With all this news around NFT's filling up our news feeds you're not alone in feeling confused and overwhelmed. With memes such as the Nyan cat meme selling for nearly USD 600,000 and tweets being sold for nearly USD 3,000,000, it's normal to think, 'Wait, am I missing something?'
We are going to simplify what NFT's are and what's in it for us marketers.
Getting started,
What is an NFT and what does it stand for?
NFT stands for non-fungible token. in other words, it's unique and cannot be replaced by anything else and only one of it's original exists despite it may be having millions of copies. Whereas a fungible item is replaceable by another identical item.
Please simplify it,
For example, let's take the guitar you have had since your childhood, and let's say it's a Fender. It's getting old now and has worn out. You can go to the shop and buy another Fender and a similar-looking guitar. But you can never buy the very exact guitar that you have so many memories with, where you find significant value, and emotional attachment to. Therefore there is only one of it.
NFT is also similar to the physical collectible art, comic book, baseball card industry. Where a group of people decides that a particular painting, card, book is valuable due to certain reasons and sets a price to it and justifies it, where collectors are willing to pay millions to own it. They purchase it, frame it, and hang it on their wall.
The difference now is that it's done for digital art, in a non-physical way using blockchain.
What's so great about it and why is it exploding in popularity?
Blockchain, aka the technology that backs NFT, is growing in popularity. Where experts say close to 50% of new crypto users would use NFT as the entry point. Hence you could say that NFT's are partly riding the crypto hype wave. Similarly, there is a possibility that NFT’s are being used by the crypto industry as a tool to increase crypto usage.
The world's largest and most innovative brands are incorporating this concept into their marketing campaigns creating much hype. Let's discuss it, in just a second.
What principles are NFTs based on
Creating value in something which doesn't necessarily have an inherent value by incorporating the principle of scarcity.
Creation of an artificial scarcity by incorporating human psychology.
Based on hype and speculation markets.
An NFT works as a digital asset
What human principles and psychology is the NFT hype taking advantage of
Once a human's basic needs are met, the mind tends to search for value in self-esteem, psychological hype, and excitement around something.
Creation of an artificial status symbol of owning an asset that cannot be replaced.
The movement on how ideas of perceived value are shifting due to the effects of technology.
The desire to not feel 'left out' and feel 'in'.
What is the influence of blockchain in NFT's?
Blockchain can be illustrated as a public ledger that records all of the transactions done (similar to your bank statement, with the credits and the debits) the difference is that it's publicly available.
It contains distinguishable information like a digital signature who owns the digital asset, who sold it and for what price, making the ownership easily verifiable.
NFT creates a blockchain-based digital ownership certificate for these collectibles
The digital art is not necessarily the NFT, but the transaction record on the blockchain that acts as a certificate or token showing everyone who the owner is.
"In the real world, we have laws and deeds to prove and stamp the ownership of valuable assets. in the virtual world for digital assets, It's NFTs"
So what's in it for marketers?
Even though all this sounds rather crazy it's important for us to start to wrap our heads around these trends. The NFT industry gives us a deep insight into why people buy things they don't necessarily need. Let's take the example of a Nike sneaker. Why is someone ready to pay USD 5,000 for it and not for another shoe that is made in the same factory by the same workers with the same material? It's clear that the customer is actually paying for the brand and the perceived value it adds to his self-image.The utility value is secondary and at times ignored.
Similarly, the purchase decision to buy an NFT is not based on its quality rather the perceived value and of owning an asset that is scarce ( Even though we feel it's an artificially created scarcity). which promotes his/her self-esteem and status.
Therefore it could be said that NFT's are providing marketers with novel ways of reaching their audience.
Let's take a look at how some brands leveraged the NFT hype in their marketing campaigns and delivered results.
Marriot International leveraged the hype of NFT's through its Marriott Bonvoy travel program. The brand partnered with Three up-and-coming digital artists to create three different NFT's based on their own unique experiences. The NFT's were unveiled at a show where the attendees will go through a draw, where three lucky individuals will each win one of the NFT as well as 200,000 Marriot Bonvoy points.
Result - The brand was successful in creating a brand experience by adding innovation. Portfolio marketing. Brand loyalty too was focussed during the campaign. The brand signals to its audience that it's looking at engaging with consumers in an impactful and inventive way.
The AMC Theatres promoted the Spider-Man: No way home selected showtimes to some of its selected members who purchased and attended the show. Each eligible member would receive an exclusive Spider-Man NFT.
Result - The brand was successful in rewarding their members and creating hype along with the NFT craze, creating brand awareness and improving customer loyalty.
Gary Vaynerchuk promoted one of his books with an exciting offer. That is for every dozen copies purchased in a specific 24-hour span the customer would get an NFT.
Result - The book racked up sales of more than a million copies and saw the title rocket to number one position on NielsonBookScan's list.
And the list goes on...
Therefore it's now clear that NFT's are a new trend that has emerged that works on different economic and human psychological principles and where the the correct use of NFT's by brands are well poised to deliver marketing results such as,
Increasing brand awareness
Brand storytelling
Driving Sales
Creating unique brand experiences
Encouraging customer interaction
Creating heightened interest and hype in your brand
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