This article first appeared in The Drum written by Nick Blenkarne, Creative Strategy Director, Imagination.
As the clichéd mantra found across Discord groups and Twitter threads goes, ‘we are still so early’ (in realizing the full disruptive potential of NFTs). On top of the seemingly limitless release of bootstrapped NFT projects and drops, almost every brand in existence seems to be experimenting in some shape or form. From limited-edition digital fashion collections to music releases, programmatic art to digital horses and even real estate, new opportunities and applications are emerging on a daily basis.
OpenSea NFT sales have topped a weekly average of $11bn, yet are still largely dominated by digital art and collectables. Many speculators are buying and selling for short-term profits, but others are in it for more genuine, long-term reasons. Algorithmically-generated Bored Ape Yacht Club (BAYC) copycats will inevitably reach saturation point, and those assets left with any value are likely to be the ones where communities have been built around true utility.
Utility is the holy grail. Brands, creators, entrepreneurs, they’re all trying to crack the ultimate question – how can NFTs be used in creative ways to provide true value and utility to people beyond simply the ownership and transfer of unique digital assets?
Many brands have jumped on the bandwagon, either to test the market value of their digital assets, capitalize on the PR buzz, or both. But looking forward, brands will need to take a customer-first view and understand what value looks like for them.
Here are four ways brands can find utility in NFTs to create more memorable experiences.
1. Capturing and storing memories
Experiences are powerful because they create, capture and store visceral personal memories in people’s minds. For brands, being positively associated with that memory will inherently shape the way in which that person perceives them.
But humans are forgetful – memories fade – so we often look to a souvenir to remind ourselves. A photograph from a theme park ride, or a keyring, but often that stuff ends up collecting dust in a drawer, in landfill or buried in an Instagram feed. Why? Because it holds no intrinsic value. Emotional value yes, but what if you could create something tangible, recorded publicly, that acts as a real store of value? That would be a genuinely valuable enhancement to an experience.
Blockchain platform Tezos created an experience that offered just that at Art Basel in Miami. Brands can use NFTs to enable customers to capture and store memories not just to jog the memory, but to potentially appreciate in resale value.
2. Building digital identity
The brands we choose shape our aesthetic, and in turn our identity. As people build the digital expression of themselves, and if/when we get somewhere close to (the some would argue fanciful notion of) interoperability, NFTs provide the ability to build your unique digital wardrobe, or garage, storing belongings that don’t degrade or depreciate in value, that can be used as an expression of self and resold or traded.
If the Gucci bag you buy can be adorned on your avatar in Roblox/Fortnite/The Sandbox/Decentraland/your work meeting – or wherever you choose to spend your time – NFTs will provide utility value in digital fashion and many other sectors. Nike’s acquisition of RTKFT last month indicates it recognizes this increase in momentum, and the huge revenue opportunity that comes with it.
Put your NFT to work. New gaming platforms such as Axie Infinity and Zed Run bake NFTs and tokenomics into their gameplay. Owning an NFT in the form of an Axie or a horse within Zed Run can accrue the owner value through direct rewards for playing, but as those NFTs play and improve their characteristics, they become more valuable on the open market too.
For brands, these established experiences allow them to demonstrate their new appetite for play-to-earn games – Stella Artois’s sponsorship of Zed Run is a recent example of this. As brands explore the potential of gaming further, plugging into existing platforms or building their own, they would do well to keep the play-to-earn utility value proposition in mind.
4. Physical access and unlockables
By issuing verifiably unique tickets across a blockchain where ownership can easily be tracked, it’s clear to see how ‘access NFTs’ can provide entry to real-world experiences such as live music concerts. Last year Kings of Leon were the first band to release an album as an NFT, dropping three types of tokens alongside the delivery. Each of these tokens offers a unique attraction, with one being a special album package, another offering front-row seats for life and the third exclusive audiovisual art. The band’s purpose and drive toward exploring access NFTs accentuates better direct-to-fan relationships while bringing more value back to music.
Added utility can also come in the form of real-world products that are attached to an NFT. Macallan recently sold a cask of whisky for $2.3m via whisky NFT marketplace Metacask, tying physical casks to NFT records. Meanwhile, Hennessy sold a unique bottle of Cognac via NFT marketplace Blockbar, which entitles the owner to a one-of-a-kind bottle.
For brands, identifying what additional benefits, experiences or assets can be experienced in the real world – and attaching them to NFTs – will not only increase their value, it will help build communities of fans and advocates, if it’s part of a future roadmap. Just ask the founders of BAYC for proof.
What does this mean for marketers?
It’s worth bearing in mind that the top 9% of accounts hold 80% of the $41bn market value of NFTs on the Ethereum blockchain, and the practice of ‘whitelisting’ keeps the bulk of NFT profits within a tight circle of insiders. There are also a LOT of scams out there. Many NFT projects claim to have ‘future utility’ built into the ‘roadmap,’ but often the details are vague and clearly not mapped out.
While evangelists for NFTs are busy imagining the endless possibilities of this tech, consumers outside of the crypto bubble are more cautious. They might hesitate to buy into a high-priced NFT project if it’s unclear how the price tag will deliver over time.
As with most transformational technologies, many of the early players will fade into obscurity (Netscape anyone?) but brands willing to experiment, test, learn and understand how they can use NFTs to truly deliver utility value to their customers will ultimately benefit.
Head of Strategy, Imagination London
As Head of Strategy, Nick is responsible for laying the strategic foundation for inspiring brand experiences working with clients such as Visa, Major League Baseball and LG. Working symbiotically with creative and project delivery teams to deliver insight-driven campaigns grounded in experience, and amplified by compelling content and smart uses of social. With a focus on effectiveness, he employs a mix of planning tools and techniques to ensure those experiences are both solving business problems and adding value to customers.