Non-fungible Tokens (NFTs) have been a popular topic of conversation: with the value of the U.S. dollar declining, a wave of interest has shifted to cryptocurrency. According to the latest metrics, the market for NFTs surged to $41B in 2021, a figure that nearly matches sales in the traditional art market. That alone is reason enough to discuss NFTs for marketers and creatives, but it doesn’t stop there.
Some deem NFTs a tool to democratize the art world, whereas others voice concerns about a new, largely unregulated, volatile financial instrument wreaking havoc. From a mortgage backed securities debacle to a Reddit storm of inflated GameStop stocks… it’s no wonder why many are wary about CryptoKitties and million dollar monkeys.
However, participating in the NFT market seems prohibitively expensive for smaller creators… for now, at least. And the value of NFTs is debatable because of how broad, variable, boundless – and even arbitrary – the formula behind them seems to be… particularly for newer works that lack the history of Da Vinci’s Mona Lisa or even Jeff Koons’ balloon dog.
So how is the value of an NFT determined beyond one’s willingness to pay? The Value of an NFT = Utility + Ownership History + Future Value + Liquidity Premium. Utility can range from access to an exclusive art show, to ownership rights of the art, to the ability to hang a digital rendering of the original artwork over a digital fireplace in the Metaverse. The method by which to securely track ownership history and verify original works of art on a digital blockchain is still uncertain, but the most interesting thing about NFTs is their creative potential. Brands such as Ray Ban have created an NFT for their iconic aviator sunglasses and Nike has created a patented NFT for “Cryptokicks” to assign digital certificates to their physical products.
So what does this mean for agencies? Digital marketing agencies can incorporate NFTs into brand-specific marketing strategies. In the same way brands use shoppable Instagram posts – or how a certain cryptocurrency platform leveraged a QR code in a recent TV commercial – marketers can help brands close the gap between social media and reality. For example, marketers can create a social media giveaway that is directly linked to a branded NFT, providing the winner with a lifetime supply of product – or even use revenue raised from branded NFTs for charitable purposes, which would in turn increase brand awareness and trust amongst consumers. That’s just one idea, but the possibilities for NFTs and Web 3.0 are endless.
There is also a first mover advantage in this new NFT market. Whatever the barrier to entry, marketers and creative agencies can benefit from being the first to link a less tangible concept or campaign to an NFT. For example, if the viral “Got Milk?” campaign assets of the 90s were linked to an NFT – a digital marker that could define intellectual property and usage rights – it could set a benchmark by which to value a newer, vegan-friendly campaign, like “Got Almond Milk?” (hypothetically speaking, of course). Although the intersection between intellectual property and NFTs remains unclear because the instrument is so new, the potential to name copyrights and patents on a digital blockchain is clearer.
Overall, the value of these tokens have been likened to a rare work of art. NFTs cannot be traded, like unique diamonds, but they can be resold – thus allowing the original creator to earn royalties each time a transaction occurs, further incentivizing being the first to own one. If the market grows in popularity, we may ultimately have a more established platform that resembles Christy’s-meets-eBay – and creative agencies may gain a competitive advantage by incorporating these instruments into their brand strategies, both for themselves and for their clients.
So are NFTs a new frontier of digital commerce for art – or a trendy bubble bound to burst? Only time will tell, but that’s not stopping us from getting involved. Email firstname.lastname@example.org or fill out this form to learn more about NFTs for marketers and creatives.
Written By: Nandita Kougentakis, Senior Content Strategist