Brands are using non-fungible tokens to explore new strategies and engage new audiences
According to digital analytics firm DappRadar, interest in NFTs is exploding among collectors, investors and speculators, generating $10.67 billion in trading volume in the third quarter of this year, up 704% from the second quarter. There have been several major NFT deals, including the sale of a digital image by an artist for $69.3 million through Christie’s auction house in March.
Some marketers are experimenting with NFTs. Last week, fashion retailer American Eagle Outfitter, Inc. put a collection of 120 NFTs up for sale at $1 each, and fast-food chain McDonald’s Corporation
10 McRib-themed NFTs Sweepstakes Giveaway Launched. Brands including Campbell’s, Pizza Hut, Taco Bell, Charmin and Pringles have also launched promotions related to NFTs this year.
Last month, skin-care and cosmetics maker Clinique Laboratories LLC, part of global beauty brand Estée Lauder Cos, invited consumers to participate in a contest to win one of three NFTs inspired by their products.
“We started seeing consumers shift to the NFT space. And for us, we really wanted to explore that,” said Roxanne Iyer, Clinique’s vice president of global consumer engagement.
The clinic plans to continue investing in this area, Ms Iyer said. “All the things that we’ve been able to do with the consumer in the physical world are some of the things that we’re thinking about potentially in the digital world as well,” she said.
But NFTs face criticism for the amount of energy used to authenticate them and their transactions. These tokens are usually bought with cryptocurrencies, which likewise consume high amounts of electricity and produce carbon emissions.
Mike Proulx, research director at Forrester Research Inc., said in an email that the environmental impact of multiple NFTs could be at odds with the sustainability promises made by many brands. “This could result in consumer backlash from brands that claim to be green.”
NFTs have also been called a fad, and, as marketers have moved on, the value of owning a virtual slice of a brand of pizza or virtual football may not be obvious to many consumers, despite certificates of authenticity.
“Brands entering the NFT arena are facing adversity,” said Proulx. “Blockchain, cryptocurrency and digital wallets are still alien territory to the everyday consumer… plus, legal ambiguity exists as to whether NFTs provide ‘ownership’ of actual digital assets or simply tokens associated with the asset.”
NFT advocates say digital assets could play a role in virtual platforms of the future.
For example, R/GA, the Interpublic Group of Cos digital advertising firm in London, is working with brands to help build virtual stores across the Metaverse platform, with the launch next month on the virtual platform Decentraland for British clothing brand Woleback. Will happen. The store’s digital merchandise can be bought and worn in a digital environment and affixed with NFTs.
Tiffany Rolfe, Global Chief Creative Officer, R/GA, said, “These NFT assets become digital artifacts that you can bring into your own kind of virtual world that you’re exploring, living in, playing with. “
Brands are also exploring connecting NFTs with the real world. For example, Clinique’s NXT sweepstakes promised winners a selection of the beauty brand’s physical products for the next decade. American Eagle’s NFTs come with a woven patch with the corresponding image and gift card.
“Over the past few months, many successful projects have had that element of utility that really drives the value down,” said Avery Akkineni, president of consulting firm VaynerNFT, a division of communications company VaynerX, which partnered with American Eagle to promote its NFTs. works on.
Many brands dabbling in NFTs are doing so hoping to gain media coverage, but they should take a longer view, Ms. Akkineni said. He added that brands can give owners of their NFTs the ability to gain early access to merchandise, enter conventions, or even vote on certain company matters.
“I think the collectibles market is a specific use case for NFTs. It is one that is resonating right now, and I think it will continue to resonate,” said Ms. Akkineni. “But it’s not ultimately a game-changing opportunity.”
Craig Elimelia, executive creative director of WPP advertising agency VMLY&R, said some consumers may feel emotionally and financially more invested in the brand if they own its NFTs. Owning an NFT is like investing in “cultural stocks,” he said.
“It’s like you have skin in the game, right?” Mr Elimelia added. “If this thing goes up, you can make a lot of money.”
For State Farm, the NFT Treasure Hunt was a way to get in front of people under 40 and advance their broader project of using technology to bring consumers closer, said Alison Griffin, the company’s head of marketing.
“It’s being able to consistently tell our story to that person over time,” she said.
Megan Graham at [email protected]