NFT and marketing

From Christie’s sale of a piece of digital art for $69 million, to Jack Dorsey’s (co-founder of the Twitter platform) first tweet for $2.9 million, in recent weeks a three-letter word has taken the world by storm: NFT.

Although still an emerging technology, many believe that NFTs and the underlying blockchain technology will radically reshape the future of business. Despite the hype, many companies are struggling to use this new technology for themselves and their marketing. Who has already taken the plunge and how has it worked?

What Is An NFT ? 

NFT stands for “non-fungible token”. Unlike a fungible token, which can easily be exchanged, a non-fungible token is a digital asset defined by its unique properties, and therefore not interchangeable. As NFT transactions are recorded on the blockchain, these NFTs are therefore individually endowed with a unique proof of ownership, both secure and decentralized.  They also have “smart contracts” that allow their creators to receive royalties on any future resale, depending on the structure of the contract. Simply put, it is always possible to exchange one bitcoin for another bitcoin because they have identical value and properties, while exchanging one NFT for another NFT is impossible because, since each NFT has unique and different properties, their value is different. First of all, it is important to visualize how NFTs can benefit your company. Indeed, these digital assets are obviously a new source of revenue for your brand, potentially a new sales channel, but also a way to develop brand awareness, preference and customer loyalty.

Among the big brands that have joined the NFT adventure is Adidas: the company announced a cooperation with The Sandbox (a blockchain-related video game), in which they want to create an “Adiverse” together, a digital world that the brand makes accessible to players and in which players can – presumably – buy digital goods such as clothes for their avatar in the form of NFT. The brand with the 3 stripes has also launched its POAP collection – Proof of Attendance Protocol. Thus, participants in real or virtual events will be able to receive an NFT as a souvenir (like the bracelets found at festivals), which can then be resold on online platforms.

NFT & Digital Marketing

So what are the takeaways when it comes to NFTs in the context of digital marketing?

1. The scope of exploitation of NFTs is limitless since they concern all digital files: videos, photos, GIFs, music, documents… The list may seem endless! Among the most surprising NFT sales, we can mention Jack Dorsey, co-founder of twitter, who sold a screenshot of his first tweet for 2.8 million dollars.

2. For artists and brands, NFTs can be seen as a way to connect directly to their “fanbase” and collect revenue directly and in a completely disintermediated way: while the trend is no longer towards ownership but towards usage (such as the shift from DVD collection to Netflix subscription), NFTs are a good way to create a strong link on a unique digital asset. For example, NFTs allow musicians to sell their music directly to fans instead of going through streaming platforms like Deezer or Spotify. These same musicians can then collect royalties when their music is resold to another person, thanks to smart contracts.

3. Virtually no ancillary costs, no non-conformity and no unsold products. This is one of the major advantages of NFT. Indeed, since they are digital assets, there are no storage or shipping/customs costs.

Behind The Scenes

Although the media constantly highlights the sale of NFTs worth more than $1 million, a team of researchers found that the average sale price of 75% of NFTs was $15, and only 1% of NFTs reached prices above $1,500.

So it’s not necessarily the goose that lays the golden eggs sold by the media and blockchain enthusiasts, and the risks of commercial failure are high because, unlike traditional goods and services, liquidity in the NFT market depends as much on speculation as it does on supply and demand. In addition, the study found that only 10% of traders conduct 85% of all transactions, and the opacity and lack of liquidity of the market led the U.S. Treasury Department to issue a warning about the potential risks of NFTs, including money laundering and terrorism…. Since NFTs are almost exclusively sold in cryptocurrency, they are excellent opportunities for ill-intentioned individuals seeking to finance or launder money from illicit activities.

Thus, it is important to take a step back when reading that NFTs are the new trend or the new way to generate
additional revenue. Getting involved in this field obviously involves risks, both budgetary (development of “works”, creation or integration of a sales platform, marketing and communication budget) and in terms of image  – It is not enough to launch NFTs to be successful, far from it, and not all companies have the marketing and commercial strength of the success-stories we are fed by the media, and very few of them manage to create a new sustainable revenue stream.