Non-fungible tokens (NFTs) are likely to be here for the long-term, says adland, but brands need to be "more ballsy" and think long-term to maximise value from these digital one-of-a-kind assets.
NFTs- a digital record of ownership of an asset- have exploded in popularity over the past few years, as brands grapple with realising their potential. While much of the hype around NFTs has been linked to their association with digital art, a broad sweep of brands including high-profile brands like Nike, Adidas and Gucci are now exploring NFTs and the budding metaverse.
NFTs use to adland
Broadly speaking, the adverting industry, which likes to be at the forefront of new technology, is optimistic about the potential of NFTs. An exciting new tool for campaigns, a fresh iteration of a loyalty programme, a new revenue model tapping into emerging technology are all flagged as potential wins for marketers. But as with any nascent technology, particularly a complex one like NFTs, there are red flags to be side-stepped by marketers if they don't want to get egg on their faces. Zero guidelines for NFT minting due to crypto being largely unregulated, the accusation of bandwagon jumping, and a misunderstanding of the technology are amongst the dangers marketers will be wary of. Dillah Zakbah, creative director, BBH London, the creative agency, argues at the moment only a handful of ad agencies are truly understanding NFTs and how they work for brands. Zakbah says: "Some have used them as a gimmick solely to claim a first without really getting much out of it. "NFTs are going to be around for a while longer and adland needs to find more daring ways to work with them." But she cautions those that who wait too long could be caught out.
Brands shouldn't wait too long!
Zakbah adds: "I think brands need to be more ballsy and experimental. "They should start exploring how NFTs fit into their marketing agenda and how they can be made meaningful to their audience. "The longer brands wait, the more likely they will end up doing something unoriginal." Gui Sampaio, communications strategy director 72andsunny, the ad agency, agrees on the dangers of brands pilling in without properly understanding NFTs. Furthermore, he says there is a danger that consumers could turn their back on brands through either bandwagon jumping or not helping customers navigate the complex world of NFTs.
He adds: "This has similarities to the hashtag boom 10 years ago when brands actually forgot the real aggregator power of hashtags to organise and foster conversation and shamelessly used it in their ads to show the kids how cool they were." Pieter Konickx, creative director, B-Reel, the creative shop, also cautions adland against jumping on the latest bandwagon. He said: "When hasn't adland jumped on gimmicky ideas like Snapchat lenses, VR experiences that require a cardboard box around your phone or NFTs that only make the agency look good in the press?" He says NFTs currently feel like a "gimmick" and says "ask me again in 2032" if he thinks NFTs will be a permanent fixture on the marketing landscape.
NFTs here for the long haul
Striking s positive note, Amar Mehta, senior consultant, LEAD Consulting, the digital consultancy firm, says NFTs are going to be around for the "long haul". Mehta likens NFT technology to that of an auction house "declaring a piece of artwork an original, valuing it and then selling it". Mehta adds: "It's hard to see NFTs disappearing any time soon as they are replicating a real-world concept in the digital space." Agreeing with this sentiment is Justin Peyton, chief transformation & strategy officer at ad agency Wunderman Thompson, APAC. Peyton says NFTs are here to stay but the word NFT might soon be defunct, pointing to brands coming to market with NFT alternative names like Digital Assets and Digital Property.
Creating value through scarcity is "tantalising" for marketers
Adam Sefton, strategy partner, Superunion, the brand and design consultancy, says NFTs "ability to create value through scarcity is obviously tantalising". Sefton adds: "There are lots of possible uses for a technology that creates scarcity. Loyalty schemes, or unique rewards for loyal customers, are one such possible use." Ben Richards, chief experience officer, VMLY&R, the ad agency, stresses the importance that brands understand NFTs as long-term assets. Richards says: "If brands are able to unlock a lasting value exchange, they definitely have the potential to be here long-term. "
NFTs might have started out as the domain of crypto geeks but they are now being leveraged by some of the world's biggest brands, like Nike, Coca-Cola, Gucci and Taco Bell, as well as status-hungry celebrities and sport stars like Jay-Z and Serena Williams. On US fast-food chain Taco Bell, which sold Taco-themed GIFs and images on an NFT marketplace and donated funds to a Taco Bell foundation offering students scholarships, Zakbah cites it as being "one of the best examples" of a brand utilising NFTs. Earlier this year, Nike, also seen as an NFT pioneer, revealed its first NFT apparel item, a hoodie that can be worn by both avatars and real-life holders of the NFT sweatshirt
NFTs which provide services and utilities are winning
Sampaio says those brands successful leveraging NFTs are using them beyond collecting JPGs to provide services and utilities for their audiences. He cites the Coachella music festival and US film chain AMC Theatres as two examples, whereby they have used NFTs and blockchain technology for ticketing security to guard against counterfeiting. Likewise, Sampaio gives a shout-out to MAC Cosmetics, the US cosmetics maker, which has issued NFTs to reinforce its social responsibility by selling collectable NFTs to raise funds to support organisations in the fight against HIV/Aids. A standout performer for Mehta is toy maker Mattel's Hot Wheels NFT, offering digital collectable cars which Mehta likens to a "digital version of Pokémon cards" and which will speak to its adult-based collector audience and younger digitally native audience. On top of the likes of Nike, Gucci and Adidas, Peyton cites Time Magazine as an innovator in the space, pointing to its CEO saying future subscriptions might take the form of NFTs.
NFTs a good way of keeping consumer close
Experts believe that NFTs can be used by marketers to keep the customer close. Konickx says it's a "give and take" relationship between brand and customer. Konickx says: "Like a good friendship, NFTs should be give and take. The consumer gives the brands their data and in return the brand enhances each part of the consumer's interaction with the brand." But Mehta says that the NFT space needs to lose its Wild West image first.
Mehta says: "There is potential for the NFT space to become a more ubiquitous marketplace that is less Wild West and more Saturday local art fair. At that point, it might be a better way for brands to keep customers close and engage with a wider audience in a more regular and dynamic way."
Audience too small
Peyton says NFTs are a "great way" to keep the consumer close, but cautions the audience is still small as not many consumers have digital wallets. Peyton adds:" So, in short, is it a great way to keep consumers close today – although the audience is probably still too small, but we are seeing significant growth even as the overall crypto market has been in decline." Richards adds: "Brands need to create NFTs that are bringing value in consumers' interactions with them, if a brand creates NFTs with this in mind they will find themselves driving greater loyalty and building a stronger affinity. "It's crucial to think of an NFT as a mechanism and not an idea in doing this."