How Brands can Influence Non-Fungible Tokens
Since the very first tweet sold for millions as a non-fungible token, NFTs have been a hot topic. The possibilities are endless, and so far little has been done with them.
A first look at the opportunities and possibilities for collaborations between brands and influencers.
“just setting up my twitter,” tweeted Jack Dorsey, co-founder and CEO of Twitter on March 21, 2006.
Earlier this year, a Malaysian businessman bought the tweet as a non-fungible token (NFT) for $2.9 million. Who would have thought that possible fifteen years ago?
What Are Non-fungible Tokens
A short introduction for those who are not familiar with the latest hype on the worldwide web: a non-fungible token is a link on a blockchain of an account to a unique (non-exchangeable) digital item via a smart contract.
NFTs can be purchased through online cryptocurrency marketplaces such as OpenSea, where users can convert their work into an NFT (also known as minting ).
NFTs can represent digital assets as well as tokenized versions of real-world objects. In fact, NFTs may replace real-world objects.
Blockchain company Injective Protocol bought a work by British artist Banksy at an auction in New York with the telling title: “Morons”.
The buyers digitized the artwork and then set it on fire. There was nothing left of it. The action was live-streamed on the Twitter account “Burntbanksy”. The rationale: if you own both the NFT and the physical piece, the value is mainly in the physical piece. Destroying this, leaving only the NFT, moves the value.
NFTs, ensure that digital artworks have the same quality of scarcity that gives physical artworks their value.
Brands and NFTs
Brands have already made a cautious entrance into NFT land in the past period. Fast food company Taco Bell took a relatively one-dimensional approach and designed a number of digital artworks inspired by their folded tortillas and then sold them as NFT to fans.
The world’s most prestigious basketball league jumped into the crypto collectible craze with NBA Top Shot, turning the most iconic moments in NBA history into NFTs. NBA Top Shot cards are stored on the blockchain and can therefore easily be transferred to a new owner if desired. NBA’s NFT project has not even been around for a year and has already generated $500 million in revenue.
Nike came up with a concept where NFTs add value to their physical products. With the CryptoKicks, the sports brand has a patent on blockchain-based sneakers.
When you buy a pair of CryptoKicks you will also receive an NFT that is linked to a unique identifier of the shoe, which securely links a cryptographic digital token to the physical product via the blockchain.
Nike’s platform tracks ownership throughout the sneakers’ lifetime. When the shoes are sold, digital ownership must also be transferred. An interesting solution for a market where fake items are an increasing threat.
Influencers and NFT Trading
Linking NFTs to the plethora of digital content that influencers create and publish opens up a myriad of options to generate new revenue streams. For influencers with artistic ambitions, for example, there are opportunities to take up the digital brush themselves and create their CryptoPunks*-like creation.
In the world of digital art, it’s not just the artist who creates the value. Recognition ensures, by means of buzz around an artist, that the reputation and therefore the value of the work increases. In other words: it is a lot easier to make a hype out of something when you own the channels to activate your supporters.
No affinity with art? Influencers can also sell a (part of a) ‘standard’ post or video as NFT. This gives the owner (part of) the original, verified, and authenticated NFT coding, which makes him/her a shareholder and receives a percentage of the advertising income from the video or post.
Some investors buy NFTs (like the first Instagram post ) from relatively unknown creators in the hope that they will become famous in the future. They speculate on a possible increase in value and can decide to resell the NFT at a later date.
Influencers using NFTs can include in a smart contract that royalty payment is to be made to the original creator upon resale of the NFT. In this way, the influencer always continues to benefit from an increase in the value of the item created by him/her.
In addition, creators can empower fans by providing input on the content of their posts and videos.
Think of the beauty look of a (famous) make-up guru or the outfit of a fashionista that is completely put together by a follower or subscriber. Influencers can also completely leave the content of their videos and posts to their audience.
Their fate thus rests in the hands of their fan base, who gain control over their lives and with it their content.
Influencers and Advertisers
From their role in partnerships with brands as we know them, influencers can add value in generating awareness and engagement, and strengthening trust, but let’s see what it can bring when advertisers and influencers join forces in the world of NFTs. The number of examples is still limited, so here are some first ideas:
Influencers have a major impact on the beauty trends that determine the street scene. In collaboration with a make-up brand, a beauty influencer introduces a new product line through her channels.
The influencer has developed several different looks together with the brand, of course using the mascaras and eyeliners from the new collection.
The photos of the looks are posted on the influencer’s Instagram channel and tokenized to NFT. Fans can participate in a giveaway when purchasing the products and have a chance to win one of the posts as NFT.
With the stamps, you receive at the checkout of the supermarket you can save for herb gardens, football pictures, or amusement park tickets. This mainly concerns products and experiences that are aimed at children.
Not surprising when you consider that they often decide which supermarket their parents go to. It’s time for a new type of savings campaign. An action with which you do not save for tangible products or real-life experiences, but digital collectibles, in the form of portrait cards of your favorite influencers.
Games like Fortnite and GTA have nothing to do with fashion but have caught the attention of several high-end fashion brands that have developed exclusive skins to help gamers create their online identity.
Fashion, therefore, transcends the physical body. It is to be expected that more mainstream brands will also enter the field of digital fashion.
Interesting for the industry to build a bridge here between the offline and online world by hanging out with popular gamers and giving them a role at the product development level.
Maybe brand and influencer can develop a collection of pants, hoodies, and t-shirts together; especially suitable for gamers. The garments are for sale in the real world, but can also be worn as NFT in popular games.
Since the gamers’ videos and live streams are often seen by many hundreds of thousands of viewers, the amount of exposure that brands get through platforms like YouTube and Twitch is staggering.
What Will the Future Bring?
During the crypto crash last May, many cryptocurrencies lost a large part of their value. However, trading in NFTs continued to grow strongly. If this development continues even further, it is obvious that brands will step in en masse. Have you seen or thought of any other examples? I’d love to hear about it in the comments.