December 21, 2021
4 Comments
When NFTs first popped onto my radar in late 2019, my initial reaction was…
“This is f%#$ing stupid”.
I didn’t “get” them, so I didn’t think much about them.
In early 2021, we partnered with a client to create a strategy to launch an NFT project.
The client project forced me to dive deep into the world of NFTs are understand them.
I came to the realization that NFTs are something we all have to pay attention to.
Especially as marketers and business owners – NFTs have already impacting our industry.
NFTs can be a little scary because of how unnatural they feel…Both the technology and why people are paying so much money for a JPEG.
The truth is once you can wrap your head around NFTs, they’re not overly complicated. In fact, they’re incredibly simple.
To make things easier for you, we put together a video walking you through why NFTs are so important right now, and 6 use cases of NFTs being used in marketing right now.
I promise, if you watch this video you’ll not only feel better about NFTs, you’re going to be excited about them.
FWD THIS VIDEO TO A FRIEND WHO DOESN’T “GET” NFTS
Timestamps:
In order to understand NFTs, we first have to understand the history and future of the internet.
NFT = Non-fungible token. “Non-fungible” means that it’s unique and can not be replaced by something else.
For example, a dollar bill is fungible — trade one for another dollar, and you’ll have the same thing.
A one-of-a-kind piece of art however, is non-fungible. If you traded it for a piece of art, you’d have something different.
Ownership of the token (NFT) directly reflects ownership of the asset / good / product that’s stored on the blockchain.
NFTs are exploding in popularity according to Google Trends
NFTs are so hot right now for a number of reasons…
I want to focus on point 3, as it’s the most important part of this from a marketing point of view.
NFTs give us insight into one of the most powerful reasons why people buy things they don’t need – as a marketer you have to understand this concept.
Let’s break down why this pixelated image (aka Cryptopunk #7523) sold for over $11,000,000.
To illustrate, let’s use an example of a Hermes handbag.
Why do people pay $5,000 for a bag that was made in the same factory, with the same materials, as a bag that costs $500?
It boils down to how the concept of “value” is human centric. We assign a value to items based on the demand for that item.
That demand is driven by brand, perception and status.
We believe that carrying a bag with an Hermes logo will communicate something about who we are and our value to society.
This is exactly what’s happening with NFTs right now.
The value of an NFT has little to do with the “quality” of the art, but rather what owning that NFT can do for our status. It’s a simple, fast and effective way to communicate our status for the entire world to see.
Let me answer that with another example.
Last year my wife and I bought a home, then spent A LOT of money renovating it. Naturally, you want to share this with others.
We had a housewarming party so our friends and family could see it, but due to COVID not many people came.
So naturally, my wife took to social media to post the house (before/after, etc).
Why did she do this?
For credit. For validation. For status. And also because way more people are going to see it.
I love my wife more than anything in this world, so please don’t take that as a slight towards her – she’s human, and this is what humans do.
This isn’t a trend or shift in technology, it’s an exposure of human behavior as a whole. Just like how social media has exposed us in so many ways (racism, shaming, etc), NFTs are doing the same x10 (the hype machine).
Yes and no. They can screenshot it, but the having a screenshot does not equal ownership. That’s the power of the blockchain – you’re able to see the owner, the value and all who have possessed it before.
The easiest way to understand this is the Mona Lisa – millions of people have pixel perfect replicas hanging in their homes, but we all know it’s not the real thing.
This is a crucial shift that will have a huge impact on everything we purchase in the next 10 years.
Think about how much of a struggle it is to verify authenticity in luxury goods alone?
An NFT becomes the only verify a purchase / item / good / experience is truly authentic and not fake.
In the next decade, everything you buy will come with a token as the receipt. A way to verify the purchase you made as real, locked forever into the Blockchain.
Let’s put some context around NFTs and bring it back to the marketing world through a series of use cases.
“Minting” refers to the process of turning a digital file into a crypto collectible or digital asset on the Ethereum blockchain. What we’re really talking about here is creating your own NFT and making it available for the world to see / purchase.
Anyone can mint an NFT – it’s actually not an overly complicated process.
Brands like Adidas, Budweiser, Twitter and hundreds more have been jumping on the bandwagon to create their of NFT drops.
Most of these NFTs are more than just a JPEG in a digital wallet, they come with “utility”. For Adidas, that meant you get exclusive clothing and first in line access to future drops.
Adidas made over $22M from their first NFT mint.
The key to successfully NFT launch / minting campaign is attention. Getting your project out in front of as many people as possible and creating a hype machine around it.
Keep in mind what I said earlier, that humans assign the value to NFTs, that value is simple supply and demand economics.
The more people want them, the higher the price can go for resale. So if you have a big following, minting is a great opportunity to make money or provide other value (tax offsets, charitable donations, DAOs, funding).
Also, sales on the secondary market (where luxury goods and sneakers brands get killed in today’s market) get compensated for every re-sale of an NFT. This is really where things become interesting and we can see the power of the blockchain technology.
If you’re going to mint an NFT, you need a string community around it to drive up the value. It’s the foundation to drive up the demand for your drop.
However, the community itself is also a massively important tool for marketers.
Discord and Twitter are the most popular platforms for NFT communities
We’re moving to a cookie-less internet, which is going to make it impossible to track and advertise the way we have over the last 5 years.
As we move off of cookies (aka 3rd party data), 1st party data becomes king (aka owning that data inside of a community).
NFTs give brands the opportunity to start building the “new email list” for a decentralized, private web 3.0.
More and more NFTs are being created with “utilities”, or added benefits to owning that given NFT.
In other words, NFTs are evolving away from being solely valued on hype and intrinsic value, but also the real world utility they can provide.
For example…
The easiest thing to think about utility when it comes to your business is customer loyalty. Providing tokens with additional value to your top / nest customers is the easiest way to contextualize utility right now.
Right now NFTs are mainly contextualized as digital art, but the true long term value comes in the technology – the blockchain and smart contracts.
A smart contract is some code that runs on blockchain and enables a secure value exchange. Smart contracts can remove the need for a mediator when two parties want to exchange valuable digital or physical assets.
In 10 years, everything will run on smart contracts, from business deals to purchases of everyday goods.
This technology is going to dramatically change our day to day lives as marketers by impacting the software we use.
I reached out to Nick Eubanks, a marketing entrepreneur who is deeply involved in the NFT space for a quote on this…
“I see huge opportunities for NFTs within the broader business ecosystem, specifically due to smart contracts and the ability to programmatically build and deploy utility that can go beyond financial aspects, such as access to events and other premium content. I think one of the more exciting (and obvious) applications for NFTs is within affiliate marketing, and for brands and publishers to leverage the additional layers of commissions including ongoing transaction revenues that are retained by the original owner of the token (the wallet that minted)”
The blockchain technology will give the power back to creators, for real this time. No more stealing content, the true creator will always be recognized (and potentially compensated) for their work.
“The biggest shift is perhaps this new expectation of having equity or skin in the game. If social media gave customers a voice in the brand conversation, [NFTs] take this a step further.”
Simon Kearney, Strategy and insights director, Wolff Olins
This can be contextualized in something as simple as a meme. Memes are some of the most viewed pieces of content on the web, yet we usually never credit the creator. They simply get screen shotted and re-shared with no gain for the creator.
The blockchain will be able to credit all re-shares back tot eh creator, potentially compensating them for the value they’ve created.
Cookies are dead. In a matter of months the way we advertise and market will be changed forever.
The move to web 3.0 means more privacy and less ability to reach customers the way we do now.
Platforms like Google, Facebook, Instagram and TikTok will likely cease to exist as we see them now.
This cuts back on massive marketing channels that we’ve relied on for years to acquire customers. Instead, we’ll need to look for new opportunities…
This is a big, big shakeup that’s coming sooner than you think.
These changes are happening – they’re here, and they don’t care what you think about them.
As a marketing professional or business owner, it’s incredibly important that you start to wrap your head around these shifts.
While you don’t have to go out and start collecting NFTs, i do recommend you go through the process of setting up a wallet, buying come crypto and trying to understand the WHY behind all of these.
If you want to keep growing your business over the next decade, you have to understand the shift in consumer technology, behavior and most importantly – the psychological cues that make us human beings.
Need help with your marketing strategy? Book a time with our growth team to talk about getting more customers for your business.
“NFTs are something we all have to pay attention to.”
totally agree!
agreed! thanks for commenting
Eric Webber SaysFinally – someone who explains advertising-related NFTs in practical, relatable, and relevant language. Thanks.
Sarah Leccacorvi SaysThis is an excellent summary. So helpful! Thank you for decoding the code… I feel so much better informed. Thank you
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