It's important to be realistic. For the majority of consumers, NFTs are not on the radar screen. A survey carried out by Finder suggests that awareness is relatively low. In the US, 70.6% of respondents didn't know anything about NFTs. In Britain, the figure was 78% and in Germany 82%. So why the intense interest? Well, those who are interested in NFTs are sometimes prepared to spend for the privilege of owning them. Famously, a work of digitised art by Beeple sold for $69 million when minted as an NFT and collections created by companies, such as the Bored Ape Yacht Club, have also commanded high sums of money.

But does this have any relevance for brands? Well, there's a financial attraction. "NFTs are the next step for a lot of brands," says Michael Baggs, Director of Strategy at The Social Element, an agency specialising in engagement across social media channels. "They are the only form of marketing tool with the potential to drive millions of pounds in revenue." But as Baggs points out, in order to be successful in marketing terms, NFTs have to not only drive value for the brand but also offer something that a significant number of consumers will be prepared to buy into.

On one level, NFT technology allows brands to offer something collectable to their consumers and superfans. But that's not the end of the story. An NFT is essentially a digital asset - such as a drawing, painting or music file - that confers ownership on the purchaser. In addition, NFTs can also have secondary characteristics programmed in. They can provide a digital contract or agreement offering additional benefits. For instance, if someone buys a company Logo as an NFT, the deal might also include access to special offers or privileged access to events. In other words, NFTs can not only be sold directly to fans, they can also be used as part of a rewards or loyalty programme. It's these contractual elements that will be of most interest to brands in the longer term.

Rewarding Fans
Luis Carranza is founder and CEO of Fayre Labs, a company using NFTs to help brands engage with fans. He cites the example of an NFT program created by Fayre for RCD Espanyol, a team playing in Spain's La Liga. As Carranza explains, the NFT provides a bridge between the digital experience of acquiring an NFT with benefits that can be accessed in the physical world. "Fans can take their NFTs out on the road with them," he says. "They can use them to upgrade their seats in the stadium or claim free drinks." There are also plans to link the NFTs with partnership programmes - for instance providing fans with discounts in shops adjacent to the RCD Espanyol stadium. Importantly, the NFT in question is a club mascot. "So it's something that the fans can identify with," says Carranza."

This principle of mixing the physical with the digital can be applied across just about every consumer segment. Baggs cites the example of jeans brand, Wrangler's recent campaign which involved a collaboration with Leon Bridges and utilised pictures capturing the musician's dance moves."They created seventy-five NFTs and with every purchase, you got a physical copy of the actual piece. In addition,you got access to New York Fashion Week and a chance to meet Leon Bridges," he says.

What's It All Worth
But coming up with a consumer-friendly NFT offer isn't totally straightforward. "We've got used to the economy of abundance on the web," says Baggs. "NFTs move us back to the economy of scarcity." Scarcity gives NFTs a value. A purchaser can not only buy but also trade the newly acquired item and it may actually go up in value. On the other hand, it could go down. Despite a few NFTs selling for thousands or millions of pounds, euro or dollars, the average price paid is around $200. That may be an appropriate amount for a super fan to pay,but as Carranza acknowledges, it's a figure that would deter considerable numbers of consumers."Crypto attracts a lot of speculators," he says. "But for real people, $50 or $200 dollars is a lot to pay."

So as NFTs become part of the mainstream, the biggest challenge facing a lot of brands is knowing what to charge for the tokens. "Price is important," adds Carranza. "You have to look at what people who are not speculators will pay." There are anumber of strategies that brands could adopt. One is simply to link the price of the NFT - whether that's a club mascot, a piece of music or specially-commissioned art - to the value of the associated benefits. For instance, you buy an NFT of some trainers and unlock discounts for the physical goods that are equivalent to the cost of the token.

At the other end of the spectrum, the brand offers an NFT that has genuine resale value. James Weller is Account Director for strategic digital marketing agency, Spike Digital and has been researching NFTs for the company's online resource, Learning Thursday. He points to the approach of Adidas in creating tokens that have intrinsic value. "Adidas was quick to partner with Bored Ape Yacht Club, seen as the industry gold standard for PFP - profile picture - NFTs.Adidas sold out their initial mint of 30,000 NFTs - equivalent to $16 million dollars," he says.In addition to the digital product, fans could also claim special physical goods.

The revenue structures for NFTs can be highly appealing because money can be earned from primary and secondary sales."Selling NFTs is obviously a revenue model," says Weller. Those NFT collections also have a re-sale value baked into the smart contract on the blockchain - meaning, any subsequent sales go to the project creators." On the other hand, NFTs can be free and deployed simply for consumer engagement. For instance, Riot Music is staging a live concert, facilitated by digital production company Brave Group - in Tokyo involving virtual musicians based on Manga characters. All those attending the gig will receive NFTs by airdrop giving them access to additional content. Keito Noguchi, Brave Group said:"Our live audience can obtain their NFT tokens, free of charge, via Airdrop. The tokens for the live event attendees will provide exclusive access to unique content to connect with their favourite characters. The question facing brands is simply this. Is the NFT itself the product. Or is the NFT a utility? The two aren't mutually exclusive. An NFT can be either of the above or both, but the key is to decide on the purpose and fix the price accordingly.

New or Old Customers
When viewed primarily as a utility or marketing tool, there is a further question. Are NFTs primarily of interest to existing super fans of a brand or can they reach out to new customers? Luis Carranza says his work with Espanyol is mainly aimed at people who are already committed to the club - people who are attracted by ownership of a digital mascot and value-add privileges.
But Wayne Liu- Chief Growth Officer - of Perfect Corp believes brands have an opportunity to reach new demographics. His company provides an augmented reality platform for fashion and beauty brands, allowing customers to try before they buy. It has recently added an NFT capability. He cites the example of beauty brands reaching out to gamers. "You could have make-up artists create an NFT for game avatars," he says. This would reach an audience that the brand wouldn't necessarily be able to address through its normal marketing. It's very early days and most brands are in experimental mode. Nevertheless, it seems likely NFTs will begin to form part of the marketing armoury in the months and years ahead.