Non-fungible token (NFT) is the undeniable techie buzz phrase of 2022. You can’t open a news source or your favorite social media platform without seeing someone waxing poetic about NFTs. They have clearly captured the attention of the crypto savvy, but what might NFTs mean for a brand and a brand’s loyal customers? How can brands get in on this $40+ billion dollar industry? The answers may surprise you.
NFT is the acronym for non-fungible token. A token, as it pertains to NFTs, is a unit of value stored on a blockchain, and tokens can represent both physical (tangible) and digital (intangible) goods. These tokens are considered non-fungible in financial terms because each one has unique qualities that make it distinct from the next one. The original use case for NFTs was highly focused on connecting digital artists directly to their patrons. The first NFT marketplaces allowed artists to sell certified copies of their work on the blockchain, and this artwork was paid for with the cryptocurrency du jour. It was radical. Can copies of the original files be easily made? Yes. But crucially, the owner of the artwork has publicly verifiable and permanent proof of their ownership. Not only that, but artists were finally getting paid for their skills and vision. This revolution in the art world has been lucrative for many once-struggling artists, but how does this apply to brands and their customers?
There are two primary use cases for NFTs paired with brand marketing.
NFTs as Prizing
The first is offering NFTs as prizing in a chance-to-win promotion such as a sweepstakes or instant win game. We know that chance-to-win promotions help brands collect valuable consumer zero- and first-party data and opt-ins. These promotions also create positive sentiment, and by adding the enticement, excitement, and exclusivity of winning an NFT as a prize, brands can exceed their program goals. The market is awash with blockchain marketplace startups of all varieties. Some focus on solely connecting artists to patrons, while others build an agnostic marketplace experience. Merkle has partnered with an NFT company that specializes in both partnerships with enterprise clients and making the consumer experience, especially for those new to NFTs, easy and intuitive. This is important because it means that winners of NFTs will be guided every step of the way (and in layman’s terms) on how to take ownership of their newly minted NFT. NFTs awarded as prizing can take many forms: they can be brand specific, spotlight a certain artist, or a little of both.
The second use case for NFTs is far more powerful than prizing and takes the volatility of market value out of the equation. NFTs that have specific utility for their owners are the next stop on the maturity journey for Web 3.0 and brand marketing. Utility NFTs act as the digital key that unlocks exclusive physical and digital experiences. Since the blockchain provides irrefutable proof of ownership, brands can rest assured knowing that the VIP experience they are extending to an NFT owner is going to the right person – their loyal customer. Special digital experiences can include access to private Discord channels where fans can chat with celebrity brand partners or brand executives, early product releases, and VIP content. Similarly, the NFT can be used as the access pass for physical events that a brand is hosting.
If you want to experiment with new technology on a small scale and showcase your brand as innovative, using NFTs in your loyalty program or chance-to-win promotions is a relatively quick and inexpensive way to dip your toe into the waters of the next generation of tech.