New feature: Why are NFTs important to brands?
To mark the release of Branded NFTs on the GEEIQ platform, we've taken a look into why brands should care about this space and who's already winning.
In 2021, NFTs grew by 11,000%, bringing them firmly into the cultural zeitgeist. But the NFT opportunity for brands is bigger than just the transaction of digital goods. The revenue-based benefits of decentralised ownership of assets on the blockchain are indisputible, from revenue-sharing to perpetual royalties for artists. Just look at Nike; following its acquisition of RTFKT, it generated over $185 million in NFT sales alone.
But the motive for brands embracing NFTs goes beyond just revenue. The technologies behind NFTs are creating a new market in which brands can engage with consumers: A cookie-less future means tracking a buyer's digital footprint will become more important, and more difficult. This technology is enabling changes that may lead to a complete re-imagination of our digital and physical experiences.
We at GEEIQ see brands embracing the metaverse, Web3 - and the technologies that underpin them - as a means of building new communities around their brand. NFTs and blockchain technology are empowering brands to scale their audiences and widen traditional demographics in new ways.
Back to basics
What is an NFT?
It might seem like a stupid question, but research suggests only 1 in 4 American's know what an NFT is. NFTs (non-fungible tokens) are unique digital assets that exist on a blockchain and cannot be copied, altered or divided. Often representing real-world items, NFTs make buying, selling and trading more efficient. They are also impossible to forge, as information about owners and sellers are attached to each asset.
So, what's the metaverse?
At GEEIQ, we liken the metaverse to a vast expanse like the ocean. It evokes fear, intrigue and suspicion, and like early seafarers, brands entering the metaverse need the right tools and knowledge to navigate it effectively.
We best understand the metaverse as a network of 3D virtual environments that humans can inhabit and socialise within. Eventually, these worlds will become interconnected and interoperable. Currently, the closest thing we can liken to this is virtual gaming environments e.g. Roblox, Fortnite.
And what is Web3?
Web3, the ‘third generation’ of web tech, speculates as to what the key characteristics of the internet of the future will be. It enables digital ownership as opposed to social interaction online and like the metaverse, Web3 is a nascent space that represents emerging technologies like blockchain and tokenisation which enable individual ownership.
So, what's in it for brands?
Brands are looking at NFT collections as a route to engage new communities and scale existing audiences, much like a metaverse activation in somewhere like Roblox seeks to do. They also empower brands to get creative with their virtual strategies, as NFTs and the wider metaverse present an entirely new marketing vertical (in the same way social media did in the 2000s and 2010s), as well as potential new business models and revenue streams.
Take NBA Top Shot, one of the NFT world's most valuable IP's. While its value has recently dropped, the NBA created a very successful convergence of individuals interested in NFTs, collectibles and basketball; with trades in excess of $800 million. Fans are able to buy, sell and trade NBA 'Moments' that include unique historical highlights and digital art.
Other sports, including the NFL, have followed their lead, with fans able to own commemorative NFTs that represent traditional ticket stubs for anyone attending a game during the latest season. With an average marketing email open rate for the NFL sitting at around 20%, it's no wonder more brands are seeing NFTs as a useful tool to boost audience engagement.
And with a cookie-less future on the horizon, NFTs are going to be crucial in enabling brands to track and re-engage consumers interacting with them.
Which brands are finding success with NFTs?
Brands across every vertical are finding success with branded NFT collections. From Coachella and Super Bowl to Marvel and Buffalo Wild Wings, brands are utilising NFTs to sell tickets, digital merchandise, or even to fundraise.
Ownership history is a key element in determining the value of an NFT. It provides passive income for businesses when their NFTs are traded on the secondary market - through both royalties and the creation of new re-engagement channels. Below are some of the brands currently excelling in this space.
In April 2022, Dolce & Gabbana launched its second NFT project, 'DGFamily Glass Box'. Positioned as a 'Web3 loyalty program', owners of this collection are granted exclusive access to the D&G NFT universe. The collection is made up of 5,000 NFTs - 4,250 Black, 675 Gold and 75 Platinums - with the rarity of the NFT increasing benefits for the holder.
Adam Bomb Squad
Adam Bomb Squad is an NFT collection by streetwear brand, The Hundreds. Consisting of over 25,000 pieces of digital art, each NFT features a bomb designed by The Hundreds throughout its near 20 year history. Ownership of an NFT grants membership cards and exclusive perks, with the maximum price for one of these pieces stretching to over $1million.
Adidas: Into the Metaverse
Adidas made its first foray into the metaverse with a branded NFT collection in 2021. 30,000 NFTs were made available and sold out within minutes. Owners of an Adidas Original NFT unlocked access to specific experiences in The Sandbox, as well as physical, real-life merchandise, with sales volume exceeding $160million.
TIMEPieces Build a Better Future
Launching in September 2021, TIMEPieces marks TIME's first official outing in Web3. Beginning with The Genesis Collection, which included works from over 40 artists globally, TIMEPieces 'brings together artists, collectors, and fans...with the goal of building utility and community value over the long-term'. GEEIQ data shows that sales volume has exceeded $30 million.
This Florida-based chain of Australian-themed restaurants dropped an NFT collection to celebrate National Onion Day back in June 2022. Although free, buyers paid fees to process their purchase on the blockchain, with the 'Bloom, Baby, Bloom' collection selling out in 20 minutes. Owners also received free in-store food and drink. One of these NFTs was traded at a peak price of $931.42.
No one wants to be late to the party...
Branded NFT collections are providing brands with more than just financial gain. Businesses in every vertical are seeing NFTs as a means to achieve new branding results, with owners of their collections now possessing a tangible stake in the brand.
Not only are we seeing the convergence of new communities around a brand and its NFT collections, we're also seeing branded collections being leveraged to deliver premium customers experiences exclusively for NFT owners, as well as the widening demographics of traditional audiences.
In some cases, non-profits are using branded NFT collections to raise money for their causes, and creating value for their communities, stakeholders and employees.
As with any metaverse based activation, we always press brands to ask 'why?'. Why do you want to enter this space? And why do you want to engage with these technologies? Only long-term branded NFT strategies that put community enrichment at their core will win.