NFTs are a new type of cryptocurrency that exist in the digital world. They offer unique properties like scarcity, transferability and decentralization that make them appealing to investors. What will be their impact on marketing?
NFTs are a type of token that can be used for publicity stunts or as part of marketing campaigns. The tokens can also be used to incentivize users to perform certain actions, such as visiting certain websites.
Last week, State Farm Mutual Automobile Insurance Co. launched an augmented-reality treasure hunt aimed at football enthusiasts, becoming the latest corporation to leverage nonfungible tokens as a new medium to engage prospective clients.
Fans may use their mobile phones to hunt college campuses and other areas for over a million virtual footballs that may include rewards, including NFTs to retain or sell, as part of the State Farm quest. NFTs are blockchain-based certificates of authenticity for digital assets that may be exchanged and traced eternally.
According to digital analytics company DappRadar, interest in NFTs is rising among collectors, investors, and speculators, producing $10.67 billion in trade volume in the third quarter of this year, up 704% from the second quarter. There have been a number of high-profile NFT transactions, notably the $69.3 million sale of a digital picture by an artist via Christie’s auction house in March.
NFTs are being tested by several marketers. Last week, fashion store American Eagle Outfitters, Inc. announced a sweepstakes giveaway of 10 McRib-themed NFTs, while fast-food giant McDonald’s Corp. debuted a collection of 120 NFTs for sale at $1 each. This year, NFT-related campaigns have been launched by brands such as Campbell’s, Pizza Hut, Taco Bell, Charmin, and Pringles.
Clinique Laboratories LLC, a division of global beauty brand Estee Lauder Cos., encouraged customers to join competitions to win one of three NFTs inspired by its products last month.
“We began to see a change in customer behavior toward NFTs. Clinique’s vice president of worldwide consumer engagement, Roxanne Iyer, stated, “We really really wanted to investigate.”
This year, nonfungible tokens, or NFTs, have erupted into the digital art world. Proponents argue that they are a technique to increase the scarcity of digital goods, making them more valuable. The Wall Street Journal describes how they function and why some people are skeptical about their durability. Jacob Reynolds/WSJ/Jacob Reynolds/WSJ/Jacob Reynolds/WSJ
Clinique intends to keep investing in the region, according to Ms. Iyer. “Everything we’re able to work on with the customer in the real world is something we’re thinking about doing in the digital world as well,” she added.
NFTs, on the other hand, have been chastised for the amount of energy required to validate them and their transactions. These tokens are often purchased using cryptocurrencies, which require a lot of energy and emit carbon emissions as well.
According to Mike Proulx, research director at Forrester Research Inc., the environmental effect of many NFTs may be at conflict with sustainability goals made by numerous corporations. “This might result in a customer backlash against firms that claim to be environmentally friendly.”
Despite a certificate of authenticity, the value of having a brand’s virtual slice of pizza or virtual football has been labeled a fad, and as advertisers have stepped in, the value of owning a brand’s virtual slice of pizza or virtual football may not be clear to many customers.
State Farm allows football fans to use their mobile phones to look for over a million virtual footballs that may contain rewards, including NFTs, on college campuses and other areas.
Photo courtesy of State Farm
“Brands who are venturing into the NFT area have challenges,” Proulx added. “To the average customer, blockchains, bitcoin, and digital wallets are still exotic regions… Furthermore, whether NFTs confer ‘ownership’ of the real digital asset or only the token linked with the asset is a legal grey area.”
Digital assets, according to NFT supporters, might play a role in future virtual platforms.
R/GA, a London-based digital marketing agency owned by the Interpublic Group of Companies, is helping clients construct virtual storefronts in metaverse platforms, including one that will debut next month for British apparel company Vollebak on the virtual platform Decentraland. The store’s digital stuff, which is attached with NFTs, may be purchased and worn in the digital world.
“These NFTs become assets, digital artifacts that you can then bring into your type of virtual worlds that you’re exploring, living in, and playing in,” R/global GA’s chief creative officer Tiffany Rolfe said.
Brands are also looking at connecting NFTs to the actual world. For example, Clinique’s NFT competition guaranteed winners a decade’s worth of real items from the cosmetic company. The NFTs from American Eagle include woven patches with a matching picture and a gift card.
“Many of the great programs over the previous several months have had that aspect of utility truly supporting the value,” said Avery Akkineni, president of VaynerNFT, a part of marketing firm VaynerX that collaborated with American Eagle on its NFT promotion.
Many firms experimenting with NFTs do so in the hopes of gaining media attention, but Ms. Akkineni believes they should take a longer perspective. Brands might offer NFT owners early access to items, invite them to conferences, or even allow them to vote on corporate concerns, she suggested.
“I believe the collectibles industry is a specialized use for NFTs. Ms. Akkineni added, “It’s one that’s resonating right now and will continue to resonate.” “However, it isn’t a game-changing chance.”
According to Craig Elimeliah, senior creative director at WPP advertising agency VMLY&R, certain customers may feel more emotionally and financially committed in a company if they own its NFTs. He compares owning NFTs to investing in “culture stock.”
“It’s almost as if you’ve put your money where your mouth is, right?” Mr. Elimeliah went on to say. “You might earn a lot of money if this thing goes up.”
According to Alyson Griffin, State Farm’s director of marketing, the NFT treasure hunt was a method of getting in front of individuals under the age of 40 and furthering the company’s bigger mission of leveraging technology to bring customers closer together.
“It’s about being able to convey that individual our narrative through time,” she said.
Megan Graham can be reached at [email protected]
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