Why marketers should pay attention to NFTs
Though 2021 kicked off with much hype around non-fungible tokens, NFTs are proving their staying power. For starters, investors and collectors acquired over 60,000 NFT-based artworks in May and June of this year. And perhaps more significantly, there was a 700% increase in secondary NFT sales in the same two months compared to April and May.
One investor, John Dodelande, is keeping a close eye on these numbers.
“Early supporters of NFT pieces understand the historical significance of blockchain-based art,” Dodelande said. “This art is paving the way forward — not only because of the technology from which it was formed, but also because of its consequences, which include the further improvement of its Ethereum-based system.”
Emerging NFT market
Blockchain-backed artworks allow collectors to own unique or limited-quantity artifacts that grow in value through the bidding process at auction, and through reselling after the initial auction. An emerging industry is starting to develop around the tech companies that create the NFTs and provide the technology that supports the digital marketplace where auctions are held.
NFTs are “non-fungible” because the transactions from when they are bought and resold are recorded in their unique code. This avoids the doubt surrounding some older collectibles that could be forgeries. Collecting NFTs is therefore attractive to consumers and investors who participate, in other ways, in the digital economy.
“NFT collectors and enthusiasts believe in a new digital economy and in the digital world in general,” said Dodelande. “These people want to form their own identity, and art is a big signifier of identity. This generation grew up in the digital space, and they want to stay in it.“
Brands that want to engage this kind of consumer must connect in a deep cultural way. If influencers are to make an impact, they need to appear authentic. The proliferation of NFTs taps into this same digital authenticity because it takes a consumer’s digital lifestyle seriously.
In March, Taco Bell sold animated GIFs in the form of NFTs, which were put up for auction on Rarible. In addition to news articles written about the initiative, a short video advertising the sale has garnered over 300,000 views.
Last month, music and ticketing NFT marketplace YellowHeart orchestrated a multi-pronged promotion linked to an album release by Maroon 5. The launch included a series of album artwork and portrait NFTs created by LA-based artist Sage Vaughn.
YellowHeart CEO and Founder Josh Katz sees big potential in brands leveraging enthusiasm for NFTs, especially as an extension of a consumer’s digital lives experienced on social media.
“The same way brands leverage social media as a means to generate conversation among their consumers, NFTs give brands a unique ability to interact with consumers, providing a means for an ongoing dialogue,” said Katz. “By using NFTs, brands have new avenues for brand storytelling, as well as the ability to create and send value.”
He adds that the NFT market for artists, as well as brand potential for marketers, is still in its infancy. But there’s no denying that a playbook is emerging for how marketers can build enthusiasm and real connections with consumers by creating NFTs.
“The projects that we are doing all are use cases for what’s still to come,” Katz explained.
Brands on display
Think of NFTs as another way for a user to express their interests and passions online.
Canadian entrepreneur Everett Kohl is launching a digital memorabilia and collectibles platform called Dbilia. His site’s design is tailored to social sharing.
“On our site, everybody can show off their museum, if you will,” Kohl said. “If you’re an influencer, people are interested in what you’re interested in. In the future, or even today, your museum is going to be a summary of what you’re interested in.”
Kohl is designing a public page for users as a way to show off their museum, similar to the way Facebook users could show affinity for brands and musicians by liking their pages and having that appear in their profiles. This type of shared approval is baked into most social media platforms.
“Brands have the ability to build real, engaged communities via NFTs,” Katz said. “These are full of value, and fans of the brand will jump on the opportunity to show love in new and unique ways, especially when something like ‘special access’ or ‘special offers’ are being offered to the consumer in the form of an NFT.”
Adding value from the real world
Because YellowHeart has roots in ticketed events, the crossover appeal between digital collectibles and real-world experiences makes sense. Another part of the Maroon 5 album launch included an invitation to an exclusive listening party for those who bought the album artwork NFTs.
ViciNFT Corp. has executed several auctions recently that bend NFT enthusiasm toward charity and real-world passion. They are led by Partner and Co-founder Bill Gladstone, a bestselling literary agent, and require that a minimum of 25% of all auction proceeds goes to a named charity.
In May, they supported the auction of a series of NFT images of giant sea bass to benefit San Francisco’s Aquarium of the Bay. Last month, they also auctioned 10 NFTs of an original piece of art drawn by rock legend Michelle Phillips, the lone surviving member of The Mamas and the Papas. (The charity in this case was The Painted Turtle, a resort for children with medical conditions founded by actor Paul Newman and Page Adler.)
Owning a limited-edition digital version of art created by Michelle Phillips is a way for devoted fans to connect to an important group. But as part of the auction, top bidders of the NFT were also invited to a dinner with Phillips at her favorite restaurant, PASTINA, in Westwood, California.
“When we mint the NFT, we’re doing that through a cryptocurrency transaction and that is recorded on the blockchain, which validates that the transaction happened,” said Jordan French, advisor for ViciNFT. “As a corollary to that, smart contracts embed an option to exercise an event or something people can go to. This is the evolution of the NFT, a contract built in for the first-time buyer (of a specific NFT among the 10 initially offered). Part of those rights aren’t just memorabilia, but a contract option to the private dinner with Michelle Phillips.”
This flexibility in NFTs opens the door to corporate events and B2B marketing, French said.
ViciNFT spearheaded the auction for an NFT of author and businessman Jon Fisher inspired by his notable commencement speech at University of San Francisco. The speech has also spawned a book that will be released in September.
“The auction raised $25K for a tokenized speech,” said French. “Definitely in the works are speeches from CEOs, document artifacts, articles of incorporation, companies’ own memorabilia. We will help identify (valuable artifacts), manage the auction, make sure they get paid and build in any smart contracts, royalties, residuals and help with the resale market. That’s going to explode as businesses want to sell them.”