Why Are Brands Driving Into NFTs?

Himani Agrawal Mar 30, 2023

The NFT revolution: Introduction and Growth of NFTs

The Indian NFT market is valued at an estimated USD 3.3 billion with a cumulative average growth rate of 61.6 per cent and is expected to reach an estimate USD 27 billion by 2028. ( source: entrepreneur.com). The rapid evolution of the internet of things(IoT) has made possible the most exciting digital development that has paved the way for the emergence of new forms of assets called the NFTs( non-fungible tokens). NFTs have become increasingly popular with unprecedented profits, reinvention of asset ownership and creation of virtual communities from different parts of the world. They have transformed from being just artworks that hold great value to their inclusion in finance, healthcare, entertainment, sports, gaming, fashion, global supply chain and insurance sectors. They are digital assets that use blockchain technology to certify the ownership and authenticity of a unique piece.

How are brands leveraging NFTs to build brand awareness?

NFTs have taken the creator economy to a whole new level allowing digital creators, artists, brands, and others to be more creative and innovative with NFTs’ unique and irreplaceable digital assets. These represent real-world items including art or limited edition products that are certified and original without replicas. This is enabling brands to produce, sell, or trade these NFTs securely in a protected environment, that eliminates the possibility of scams or discrepancies. The NFT movement is pushing customers by giving them a sense of digital independence and ownership. NFT’s popularity is evident with Open Sea’s Alex Atallah, the co-founder of the largest NFT marketplace, tweet back in 2022 stating that there are more NFTs on the platform then there were internet pages in 2010.

How can non-fungible tokens bring value to brands?

1. With the purchase of NFT, brands acquire exclusive ownership, because everything is embedded in the blockchain giving brands a fresh lease of life by making revenue off their content and intellectual property.

2. Brands can utilise NFTs to reward or encourage interaction from their most devoted patrons. This may promote brand loyalty and improve client retention. Rewards and experiences can be linked to NFTs, which will provide opportunities for brands to engage with loyal customers in a new and memorable way.

3. Brands can create a competitive edge, by utilising NFTs in their marketing plan to develop a special value proposition that appeals to consumers.

4. Brands can employ NFTs to develop a one-of-a-kind, immersive experience that draws in consumers in novel ways to increase consumer engagement.

5. NFTs can provide a digital identity of ownership, and protect brands from online piracy, with proof of online ownership of products. It can be used as proof of authentication against fraudulent products.

6. New products can be linked to NFTs with exclusive benefits and perks. Their rarity and uniqueness, allow brands to use them to build exclusive communities of NFT owners.

7. NFT collections would also appeal to Gen Z and millennials and they would be vibrantly willing to experiment with NFT products. Brands can attract a whole new generation of customers by staying on top of current trends.

An overview: NFT campaigns of prominent brands

1. Coca-Cola launched “friendship box” NFT, selling a batch of collectibles in an online auction for USD 575,883.61, creating an air of urgency and thrill among users.

2. McDonald's NFT campaign used them as prizes for a competition, instead of selling NFTs to the highest bidder. To enter, participants needed to retweet the official announcement. The initiative was successful, resulting in over 85,000 retweets.

3. Budweiser launched its own NFT, which featured 1,936 unique digital cans — a reference to 1936, the year the first Budweiser can be created.

4. Taco Bell created 25 blockchain taco art pieces that came with the real-world perk of a USD 500 gift card, which sold out in 11 minutes.

The big decision: Should brands invest in NFTs?

NFTs have a futuristic and bigger vision than just being a market asset. The goal is to develop a method of controlling and managing confidential data, and its originality and authenticity make it valuable and long-lasting. Although they are just at the beginning of the game, the unique advantage, that allows users to customise both current and new assets, makes it a valuable investment. It is safe to say that non-fungible tokens will be a major player in the world of D2C marketing but to get the most out of it, brands must invest in the NFT with due diligence and clearer objectives.