The business world is increasingly transitioning towards the digital era. It is becoming evident that blockchain technology and NFTs will become indispensable.
Read this article to understand why and how it might effect your business.
I imagine that by now you’ve heard some fantastic buzz about non-fungible tokens – better known as NFTs, but what exactly are they, and how can they help YOU? If you’re Jack Dorsey the CEO and founder of Twitter then you sold the first-ever tweet in the world for 2,9 million USD (2,4 million EUR; Locke, 2021), or the digital artist Beeple who sold “Every days”: The First 5,000 Days” as an NFT for 69 million USD (58 million EUR) – the most valuable NFT to date (Brown, 2021).
Those are famous people making incredible money from selling NFTs, but there are plenty of ways you could be earning money from your NFTs too!
What is an NFT and what is it used for
An NFT is an asset with a unique cryptographic identifier that is stored on a blockchain that “cannot be traded or exchanged at equivalency” (Sharma, 2021) because they have unique properties. If they could be “traded or exchanged at equivalency”, then they would be a cryptocurrency!
These assets can represent real-world or digital items by acting as a deed of ownership, but by “tokenizing” them, trading the item becomes safer and more efficient due to the nature of blockchain’s security features (Ethereum Foundation, 2021).
You might be familiar with blockchain if you’re familiar with cryptocurrencies, but if not: blockchain is a database technology that takes new data and puts it onto a ‘block’ that is ‘chained’ permanently to the block of information that preceded it in time. The blockchain is irreversible, decentralized, and typically public (depending on the particular blockchain), which ensures the security of ownership (Conway, 2021; Ethereum Foundation, 2021).
The types of NFTs in the Context of Business
There are two types of token standards that are relevant on the Ethereum blockchain: the Light Version (ERC-721) and Advanced Version (ERC-1155). ERC-721 was the first NFT standard ever developed and is an excellent token for those who wish to set it up themselves for collectible items like 3D animations of logos, artwork, etc due to how easy it is to set up.
Most NFTs follow the ERC-721 standard (101 Blockchains, 2018). In contrast, ERC-1155 is cheaper and more efficient from a technology perspective but requires a developer to manage the setup process. These types of tokens are useful for brand protection/licensing, authenticity certification, and contracts.
Other blockchains are also coming out with their standards for the creation of NFTs on their blockchains, which may create exciting new opportunities in the future (Ledger Insights, 2021).
Stunning Facts, Figures & Outlook on NFT Market Potential
- In 2021, an NFT called “Everydays: The First 5,000 Days” by an artist named Beeple was auctioned off for about $69 million (Brown, 2021)
- NFTs are commonly utilized to show ownership of file formats that include JPEGs, GIFs, and MP3’s
- The market cap for global transactions of NFTs was $40.96 million in 2018, $141.56 million in 2019, $338.04 million in 2020, and nearly $2.5 billion for the first half of 2021 (All values USD; de Best, 2021; Howcroft, 2021)
- Although they’re now becoming mainstream and the first buzz started in 2017 with the market launch of Crypto Punks and Crypto Kitties, it’s believed that NFTs have been around since 2012 (101 Blockchains, 2018)
- Another well-known NFT is Jack Dorsey’s (the founder of Twitter) first tweet, which sold for nearly $3 million (Locke, 2021)
2021: A Year of Growth for NFTs
2021 isn’t over yet, but it has already seen a rapid rise in the popularity of NFTs. They have become more common than ever before, with more NFTs being created, bought, and sold. People are willing to spend top dollar on a digital asset that they want to claim as their own.
According to data from “Market size of NFT in different segments worldwide 2018-2020” by Raynor de Best:
- In 2021, the value of NFTs for gaming declined, but those for arts increased
- Big-name brands such as Taco Bell, have started offering NFTs of their own by creating digital collectibles for sale
- In February 2021, monthly sales on OpenSea were over $95 million
- By March 2021, trading volumes for NFTs on Ethereum totaled more than $400 million
The market for NFTs is greatly expanding and you have the opportunity to become a part of it!
How Brands Discover NFTs – Unlocking Undiscovered Potentials
The big brands are already onto the trend!
We’ve previously mentioned game developers, celebrities, artists, and even Taco Bell issuing NFTs, so I’m sure that you are wondering how you can capitalize on the buzz. Richard Yao of IPG Media Lab argues that the value for digital goods is created through scarcity of authentic goods: “[as] more parts of our lives happen in these digital spaces, brands need to start thinking about digital ownership and how to leverage NFTs to issue limited editions of brand assets and generate buzz” (2021).
For instance, Nike has already issued a patent on “CryptoKicks”, which allows users to own and ‘breed’ unique shoes that can be manufactured in the real world. This type of innovation generates excitement among consumers by providing unique opportunities for brand engagement.
The era of the NFT is in its early stages at the moment, so any businesses that become early adopters stand to benefit from the increased brand awareness that will not be as accessible at a later point in time. Currently, people are looking to Taco Bell, Pizza Hut, Nike, and Charmin as being mainstream leaders for already having collectible NFTs – your brand could be amongst that list. Eventually, the buzz will calm down, but utilizing contests, or working with charities will always remain a way to pair NFTs with brand awareness marketing.
In the long-term, unique collectibles like “CryptoKicks” and experiential content will likely be the way that NFTs sustain brand engagement. NFTs are ideal for use as an access key to a website or event due to their uniqueness. Imagine having people show up to your event with special access code NFTs – such secure and exclusive means of participating in your event are sure to generate a buzz! These will also have the opportunity to bridge over into the real world as Nike has done with their CryptoKicks (Lewis, 2021).
For the innovative entrepreneur, there are also fantastic ideas for incremental revenue and even monetization of time: IDEO CoLab Ventures investor Reuben Bramanathan tokenized his time where one $CSNL token equaled one hour of his time and was freely traded. Undoubtedly, other professions will catch on to this idea and sell their time or labor as an asset (Lewis, 2021).
Another way to harness the power of the NFT is to create a deeper sense of connection, which leads to brand loyalty (SevenVentures, 2021). Here are three great ways that companies have used NFTs to foster these connections:
Why You Should Think of Creating an NFT For Your Business
Your business now has a new way to generate revenue! Adding NFTs creates an income stream that increases both your brand value and awareness. You get to tell your brand story creatively without doing so in a direct sales way.
When you take advantage of this trend you bring a unique twist that most businesses have yet to capitalize on – make your brand a leader in the digital future! NFTs ought to be an integral part of your market content in your campaigns to make sure you fully capitalize. When you effectively capitalize on business trends, you ultimately broaden your reach, gaining access to new target audiences.
How NFTs can be integrated as a part of a brand strategy for small to mid-sized companies
Your brand strategy will benefit by being part of the world of NFTs. The global NFT community, which is active on Twitter and Discord, is a new target audience for your business.
By entering into this marketplace, you open your brand to several new business opportunities and raise your brand’s value through the combination of exclusivity and creativity inherent to NFTs.
- Ownership, licensing, and royalties can all be defined by creating an NFT
- Pairing your marketing with such a trendy concept will raise awareness of your brand
- NFTs also raise your brand’s value through the additional value proposition represented by the NFTs creativity, exclusivity, or appeal
- Create emotional ties with your branding using art or visual elements
- Bond existing clients together by presenting NFTs as a fan or community type of brand asset
Sales Distribution & Additional Revenue Stream
- Limited Editions – buy now before they are sold out!
- Special Collections created for special client niches or fan bases via products and services that stand out from your regular products
- Global access to untapped potential clients via different channels than your existing marketing or sales channels (i.e. email marketing, ad campaigns)
- Instead of pushing people towards your products/services by selling in an obvious way, you strategically draw potential clients to your brand with a new marketing asset that is not perceived as direct sales or marketing
How to integrate NFTs into your communication strategy
Once you have created an NFT for your business, you should immediately create a roadmap for how you will integrate your new branding asset into your communication strategy.
Here are 4 important steps you should consider:
10 Steps to Create Your NFT (using Ethereum)
NFTs are an exciting new opportunity that you can use to enhance your business. The potential for enhanced engagement and new audiences makes it an obvious opportunity.
Everyone is excited about the world of cryptocurrencies, but this is the next stage that takes advantage of the blockchain framework that enables decentralized platforms like Ethereum or Solana to offer NFTs as an additional asset class.
Your creativity holds the key to how many different ways you can utilize NFTs to promote your brand. Beginning with your logo and continuing from there is an excellent way to get into the market, but as you have seen from some of the unique ways that other businesses have already utilized NFTs the possibilities are expansive.
Images: Canva, Shutterstock & Infographic: Aylin Ihnen
- Brown, A. (2021, March 11). Beeple NFT Sells For $69.3 Million, Becoming Most-Expensive Ever. Forbes. https://www.forbes.com/sites/abrambrown/2021/03/11/beeple-art-sells-for-693-million-becoming-most-expensive-nft-ever/
- Conway, L. (2021, June 1). Blockchain Explained. Investopedia. https://www.investopedia.com/terms/b/blockchain.asp
- de Best, R. (2021, July 22). Market capitalization of transactions globally involving a non-fungible token (NFT) from 2018 to 2020. Statista. https://www.statista.com/statistics/1221742/nft-market-capitalization-worldwide/
- de Best, R. (2021, July 22). Total sales involving a non-fungible token (NFT) in gaming, art, sports and other segments from 2018 to 2020. Statista. https://www.statista.com/statistics/1221400/nft-sales-revenue-by-segment/
- Ethereum Foundation. (2021, July 8). Non-Fungible Tokens. Ethereum. https://ethereum.org/en/nft/
- Howcroft, E. (2021, July 5). NFT sales volume surges to $2.5 bln in 2021 first half. Reuters. https://www.reuters.com/technology/nft-sales-volume-surges-25-bln-2021-first-half-2021-07-05/
- Ledger Insights. (2021, April 21). Battle for NFT blockchains hots up as Enjin attracts 50 projects. Ledger Insights: Enterprise Blockchain News. https://www.ledgerinsights.com/battle-for-nft-blockchains-hots-up-as-enjin-attracts-50-projects/
- Lewis, K. (2021, April 26). Nft Marketing: How Brands Can Use Nfts To Engage Consumers And Generate Revenue. ThinkNW. https://thinknw.org/blog/nfts-anvil-media
- Locke, T. (2021, March 22). Jack Dorsey sells his first tweet ever as an NFT for over $2.9 million. CNBC. https://www.cnbc.com/2021/03/22/jack-dorsey-sells-his-first-tweet-ever-as-an-nft-for-over-2point9-million.html
- 101 Blockchains. (2018, September 2). Non-Fungible Tokens: A Complete Guide. 101 Blockchains. https://101blockchains.com/non-fungible-tokens-nft/
- SevenVentures. (2021, April 22). NFTs – What’s In It For Brands? The Restless CMO. https://www.therestlesscmo.com/post/nfts-whats-in-it-for-brands
- Sharma, R. (2021, March 8). Non-Fungible Token (NFT) Definition. Investopedia. https://www.investopedia.com/non-fungible-tokens-nft-5115211
- Yao, R., & IPG Media Lab. (2021, February 18). The Rise of NFTs and What It Means for Marketers. Medium. https://medium.com/ipg-media-lab/the-rise-of-nfts-and-what-it-means-for-marketers-628efc68c90