Selling branded merchandise has been one of the many ways of effective marketing strategies employed by brands to increase profit margins. Many of these branded collectibles are perishable with limited resale value. Now, cryptocurrencies are carving new business models to weave a seamless path between the physical and virtual worlds through the use of NFTs. Collectibles have become more valuable and there is a larger market readily accessible for resale.

No doubt! NFTs are the next big thing in today’s world of commerce and many companies are already diving into its endless possibilities. High profile influencers, celebrities, sports icons and tech innovators alike are selling brand NFTs. Over $700 million worth of sports memorabilia has been sold this year to fans and investors. As this new generation becomes more dependent on digital consumables, brand marketing and advertising can leverage NFTs in many ways. Here’s a brief summary on NFTs and how they can be leveraged for brand visibility.

Firstly, what are NFTs?

Non-Fungible Tokens popularly known as NFTs are unique cryptocurrencies created on the blockchain to digitally represent an item or asset which includes images, music, art, memes, domain names, virtual world, etc. With NFTs, an idea can be uniquely documented on the blockchain with transferable ownership rights, without the threat of counterfeit. In a digital world where everything has become copyable, blockchain enables us to assign value and rarity to intangible items through NFT.

NFTs & Brand Tokens

Brand tokens are one of the many incentives companies use for client retention. They are like loyalty points represented with cryptocurrency to reward customer patronage. In the past, loyalty points could only be spent on specific company products and services. By leveraging blockchain technology, brand tokens can gain enough liquidity, become currencies in the cryptospace and be exchanged for other currencies, therefore making them more valuable to earn.

NFTs are part of brand tokens but they are unique brand tokens. A company can give out 1 million brand tokens to clients, where each token can be substituted for another. What makes NFTs unique is rarity; there can be no two similar NFTs. This scarcity is what drives their value and is currently influencing the culture of collectibles. Each NFT token is unique like a thumbprint with its digital characteristics permanently stored on the blockchain.

Blockchain and the Metaverse

The blockchain is primarily a digital ledger on which data is stored immutably, and through decentralisation, every data stored can be assured of verifiable authenticity. Through blockchain, decentralised financial (DeFi) services are thriving without the need for traditional banks, brokerages, or exchanges. Blockchains like Ethereum use smart contracts to create decentralised solutions that offer financial services independent of a central authority, thereby creating transparency and equity between participants.

Blockchain-based platforms have expanded the digital frontier by introducing the concept of equity in ownership; a win-win for everyone where there is no central control of power, money, or gains. Producers, as well as consumers, can earn from the success of a product. This new reality is being used to develop the “Metaverse” – a shared virtual world that accommodates many virtual realities including communities, games and workplaces. In the metaverse, users can perform varying tasks to earn tokens, share experiences and trade unique items using NFTs. Because anything can be assigned value and represented as a token on the blockchain, the virtual world has been brought to life.

Brand Equity Empowered With Tokens

Consumers can now benefit more from their favourite brands beyond earning loyalty points. Companies are allowing their clients to take ownership of brands’ products through brand tokens which allows them to contribute significantly to the development of the company. In the Metaverse, there is active community participation for the development of a product.

Axie Infinity, a blockchain-based game grants equity to consumers by allowing players to outrightly own their in-game assets thereby earning both active and passive income from playing. Gamers get tokens (SLP tokens) as a reward for playing. These tokens can be taken out of the gaming environment and exchanged for real money on crypto exchanges. Also, in-game items and collectables can be sold on the Axie marketplace as NFTs. In February 2021, in-game land on Axie Infinity was sold for 888 ETH approximately $1.5 million. The Axie Infinity is community developed, therefore, users who hold tokens can vote for changes in the game. By giving the users ownership rights of in-game assets, players have an awareness of equity and will continue to contribute to the success of the game.

Future of Brand Marketing is Community-led

Large corporations and institutions are already making NFTs of their products for their fans. Creating special tokens of iconic moments, limited products, new designs, and brand memorabilia for promotional uses. Through the powerful landscape of social media, these NFT sales are used to generate engagement and build a community of enthusiasts which eventually leads to increased brand visibility and generates more turnover. One of such is the Non-Fungible Pizza created by Pizza Hut Canada to promote new pizza recipes.

The marketing landscape is changing. Companies who require visibility, especially startups, creatives, artists and small brands will join this trend and begin to develop NFT-based platforms to increase consumer interaction. These NFT-based applications uphold peer-to-peer protocols that do not require the influence of a middleman or band affiliates. Therefore, new roles will emerge in the metaverse, consumers will take up roles to increase brand visibility because of the returns they earn. Small brands and start-ups will no longer need influencers and brand affiliates for marketing, therefore saving costs.

In Southern Asia, some video game players have been reported to cultivate a growing community of players within their neighbourhood, where they introduce family and friends to play their favourite NFT games, thus increasing the game population while providing them with a source of income.

How Brands Can Leverage NFTs

Product Token with equity: Tokenising brand products and memorabilia is the easy way to NFTs. Brand logos, phrases, unusual statistics, customer ratings, and other unique identities can be tokenised.
Join the Metaverse: The virtual worlds are beginning to gain traction with more mobile phone penetration across the globe, there is a huge market for digital consumerism. Brands can create virtual games, virtual real estate, Art, Fashion etc. Microsoft has recently launched a game where players are rewarded with NFT.
Create Virtual workspaces: Startups can create workspaces in the Metaverse and offer simulated work experience. Facebook Founder Mark Zuckerberg recently announced a new vision for Facebook to become a metaverse workspace.

Conclusion

NFTs are the next step into a fully decentralised financial ecosystem. They have opened up new ways for brands to tell their stories and interact with consumers on a more rewarding landscape. The future of digital ownership is undoubtedly filled with many possibilities. With the concept of equity enabled by blockchain, the world of commerce as we know it is about to experience a radical shift where brand superiority is community-led and dependent on consumer satisfaction.

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