In just a short time, the phrase “NFT” has become a topic that grabs much of customers’ and businesses’ interest. Why are so many people willing to spend millions of dollars just to buy virtual assets that they can download for free? Why are firms leveraging the NFT trend for marketing and brand promotion?
Based on blockchain technology, assets from small to tremendous values, such as paintings, game items, music, clothes, land ownership, can all be traded as NFTs on online websites. So, let’s figure out why NFT has become so popular!
NFT – Non-fungible Token
We often heard about NFTs with their full name “Non-Fungible Tokens”. Yes, unlike conventional currencies or other cryptocurrencies, they represent assets with a unique and irreplaceable unit. A simple example can help us to understand better: a 1 dollar bill is interchangeable with any other 1 dollar bill, which means it is fungible. On the opposite side, each NFT has unique properties and cannot be divided or replaced by other NFTs.
NFTs are issued, stored and maintained through blockchain technology. They work similarly to cryptocurrencies, allowing users to securely transact them in decentralized ecosystems. Traditional NFTs can be found in digital games (NFTs’ largest market) as items can be only used by the “holder”.
The diversity and the potential of the underlying technology have made it available in many other digital forms, giving space to a wide range of industries to NFTize images, GIFs, music, videos, social media posts, games, cards, event tickets, and even virtual worlds “metaverses”, making NFTs more attractive than ever.
The “boom” of NFT is constantly attracting attention as many creators have realized the value of virtual assets, and started driving millions of dollars to the growing industry. Surprisingly, wealthy investors are spending unimaginable amounts of money to own these assets. For example:
- Beeple’s “Everydays — The First 5000 Days” ($69 million)
- “Iconic Crypto Queen” by Paris Hilton and Blake Kathryn ($1.1 million)
- Grimes’ “Warnymph” Collection ($6+ million)
The raise of NFT communities
NFT Community is a new term coined to refer to the group of people that are actively collecting, trading, selling, and engaging in conversations around a certain type of Non-Fungible Tokens. Lately, we have seen a growing trend of NFTs’ applications to create a sense of participation in projects, companies, causes, by owning a unique asset belonging to them.
One close example is The SneakerHeadz Society, a community of sneaker collectors that created a membership program based on tokenized pieces of art with sneakerheads. The project raised 220 ETH through a crowdsale of these memberships on their digital portal in less than 1.5 hours.
The project aims to create an ecosystem to improve the experience of sneaker collectors all over the world, by giving them new tools to interact with other collectors, showcase their collections, and own digital art around the topic. They have an extensive roadmap to keep growing the community around the NFT market.
NFT in marketing strategies
The importance of NFT for marketers
NFTs have also become handy for many marketing activities with the utility of improving brand strength. Especially, NFTs allow businesses to confirm the copyright and provenance of the assets – something that has been always lacking in digital marketing. Authors and content creators can protect the creative rights of their digital content/assets. Even if it is transferred to another person, the information about the author and the transaction is still completely stored in the blockchain, forever.
The NFT industry makes a breakthrough in the history of technology when it comes to creating assets of unique value. They can be tracked and easily exchanged, bought, and sold in the market. For the first time, digital assets are protected by impostors, even stealers. It comes from the advantage that products created on the blockchain are difficult to copy due to the protection and guarantee of clear and transparent origin.
NFT offers a great opportunity to earn money for authors or content creators. Once there, digital products are created and can be delivered and managed through the NFT marketplace, demonstrating that marketers can leverage them to monetize the digital assets they create in a very easy way.
On the other hand, NFT has a technological appeal when anyone can create simply with an Internet connection. NFT can create anything but this also becomes NFTs weakness causing that there are many worthless tokens on the network. The scarcity of an NFT item does not guarantee that the value will increase forever, so players can incur heavy losses when the NFT fever cools down.
Potential applications of NFT in marketing strategies
As a great application, brands create marketing content without worrying about stealing or copying. Applying NFT in the early stage marketing strategy will bring a convenient communication solution for brands. In the long-term, firms are looking for opportunities to enhance the experience and keep customers engaged with the brand. NFT is confirmed to be a spectacular new direction that any business cannot ignore.
Moreover, NFTs by awesome create scarcity in infinite assets and provide proof of that infinity. In marketing, scarcity itself is an important factor grabbing customers’ attention in the products, even make purchases to satisfy their desire.
Challenges in NFTs marketing application
NFT applications in marketing are still in the discovery and testing phase. Many brands have become pioneers such as luxury fashion brands: Louis Vuitton and Gucci. They have implemented online gaming and NFT as a way to promote their brand in the generation of young people with special interests in digital arts.
However, brand marketing efforts with NFT are risky experiments. NFT content is often not carefully crafted to represent the brand or benefit the owner. In other words, this is the test of brands themselves. Additionally, a more realistic challenge comes with the expense of creating NFTs which may cost more than they actually are. There is an increase and many controversies regarding the significant impact on the environment by energy consumption. Brands with sustainable, eco-friendly development can mind their steps with NFT.
On the other hand, blockchain technology is developing day by day. This makes the race of laws and regulations on intellectual property, copyright, and license lagging behind. Currently, there is no separate mechanism for NFT holders to value assets.
With a digital asset, it is quite possible for a trader to use fake identification with fraud. Unfortunately, the influence of the NFT market can turn into an over-hyped financial bubble that could burst at any moment.
In conclusion, NFT has a great application for brands in marketing strategies to help them enhance their brand strengths. However, it also has many challenges for firms. If the firms overcome these difficulties, the success of firms will explode and much more surpass than imagination.
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Dandelion Labs is a blockchain product and research agency that leverages the power of blockchain technology to power the next generation of decentralized commerce, paving the way for evolution and connection to the digital world. Stay updated with our newest advancements by following us on social media:
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