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Non-fungible tokens (NFTs) have exploded into the tech space in the last few years. The NFT market has grown tenfold in two years and is bursting with opportunity and excitement. But what exactly is an NFT? And how are NFTs impacting the world of marketing and branding? We unpack in this blog.

Understanding NFTs

According to Latana, NFTs are a unique type of cryptocurrency. Unlike fungible tokens, they cannot be replaced with any other token of the same type. This is because there is a one-of-a-kind piece of code programmed into every NFT making them all different and unalterable. NFTs represent ownership of any asset – digital or not – from memes to art and more. The exclusivity and uniqueness of the tokens have turned them into a digital collector’s item – which has contributed to their growing popularity.

Read more: 2022 Marketing Trends: What to Watch Out For

How Do They Work?

NFTs are made through a process called minting. The process begins with uploading a digital file to the blockchain and a token being generated for it. Once this is complete, the asset is part of the blockchain with a permanent record and is now the property of the minter. The original creator of the NFT can add any bit of programming or code to it, for example, they can monetize it or store information on it.

Forbes Advisor explains that NFTs can be found on any blockchain, but most commonly they are on the Ethereum blockchain. A blockchain is a public ledger which is why the ownership and sales are so easily tracked – it is all transparent. There is also no joint ownership of NFTs, it has a single owner, but transferring it to a new owner is a quick and easy process.

How Are Companies Using Them?

Although NFTs have been around for a while –  since 2014 – they have only recently gained major recognition, mostly because of the opportunities they hold for artists, content creators, and brands alike. Artists and creators can monetize their art and safely trade it without the need for third parties to be present or at any risk of theft. Companies can mint their own digital assets, such as a logo, monetize them and track them along with their data-associated metadata. Furthermore, NFTs can also be used to engage customers in new and exciting ways.

The list of opportunities is long, so let’s focus on some more specific areas where NFTs are impacting marketing:

Prelaunch Marketing

NFTs can be used to create excitement for prelaunch marketing. Companies can offer an NFT with purchases or create a limited collection to go with the launch. A prime example of someone who actioned on this opportunity is the entrepreneur, speaker, and author, Gary Vaynerchuk. He offered his audiences a free NFT after they bought twelve copies of his latest book in 24 hours. He sold over one million copies in one day.

Needless to say, it was a highly successful launch and the excitement of a free NFT helped contribute to the success.

Influencer Marketing

Using influencers to promote your product is a well-known and successful form of marketing. However, since NFTs are such a niche topic, the influencer you choose should have a following that is already interested in it or knows something about it. Crypto influencers are the way to go with NFT influencer marketing. Investopedia defines these influencers as individuals that have extensive knowledge about cryptocurrencies and their following consists of people that want to learn more about cryptocurrencies, have investments in the market, or want to get into the market. They already have a fanbase that is interested in the market and has sound knowledge themselves. Influencer marketing is a great strategy to reach a lot of people quickly – and you might just go viral.

An example of a company that has done just that is Red Bull Racing. The company promoted driver, Sergio Perez, using an NFT collection. They partnered up with crypto influencers and NFT creators to design and promote the collection. The goal was to be innovative in the technology space and get viewers to invest in the collection, which they did.

For more on influencer marketing check this blog out: The Changing Role Of Influencer Marketing – Now And Then

Community Building

NFTs are transparent by nature, using this in your community-building strategy can foster trust, strengthen relationships, and increase customer loyalty. They also have a high sense of exclusivity and scarcity as mentioned earlier.

Iconic fashion brand, Gucci has played on the exclusivity factor. They auctioned NFTs at an online showcase of their Fall collection. This successfully made customers and viewers feel special and part of a community for that showcase.

Read more on the power of creating unique experiences here: Experiential Marketing: How Brands Can Create Captivating Customer Experiences

Summarising the Effect NFTs Have on Marketing

It is evident that NFTs are impacting marketing in many ways, and offer several opportunities for marketers to gain traction with their campaigns, reach new audiences, and transform the way they interact with customers. From creating collectibles to unlocking game content, brands should not miss out on this exciting new technology – especially when they can benefit so greatly.

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