NFTs are what happens when digital artists, blockchain, and crypto fans collide. It’s the start of a new revolution in art and content ownership that has seen the NBA, Taco Bell, and McDonald’s jump on the bandwagon. With Ethereum-backed digital art that provides true ownership and tradeability to consumers, NFTs might be an exciting new world for enthusiast brands.
Digital marketing guru Neil Patel breaks it down this way: “While they’ve been around for a couple of years, NFTs have recently become a hot topic (and even hotter investment). What are they, and how do they work? To understand non-fungible tokens (NFTs), we must first define the word ‘fungible’. If something is fungible, it can be exchanged for something of equal or similar value. A typical example would be fiat currency (and even cryptocurrency). It’s fungible because you can trade it for goods of an equal value. You can also trade it for another currency if need be. On the other hand, something that’s non-fungible is unique and therefore can’t be exchanged at equivalency. For example, a diamond is non-fungible as no two diamonds in the world are alike, and thus each has its unique value. You can’t trade one for another at equivalency. A non-fungible token is a cryptographic asset created using blockchain technology. What sets NFTs apart from cryptocurrencies (which are fungible tokens as they are identical to each other) is that they have unique identification codes and metadata to distinguish one NFT from another. Because each NFT is unique, it cannot be traded or exchanged at equivalency with another NFT. The result is that each NFT is a digital collectible, a one-of-a-kind asset that can’t be replicated. That’s where the craze for NFTs started. In 2017, CryptoKitties, a blend between Tamagotchi and trading cards, exploded onto the scene. Each kitten is unique and can be raised, reproduced, be traded—some for as much as $140,000. NFT mania was born, and today, the interest in NFTs is only increasing.”
So as a unique piece of art on the Ethereum blockchain, with a code only one person can own in a digital wallet, NFTs have created an entirely new ecosystem for digital art. And the implications for brands are enormous. Now for the first time, IP owners have a way to encode individual digital assets, make them available for sale, and trade them on an open market. Like art, scarcity and uniqueness drive value, making NFTs a home run for entertainment and enthusiast IP brands. It’s the reason why artists, entertainment studios, music artists, athletes, and meme owners are flocking to NFTs and creating new value in their IP by releasing NFTs to exchanges for sale. Iconic photos. Memes. Collectible cards. Animated 3D digital art. Album art. Any unique creative visual that has a fan base can make for unique and interesting NFTs. And for many brands, it’s a tremendous opportunity. Here’s a look at some of the most interesting NFT brand moves:
Why NFTs Have Endless Possibilities for Brands
NBA Top Shot, a sports video highlights platform recently sold over US$80 million worth of NFT video highlights, the highest-selling collectible by sales volume yet. Blue-chip brands such as Louis Vuitton, F1 Racing and Nike are jumping in. And musicians including Deadmau5 and RAC are experimenting with NFTs, bringing a wave of mainstream attention.
Taco Bell to Charmin: 10 Big Brands Jumping on the NFT Bandwagon
Brands have seized on NFTs as a way to engage with their audiences and promote their products. Nike, Panini, and Vodafone are among the brands that were quick to see the potential of non-fungible tokens. In recent days, brands have leapt aboard the multi-million dollar NFT bandwagon, with companies ranging from Taco Bell to Charmin minting their own non-fungible tokens. Reactions have ranged from bafflement to weary eye-rolls—but is it so surprising that brands are wholeheartedly embracing the opportunity to engage with their audiences via these unique, collectible tokens?
New NFT Sneakers Could be Coming from Nike
In 2019, Nike Inc (NYSE:NKE) was granted a patent that could have huge value in the non-fungible token space. The patent calls for a “system and method for providing cryptographically secured digital assets.” The patent includes digital assets for articles of footwear. The patent lists “cryptokicks” as the subject from Nike. Cryptokicks may include token data and attributes from a companion physical shoe.
Taco Bell’s NFT Crypto Tacos Aren’t Meant for Eating but People are Loving them Anyway
Taco Bell released and sold out the first set of its taco-themed NFTs on the Rarible marketplace. The fast-food restaurant operator created five NFTs selling them as collectibles in a set of five. The initial price for the NFTs was 0.001 ETH or $1.79 and the highest bid reached up to 0.4 wETH or $700.
McDonald’s Teases NFT Big Mac
The fast-food giant announced the release of the first two NFTs—representing a box of Chicken McNuggets and the famous Big Mac—in an Instagram post on Sunday, accompanied by the hashtag “#McDoNFT”. The published videos will be tokenized and uploaded to OpenSea–a marketplace for rare digital items and crypto collectibles. There will be five copies of each work, making a total of 20 unique works. Unlike other brands who’ve released NFTs in recent weeks, McDonald’s isn’t putting the digital artworks up for sale. Instead, McDonald’s France will hold a contest among its social media followers–from April 9 to April 13 they will compete for the first two NFTs, and from April 14 to April 18 for the other two.
Playboy Invests in NFT Market, Set to Launch Digital Art Gallery With Nifty Gateway
Luxury fashion brands poised to join the NFT party
The most straightforward example of a fashion NFT is where the NFT is the digital “twin” of a real-life garment. Clothia, an online retailer in the accessible luxury space, is currently auctioning NFT dresses. The winning bidders will receive the corresponding real-life dresses, and both the NFTs and the physical garments are one-of-a-kind, says Clothia CEO Elena Silenok. Silenok says brands can think beyond digitising existing goods and consider NFTs as a new revenue stream. “NFTs could be similar to how fashion brands see bridge or diffusion lines,” she says. “Just like how a Chanel lipstick is more accessible to customers than a Chanel handbag, luxury brands can use NFTs to give more customers access to their brands.” An example of this would be Gucci’s $12 digital sneakers.
How Brands Can Capitalize on NFTS to Boost Engagement
Brands should engage current as well as attract new clients/customers by offering NFTs that can unlock special giveaways, rewards or pricing. NFTs can be embedded with metadata that can unlock any limited resource, such as VIP discounts or even a VIP’s time. For example, an event ticket sold as an NFT could be embedded with a predetermined time for a personal meet-and-greet with the founder of a company or a brand’s celebrity spokesperson. Through ownership of exclusive NFTs, collectors can feel a deeper sense of connection with their favorite brands, which will translate into increased customer loyalty. And since brand NFT collectibles could be sold on secondary markets for profits in the future, purchasing a brand’s NFT could be a new way for consumers to invest in their favorite companies.
NFTs are an exciting revolution in digital art and cryptocurrency, with far reaching impact for brands. Although they may feel over-hyped today, NFTs are truly in their infancy as a platform and the implications and opportunities for brands are clearly going to be a considerable force in the foreseeable future.
Also published on Medium.