Non-Fungible Token (NFT): What It Means and How It Works
NFTs (Non-Fungible Tokens) are becoming a hot topic in the marketing world as a novel tool for building awareness and generating data. NFTs are built on the Ethereum blockchain and are more like a digital asset than a cryptocurrency. They can be transferred, traded, and sold like any other type of digital commodity and can be used to represent a number of different things, including ownership of physical products, in-game items, assets like real estate, art, and stocks, and more.
From a marketing perspective NFTs can be used to create awareness and adoption of a product or service, as well as to track data privacy. Brands are using them to create tangible value exchange between themselves and consumers through products and services, while marketers are using them to track the success of their campaigns with data privacy protection.
The first use case of NFTs in marketing campaigns was by the Pokémon GO game. They created an in-game currency called Pokestops, which were physical places where players could collect items like Pokeballs and other digital goodies. They also created an in-game currency called Pokemon Eggs, which were used to hatch new Pokémon characters. In the game, players could visit these Pokestops or Pokemon Eggs and then trade them for items they needed to play the game.
Beyond the gaming world companies such as Nike have been using NFTs to promote their products. The company has released limited edition NFTs for their Air Max shoes series. These limited edition shoes sold for $190 and the buyers were only able to buy one pair per transaction. As a result this means that these shoes can not be bought in bulk which in turn makes them more valuable to the collectors.
NFTs can be utilized for a variety of purposes, including:
ability to issue rewards or incentives for consumers who sign up for a service or fill out surveys
creating awareness of the product by giving away free tokens with purchase of the product
exchanging data and value between parties without any third party interference
But do they actually matter? Are they worth the effort? Is it something you should care about? The answer to all of those questions is yes, absolutely and you need to start to chart a path forward. Although this is still uncharted ground for many marketers we do know is that brands utilizing NFTs often enjoy increased transparency, accountability, traceability, efficiency, and dependability.
Now is the time to take advantage of these beginning stages to consult with stakeholders on how NFTs could fit into your brand's strategy, positioning, and values.