the game and all assets – they could even close your account and you’ll lose access to the character and history you build up. But, if your in-game items are represented as NFTs you own them and you can trade or transfer them to another player.
Why NFTs are interesting for existing brands
If you read this you’re most likely converted, but in case you still need to persuade others in the team it is useful to explore the rationale behind NFTs in brand activation.
Direct engagement with your community
This is by far the primary and the strongest reason for brands to integrate NFTs in their marketing. For the first time customers have the ability to directly engage with their favourite brands. Thanks to this unprecedented direct access there is a new level of perks and other benefits that come out of that, on their own terms and without any middleman. The verifiable ownership on the blockchain unlocks many potential use cases that can bring users closer to brands.
The NFT sale can be lucrative. The funds collected can be used to further enhance the initial concept of the NFT project (i.e. you start with a small and basic collection and when funds are collected you re-invest to create additional benefits for the early adopters) or fulfil the promise that was made as part of the NFT concept (e.g. access to a special edition of your product), or could even be used to fund a special cause that is aligned with the values of the company.
Learning and growth potential
NFTs are closely connected to the opportunities introduced by decentralisation and tokenization – often broadly explained as web3. web3 as opposed to the traditional web2.0 (centralised, driven by big tech) is decentralised and gives the ownership and power to the end user. Anyway, even if you are sceptical about these trends, they are light years ahead of the current state of digital marketing or business in general. Your experience when working on decentralised projects, such as NFTs, will open new creative avenues for your brand, products and your company.
Extend your reach
The web3 and NFT community is growing fast and you have the unique opportunity to be one of the first movers in this space. It’s an incredibly engaged community, which is also on a mission to build a better, decentralised web. Creating a link between your brand and NFTs will put you on the map of many new potential users or customers.
What brands are suitable for NFT marketing
Basically all of them, including B2B firms – there is absolutely no brand that couldn’t benefit from the exposure to the NFT space and decentralisation that comes with it. There are some exceptions for companies that have monopolised their market and are heavily embedded in the centralised, traditional digital business (web2). These companies might see NFTs as a threat to their core commercial model.
Types of marketing applications
There is no blueprint for a marketing application; creativity to come up with new models is recommended. Bringing something new to the community is always appreciated by its members. Nevertheless, we can identify and group some typical applications of NFTs in marketing. Please also consider hybrid applications – there is rarely just a one sided story to any NFT collection.
Community engagement and community building
Creating a community of engaged advocates around the brand has been for years the holy-grail of marketing. Unfortunately, paid media and advertising is a short term drug that doesn’t contribute to community building or engagement. NFTs open up a number of interesting applications that could provide an alternative to traditional paid advertising.
The easiest way for a brand to dip its toes into the NFT space is to kick-off your community building with an NFT collection. If you already have a community of engaged customers, reward them for their loyalty, commitment to the brand by allowing them to access some additional benefits through the NFT sale. You could also simply surprise them for their activity. This could include some special campaigns and be simple (e.g. you buy this product and you have a chance to receive an NFT), but can also be quite complex (e.g. NFT for a subscription product that holds the information about your entire history with the brand, publicly demonstrating your loyalty, which could be linked to your status in the community and additional privileges).
Example: A musician can reward the attendees of a live performance with an NFT that can later be used to provide access to exclusive content or merchandise.
This is particularly applicable to brands that have been producing tons of unique content or products that haven’t been accessible before. They can now release this content in the form of NFTs, which not only lets users access rare content, but also lets them own a piece of the history of your brand. To add some excitement, brands often use an auction based sale to offer their collection.
Example: Digital collectibles offered by NBA Top Shot can own basketball’s greatest moments. They are like Upper Deck trading cards, but digitally accessible and represented as NFTs.
Metaverse is the new, democratised virtual world powered by the web3 technology. The NFTs are integral to ownership in the metaverse, including buildings, objects and businesses. Imagine the game Second Life, where you could individually own in-game items and all of the assets. The simplest way for brands to engage is to recreate your identity, including iconic buildings or launching a popup in metaverse.
Example: Stella Artois partnering with ZED RUN to offer users in metaverse some additional features to apply to digital horse racing. Or Nike providing sneakers in the metaverse.
Some individuals or brands have engaged with NFTs for a specific one-off purpose, such as collectively purchasing an item, business or donating money to a cause. It’s also typically combined with other applications, whereby a percentage of revenue generated is donated to charities.
Example: MegaFans uses donated NFTs and cryptocurrency prizes for gamers and collectors to participate in the company’s fundraising event for charity.
Many NFT collections that sell out are created by digital artists – brands and celebrities jump on this trend to release their own collections in collaboration with the artists. It’s a win-win situation, whereby even a less famous artist can profit from the exposure provided by the brand or celebrity. This could apply to any type of creative work, from graphics, video or music.
Example: Paris Hilton’s Planet Paris short video series made in partnership with Blake Kathryn.
This is most likely the most complex of all applications. The NFT in this case is linked to some special utility, which could also have a representation in the physical world, e.g. verification of ownership of a luxury item, or the NFT could represent a membership in a DAO (Decentralised Autonomous Organisation). In this case the actual visual representation of the NFT is less important. Applications in this category tend to do particularly well if they provide some unique value to the NFT community or a new take on something that hasn’t been tried before.
Example: Patrón is releasing its first batch of NFTs that will unlock real bottles of its limited-edition Chairman’s Reserve tequila. Buyers will have the choice to redeem their NFT for the delivery of a physical bottle, trade it, keep it in their “virtual bar” or gift it to someone else.
Where do you start?
There is no easy formula or 3 steps to launch your successful NFT collection. We developed our own NFT brand activation framework that we continue to refine as we launch new projects.
Our work goes back to 2016 when we were invited by one of the first crypto startups in Switzerland to help them to promote their Initial Coin Offering (ICO). This initial project started a snowball effect and two years later we were supporting multiple startups and creating valuable connections in the space. Today we have a team of 50+ specialists and we are working with heavily vetted NFT and crypto projects. At what., we look for respected brands with a long term perspective on this industry and ethical approach to business. We are particularly excited about the cross section of the NFT world and DAOs. We also see a lot of synergies between traditional brands and the crypto space, both worlds have never been closer and we’re excited to contribute to the community and help businesses and brands explore NFT applications in their brands.
There are still many unknowns and we’ll be adding to this guide as we launch the next brand activation programs. The upcoming post to this blog series will include:
- NFT brand activation framework, including tech stack required, channels, legal aspects, build up campaigns, launch & secondary trading, generating demand
- Tips – do’s and don’ts of NFT marketing
- Budget for NFT marketing
- Community building deep dive
- NFT / crypto influencer marketing deep dive
If you want to get in touch about interesting NFT ideas or projects, I’m @LukeSz on Twitter or contact us here.