10 SEP 2021
What they are, why they matter and are they relevant for your brand? MediaCom’s Dannielle Beechey explains.
NFTs are everywhere right now. From Coca-Cola to Elon Musk everyone is talking about them, selling or trading them for what seem like huge sums of money and the idea is attracting huge amounts of coverage.
But is this just a blip like the buzz that surrounded the launch of audio meeting platform Clubhouse or do NFTs have some long-term value that brands need to be aware of?
Before we can answer that question, we need to understand what value they actually add. NFTs, or Non-Fungible Tokens to give them their full name, cannot be divided, exchanged like-for-like or duplicated like currency can. If you own an NFT, you own something unique that has a value.
They use the same underlying blockchain technology as Bitcoin and other cryptocurrencies, but where bitcoin is one way to own verified money, NFTs are essentially serial numbers that uniquely verify digital artworks.
They weren’t invented this year, however. People have actually been trading NFTs or similar constructs since around 2013 when Colored Coins came into being, and enabled people to use the Bitcoin infrastructure to transfer assets and collectibles between owners.
It started with a cat
The real momentum behind NFTs started to build in 2017 with a number of different initiatives that have continued to build scale over the last four years, including:
Cryptokitties allowed players to breed, collect and sell digital cats. Each kitty has a unique genome that defines its appearance and traits. Players can breed their kittens and unlock rare cat-tributes. Each is one-of-a-kind and 100% owned by its creator and those with the rarest attributes can also be worth hundreds of ETH – the term used for the Ethereum cryptocurrency, which is broadly similar to Bitcoin.
Cryptopunks was a collection of 10,000 unique characters based on the London punk scene, each of which can be owned as an NFT. Now attracting an average sale price of more than $30,000, a collection of nine Cryptopunks was recently sold by auction house Christies for $16.9m.
Another brand of crypto-collectible also launched in 2017 was EtherRock, a collection of 100 clipart rocks, created purely as something to buy and sell. Most recently, one sold for the equivalent of $1.3m.
To the moon
The growth in NFT’s may have been more gradual had it not been for two key changes. First, Bitcoin has had a massive surge (and subsequent drop!) creating renewed and more mainstream interest in blockchain and digital currencies in general.
Secondly, during the pandemic, with the economy shut down and many of us stuck at home, we all had more time. People were looking for an alternative way to grow their money, and also things to do to minimize their boredom.
In the US, many people also received stimulus money from the government and were looking for new and interesting things to do with it and invest it in.
Both of these factors combined with the advocacy of the likes of Twitter founder @Jack created the buzz we see today.
And what about my brand?
NFTs are undoubtedly the next big thing in tech, and marketers will be keen to get involved while the hype is high. A number of brands have already got involved:
- Partnering with the NBA, Dapper Labs created NBA TopShot, a platform to trade key moments in the NBA season such as a great dunk or three-pointer.
- Nike has patented “Cryptokicks” to combine digital ownership with physical ownership of exclusive shoes. Reports suggest owners will also be able to create attributes and even breed new digital shoes.
- Coca-Cola teamed up with 3D creators at Tafi to host an auction for special-edition virtual ‘loot boxes’ of NFTs for International Friendship Day.
However, as with every ‘next big thing’, it is important to have a strong point of view as to whether NFTs are relevant for your brand before you dive in.
The examples from the NBA and Nike show how NFTs can help extend a brand into the digital space, while Coca-Cola illustrates that NFT’s can be used as a great marketing tactic; especially when hype is high.
There are challenges to getting NFTs right too, not least the fact that the high energy usage of cryptocurrencies in general and NFTs, in particular, may be a turn-off for an increasingly climate-concerned consumer.
But perhaps the most important aspect of NFTs today, at least for brands – even those that decide not to get involved – is that they are a window on our collective, shared digital space, now and in the future.
They offer an insight into what we might do when the internet comes to us, rather than simply existing on our devices. They show how fundamentally the future of cloud-based learning, AI and augmented reality – AKA the metaverse – could change how we live and interact in every aspect of our lives.
In that context, they allow brands to experiment and offer a signpost to future. The best response to the rise of the NFT, whether you are a believer or a sceptic is not ‘what role do NFTs play for my brand?’ but ‘what role should my brand play in the metaverse?’