Summary: Branded NFTs offer passionate customers collectible virtual goods that generate brand engagement, unlock new experiences, foster a passionate community, add new revenue, and will be critical assets for upcoming virtual worlds.
With quarantine reducing the number of people visiting stores or attending events, humans seek other ways to connect with experiences they are passionate about. If you’re new to NFTs, read this NFT primer from the Verge. As usual, brands follow the latest consumer trends, and NFTs are no exception. The NFT craze has been hot during the last few months, as wealthy crypto investors are collecting rare digital art, that often dramatically increases in value, or grants utility to premium online experiences, and/or is a ticket to an elite community of other NFT holders.
When does it make sense for brands to launch NFTs?
- They are digital leaders and are comfortable with trying new technologies, even if they aren’t fully mature.
- If they have a passionate community that loves the brand and what it stands for. If customers are already collecting brand assets (antique products, ads, signs, etc) this is a signal your customers may be open to this.
- Your customer base is already using crypto or NFTs, this is a technology they already understand and ideally use.
- The brand knows how to limit the quantity to create scarcity, driving up value.
- Your company is familiar with blockchain technologies and/or has found reputable platforms and partners to assist.
- They are ready to offer additional features, beyond just the image: access to premium experiences, discounts, recognition, access to a community, or some other creative perk.
–Insight: Some customers have already spent more on a company’s Branded NFTs, rather than the physical products–
Proof: A Coca-Cola fan spent $575,000 on this virtual jacket (image here) and other digital assets. What’s that worth in terms of Coke bottles? A fully loaded Coca-Cola truck can deliver 14k bottles a day, if the average bottle is $1, this Coke fan purchased an equal amount of 41 fully loaded Coca-Cola trucks worth of of bottles.
Above: The custom-designed virtual Coca-Cola Bubble Jacket (it does not exist in real life) also includes an unlockable version that can be worn in the Decentraland 3D virtual reality platform.
Notable Examples of Brands who have launched NFT projects:
Taco Bell leads the market with a digital Taco with Gift Card. Taco Bell was one of the first brands out of the gate to offer NFTs, they take pride in being digital leaders, for their digitally savvy customer base. 25 Taco Tokens were offered, which sold in 30 minutes, for the price of about several ETH. Each Taco Token included a $500 Gift card to Taco Bell, view the collection on Rarible
NBA Top Shots: Offers licences for fans to purchase videos and images of the top NBA plays. Each media has a limited number of items that can be purchased, with the lowest number often being the most valuable. A LeBron clip recently sold for over $387k, a brilliant way to generate new value from existing digital assets and engage fans in a new form of digital collecting.
MLB offers NFTs of famous ballparks. This innovative offering isn’t of players or famous sports moments, but of fixed locations. Makes sense given the likely player contracts, player unions, and other legal barriers. Original and clever art work is offered for each park. A gold edition Wrigley field live auction sold for $17k –agreat way to generate new value from virtual assets.
Stella Artois offers 50 NFT horses, ready to virtually race. Beer brand Stella Artois has launched a campaign by auctioning off fifty rare horses in conjunction with the summer racing schedule. This isn’t just a static art sale, there’s a digital race track, which offers a virtual game, and winners receive a sliver of ETH.
Coca-Cola sold a handful of unique digital NFT art to fans, including a cooler, a jacket, and a unique sound experience for $500k (217 $ETH) resulting in press, media, and of course, new revenues from digital assets. Visit the official website to learn more about the campaign, artists, and events.
Mattel offers NFT Hot Wheels. If you collected these cars, you know the community is rabid about owning, racing, and enjoying these collectibles. Mattel’s campaign and offered three digital NFTs (only 1 quantity each) which sold for a handful of ETH each.
Dave & Busters NFT coin. Entertainment and Beverage restaurant group has launched a digital NFT of their famous coin, for anyone to collect on the Sweet.io platform. It sold in June 2021, for $3,800. They missed the opportunity to include a party, or gaming credits for in-store redemption.
Dolce & Gabbana to launch “Collezione Genesi” an NFTs collection that features items personally designed by the co-founders Domenico Dolce and Stefano Gabbana, is scheduled to launch on August 28th, 2021, in conjunction with their real world runway show in Venice, Italy. Expecting to see real collector action, due to IRL integration.
Visa has acquired a famed CryptoPunk for $150k, waking up the financial services markets to the possibilities. Visa will use this NFT in their digital museum as an artifact. While they didn’t design and launch their own, this is notable as a leading financial services company.
Notable Mentions, post-publication: I will periodically add to this list, tweet at me for submissions.
- Budweiser Buys Beer.eth Domain Name for 30 ETH; Rocket NFT for 8 ETH (Aug 24, 2021)
- Arizona Iced Tea’s Bored Ape NFT Brand Use Was ‘Inappropriate’, Creators Warn (Aug 23, 2021)
- Win A CryptoPunk In The DraftKings NFL Fantasy Contest: What You Should Know (Aug 25, 2021)
- Official collaboration of R66 TOYS with ADIDAS ORIGINALS and SNEKZY (Aug 27th, 2021?)
–A majority of physical products will also include an associated NFT, granting access to an exclusive community–
Risks and Weaknesses:
- Early market, confusion, lack of adoption. Go up to anyone on the street and ask if they want to buy your NFT and you may get arrested for drug solicitation. NFTs are not commonly known, and in most cases, the barrier to entry (i.e., holding Ethereum, understanding how to use wallets, patience with pretty unfriendly systems, etc) is a challenge. One data point: US Congress mentioned that 14% of Americans own crypto (as part of their consideration for taxes for the Infrastructure Bill).
- Regulatory concerns brings NFT adoption to a crawl. NFTs and cryptos have some history of being used in the dark web for nefarious purposes, and premiere brands, financial services companies and healthcare companies will be hesitant to adopt. While the mass majority of interactions now are likely above board, brands are usually going to follow consumers and startups before risking their reputation.
- We build it and no one comes. Some of the previously listed NFT galleries have few bidders for the branded-created NFTs. Either the projects aren’t interesting, the art is sub-par, or the marketing didn’t build as much FOMO to get the crypto whales to purchase. Is it damaging to the brand? Not really, the space is so early, it’s just a waste of time for all the parties involved.
- Lack of talent to execute cutting-edge experiences. Most brands will lack the specialized internal talent to execute full NFT campaigns, so they will likely need to partner with agencies, marketplaces, platforms and influencers. The budget starts to increase for a potential niche campaign that may not show direct sales returns.
- Concerns over sustainability scare away brands. The crypto space has received significant criticism from many for lack of sustainability practices and wasting energy. The core crypto community has fired back, either refuting the challenge, comparing the efforts to gold/oil/printed money, or promising to improve. Brands that are environmentally sensitive, will seek to stay away from NFTs and crypto till sustainability efforts are improved.
- Marketing can spend on proven channels — why waste resources? Brands can easily execute search ads and display ads and get a calculated proven rate of return. Why innovate in such new waters, when the mass market isn’t ready? The obvious answer is to be first, learn from innovation techniques, and to plant a flag for future endeavors. Oh, and PR, yes, the PR.
–Insight: Branded NFTs are future inventory for your branded Metaverse, prepare your strategy now–
Future of Branded NFTs
I love tracking technology trends, and how business and society react to the adoption phases. This trend is no different, here’s a few milestones I expect this space to achieve:
- 2022 Peak NFT Hype. There will be so many NFT projects launched at a dizzying pace, that it will be difficult for brands to stand out in a crowded market. As a result, brands that move in during the winter of 2021 can take advantage of home-bound consumers seeking to collect and give virtual experiences and artifacts.
- Branded NFTs offer experiences and perks. The best branded NFT drops will include virtual experiences, access to events, online communities and other surprises. Passion brands will limit supply, creating intense demand and many bids, and of course, media buzz.
Loyalty programs will integrate points for NFTs. Brands that offer existing loyalty programs will enable transactions where unused points can be used to purchase branded NFTs, along with the perks associated with them.
- Real-world products will include NFTs to prove provenance & ownership. Auto companies, jewelry companies, fashion companies, and similar passion industries will provide NFTs with each product. This will be used to certify product provenance, or even be a digital twin replica that the customer can show-off in NFT galleries or on social media.
- Enterprise Software and Services for NFTs. To solve the lack of specific NFT talent in the average corporation, full-service agencies, boutiques and enterprise versions of NFT tools will emerge for publication, managing of marketplaces, and analytics. NFT boutiques will emerge with strategists, designers, social media managers, and economists. Expect traditional software companies like Adobe to acquire an NFT marketplace as they did with Behance.
- NFTs for Crowdfunding and Product Design. Some of the best companies know that innovation can come from anywhere and everywhere. Some companies will use Kickstarter-like campaigns, with digital NFTs of product prototypes to see what customers are willing to pay for. Imagine what the prototype design for the next product or packaging would look like by gauging what consumers truly are willing to spend on.
- NFTs set brands up for the Metaverse. Brands that accomplish selling NFTs, where consumers own digital art, items, and experiences, are preparing the customer to interact in a digital game or metaverse, interacting with the digital items that the customer has purchased. Example: Customers purchase digital Coke items, which will also reappear in the Coca-Cola metaverse in coming years. Prepare and sell inventory, now.
Love to hear your feedback, thoughts, on where this NFT for brands market will head in coming decades.
Credits: I obtained feedback on this post from trusted industry contacts who are involved in the NFT space, and I tipped them each 10 $JOW coin, my own personal crypto (powered by Rally.io) as a thank you. Additional thanks to Vajresh Balaji, Jessica Greenwalt, David Berkowitz, Susan Beebe, Ben Metcalfe. Photo Credits, Unsplash: Christine Sandu, Kelvin Han.