Non-fungible tokens or NFTs have become a popular buzzword in 2021 and 2022. In simple words, they represent any form of digital content including gif files, videos, images, and audio tracks. As of 2022, many major brands including Adidas, Coca-Cola, Clinique, MAC, McDonald’s, Ray-Ban, and Taco Bell have all reported using NFTs in their digital marketing campaigns, which makes more small brand owners consider the adoption of this instrument.
With that being said, ambiguity may be the best description of the existing status quo. How do you buy NFTs? Are they good digital marketing tools? Why did the United States Congress grant the US Securities and Exchange Commission the right to treat them as ‘financial assets’ and introduce new regulations to impose taxes on NFT purchases? In this article, we will analyse these factors to understand whether digital marketers should use these instruments in their next campaigns.
NFTs are unique digital items that come with a ‘proof of ownership’ confirming that their current owner is a sole proprietor of a certain image, audio file or other types of content. However, this does not stop other people from using it. Sounds weird?
In a way, this is similar to physical collectables such as famous paintings. Any person can buy a copy of the Mona Lisa for cheap or print it at home. At the same time, the original painting is stored at the Louvre Museum in Paris which has been its owner since 1797. While this work of art is copyright-free as of 2022 due to the end of its copyright duration period, many newer items are not. Hence, any person willing to use their copies for commercial purposes may be charged by their owners for the right to do so.
While the regulations governing the use of NFTs are still being clarified as of 2022, it is fairly possible that NFTs will be covered by similar legislative acts effectively allowing the owners to charge money for any commercial use of popular memes, images, and visuals. Considering the growing popularity of social media trends and paid digital content such as limited-offer Facebook Subscriber Stickers, many persons may choose to own such items to demonstrate their uniqueness. Others may simply treat them as other collectables such as rare baseball cards and resell them at a higher price in the future.
Here are some popular ideas of how pioneer brands are using NFTs in digital marketing:
One of the most interesting ways to use NFTs was demonstrated by the Coachella Valley festival which allowed its visitors to buy digital NFT images of a flower serving as entry tickets. These items also had interesting embedded visual effects and could be kept forever as a long-lasting memory of this event in the same way as their paper variants. In a more advanced version already tested by some football clubs including Vasco da Gama, this instrument may grant lifetime access to some games serving as a ‘membership card’ for the most loyal fans of the club.
Multiple wine brands have already adopted NFTs as a way of fighting counterfeit products. NFT images on a bottle are far superior to traditional RFID marks or excise duty stamps that provide limited information to prospective buyers. On the contrary, NFTs can store a whole ‘history’ of a product including its manufacturing location, year of production, and a list of past owners. This security element can only be introduced by brands themselves rather than country governments or retailers, which opens new opportunities for innovative companies.
The popularity of charity pin badges and brand logo stickers clearly shows that people tend to demonstrate their views and preferences to others. The use of NFTs allows them to engage in similar behaviours in the online environment. The development of the metaverse and VR worlds by Facebook and other high-tech brands may lead to a situation where digital belongings will become as real as physical ones. Anyway, multiple commercial companies including Stella Artois and several charitable organisations are already using NFTs to collect donations, support global well-being, and change the world.
With that being said, NFTs are really a dark horse for many brands as of 2022 due to a number of factors:
NFTs are sold via blockchain operations, which involves the need to use such cryptocurrencies as Bitcoin or Ethereum. They remain a high-risk instrument for most customers due to their volatility and ‘grey’ status in many global jurisdictions.
Both cryptocurrencies and NFTs remain undefined by local legislation in many countries. From the owners’ standpoint, this introduces additional risks in the case of fraud or theft since the stolen asset ‘does not exist’ in this jurisdiction.
In addition to the lack of legislative protection, NFT owners may face threats of theft. As this market is still in development, large-scale hacking attacks occur every year.
As of 2022, the adoption of NFTs by conventional customers remains questionable. Their purchase is linked with multiple threats while the advantages of their large-scale implementation are not clear to most practitioners. However, the increasing popularity of this trend implies that your brand can start experimenting with NFTs in a number of spheres:
This allows you to use NFTs as an alternative to physical items for tech-savvy customers and show your support of new technologies and younger generations of users.
Blockchain technologies offer a powerful way to protect your products from counterfeit copies and ensure superior customer experiences.
You can give NFTs in exchange for customer donations to let them support a good cause and show their views to others.
Such brands as McDonald’s and Coachella are using NFTs as limited-time souvenirs that will remind their owners of some memorable events for years to come.
NFTs granting tech-savvy users access to product launch parties or other limited-access events will enhance your existing loyalty programmes and will attract new audiences interested in modern technologies and the brands openly supporting them.