How NFT will disrupt the way we engage with brandsNFT
Transcriber: Hao Dong
Reviewer: Anton Zamaraev
Technological revolution.
A period in which one or more technologies
is replaced by another new technology
in a short amount of time.
It could change our patterns,
lifestyles, the way we socially
interact with one another,
and especially the way brands engage
with their user base or clientele.
The culprit here is none other
than blockchain technology
and one of its sub ecosystems,
known as NFTs.
This infamous initialism recently
heard all around the world stands
for non-fungible tokens or, as known
in most cases, a crypto-collectible.
Before we dive deeper,
we must first understand
what is the true difference
between fungible and non-fungible assets.
Fungibility is a good, or assets,
interchangeability
with other goods or assets
of the same type.
A common example of this
is two one dollar bills,
as there is equal value between the two,
making them equally interchangeable.
On the other hand, a non-fungible token is
a unit of data stored on a digital ledger,
such as a blockchain, that has unique
identification codes and metadata.
Therefore, these are not interchangeable
and can be used to represent photos,
videos, audio or other
types of digital files.
You can even check the authenticity
of an NFT by verifying this information
on a block explorer, such as Etherscan,
for Ethereum based NFTs.
This opens up a whole new ecosystem
for digital collectibles.
So now that we know exactly what NFTs are,
how will they disrupt the way
we engage with brands?
Let’s chat about a few ways
this can happen.
I’m going to start with marketing.
A high percentage of brand managers
may consider building an audience
as a more important factor
than converting sales.
A good marketing strategy
that revolves around brand storytelling,
showcasing brand personality
as well as brand experiences,
can create value-driven loyalty
and awareness from the consumer.
Clever marketing strategies take advantage
of blossoming technologies,
as well as growing trends, such as NFTs,
whether it’s a sale promotion, contest,
or even an exclusive collectible,
representing the brand logo itself,
the opportunities to create
in a digital capacity are endless.
Two brands that recently
experimented with NFTs
were Taco Bell and Charmin toilet paper.
If you cracked a smile at the latter,
then their marketing plans were a success.
With all the chatter
amongst media outlets,
as well as creating
a word of mouth buzz on social media,
both companies found success
and driving additional brand awareness.
Not to mention, having an opportunity
to own an exclusive, authentic,
and limited digital collectible
from brands we use
is a pretty awesome thing
and a wonderful conversational piece.
Speaking of awesome, many of us
have seen the futuristic fashion
and character concepts in the
movie Ready Player One,
a film that takes place in the Metaverse,
which is a collective
virtual shared space.
But what if this were
actually reality today?
From character creation to gaming
cosmetics such as Skins,
digital identity has been a major driver
of microtransaction revenues.
However, due to the confines
of being held on a server,
the consumer never really takes full
ownership over their preferred identity.
With NFTs, brands can enter
the digital space with fully licensed
clothing and cosmetics,
known as digital wearables,
giving consumers the option
to fully own their look
and a visual representation of how
they portray themselves in the Metaverse.
Let’s take a look at some examples.
The first fully decentralized world,
known as Decentraland,
has a multitude of wearables
to choose from
to complement your digital identity.
From Atari T-shirts, artifacts, shoes,
and even large cryptocurrency
exchanges like Binance,
Decentraland users have a plethora
of options to deck themselves out.
Some digital fashion houses,
such as The Fabricant and Digital Acts,
have already started to make their move
towards the high-end fashion
and design market.
In addition, they have already explored
using NFTs and virtual clothing
from the digital to what seems
like the physical.
Imagine owning an NFT of a digital outfit
and be able to take pictures in it
to post on Instagram or Facebook,
or imagine needing a nice dress
for a photo shoot in New York
and having a friend in South Africa
let you borrow an outfit,
all within seconds
of transferring the NFT.
As the metaverse grows
at an exponential rate,
brands could take advantage
of an additional revenue stream
by offering their own line of branded
and licensed wearables and collectibles.
While creating NFTs could be
an additional revenue stream,
brands could even build upon this
by making a bridge
back to the physical world.
For instance,
taking ownership of an NFT could
potentially represent a physical item
or perhaps offer access
to claim a physical item of like kind.
This process is known as digital twinning.
Let’s first take a look
at claiming a physical item.
Mike Winkelmann, who goes
by the artist name Beeple,
brought a flurry of exposure
to the digital art space
with a 69.3 million dollars sale
of the first 5,000 days digital art piece.
Previously, he experimented
with the idea of digital twinning
with select pieces from his Beeple
every day’s 2020 collection
by offering users an opportunity
to claim a physically encased
representation of the digital work.
This ensures that collectors of his brand
have something to enjoy
regardless of what world they are in.
Digital twinning doesn’t necessarily
stop at digital art.
NFTs from music artists, clothing brands,
or perhaps even fine wine
could represent something
in the physical world.
An example?
FWIB technology enables fine wine
to be traded securely
without friction at a significantly
reduced total transaction cost.
Their technology allows users
to securely collect and store information
about each of the unique assets,
provenance and transaction history
while holding and ensuring
the unique asset
in a professionally managed
storage facility.
Thus paving the way for a whole new path
in how collectors can engage
and invest in high-end wine brands
without the complications
that come with it.
In general, as more brands
look to explore NFTs,
digital twinning could be
a wonderful gateway
to get the attention of both experienced
blockchain users and traditional customers
looking to experiment and learn
about an entry into the space.
For me personally,
I first started learning about blockchain
and cryptocurrency around 2017.
At the time, it fell early,
only to realize four years later
that I was actually late
and quite a new back then.
Despite coming from a more traditional
stock and options trading background,
I was intrigued with the startup nature
of several companies coming to light.
It was in 2018
that I stumbled upon what NFTs were
and the intuitive nature
that they brought to collectors.
Yes, at the time it was very hard
justifying the friends
that I was extremely interested
in learning more about digital cats,
or CryptoKitties, to be more precise.
However, chatting about pixel art images,
such as crypto punks at the dinner table,
always got the best reactions.
As we look back on those years,
I always think to myself,
“I wish I could have saved those
moments and funny conversations
and just stored them away to look at
over and over again as time went on.”
In other words:
experiences, moments, memorabilia.
Well, what if NFT is by certain
brands could do this for us?
From sports to movies to even
music and concerts,
everyone has at least one special
memory attached to an outside source.
How cool would it be
if we had a digital ticket
from the 1969 Woodstock Festival
when Jimi Hendrix played?
Or in general, what if with each
concert ticket we bought,
we received an NFT
of the flyer for the show?
A special and unique item
only for the fans that day?
Holder earn mechanics
or holders of NFTs receive discounts?
Perhaps even this NFT could represent
a 10-minute meet and greet with the band.
Justin Blau, an EDM producer
originally from New York,
is a good example of how music artists
can offer these experiences.
He recently sold a collection
of 33 album NFTs for over $11 million,
with a top bidder receiving an opportunity
to create a custom song with him.
The top bid for this direct access?
$3.6 million.
It’s good to know that all 33 buyers
received a special edition
physical vinyl of the album as well,
touching upon our previous
topic of digital twinning.
You see, NFTs don’t age, collect dust
or deteriorate over time.
In sports, we’ve already seen
a flourishing partnership
between the NBA and Dapper Labs
with NBA Top Shot.
Top Shot allows collectors
to collect video highlights
from some of their favorite NBA players
in the form of a short-length video.
These moments from NBA history
have caused a memorabilia rash
of millions of dollars in sales
from 7.6 million moments and counting.
The value here is providing
fans of sports brands
an opportunity to truly own
a piece of history in a dynamic way.
As a potential rises for more
sports brands to enter the space,
say goodbye to card grading and casing
thanks to verifiable metadata rarities.
Here’s Johnny.
There’s no crying in baseball.
Hasta La Vista, Baby.
Leave the gun, take the cannoli.
Do any of these historic quotes
ring any bells?
My poor renditions of some of the most
memorable movie lines in history
have resonated with us for decades.
Some of us might own older VHS tapes
or DVDs of these movies.
But do we really get a chance to own
one of these memorable moments
or iconic characters that have
an extreme entertainment value to us?
Well, thanks to blockchain,
NFTs have finally made us
that offer we can’t refuse.
Hollywood is here to stay.
As companies like Terra Virtua,
who focuses on 3D, VR and AR collectibles,
have teamed up with large movie studios,
such as Legendary and Paramount Pictures,
offering fully licensed NFTs from some
of your favorite films and TV shows.
With thousands of movies
and TV shows out there,
studios and networks
have an arsenal of content
they could use to make
digital collectibles,
expanding revenue potential
from just one source.
There are even additional benefits
for brands licensing their IP into NFTs.
As a matter of fact,
one of the biggest game changers
for brands can be
secondary sales royalties.
Written into the underlying
smart contract,
a secondary sales royalty
is a fee percentage that is paid back
to the intellectual property owner
on all post-primary sales of an NFT.
Popular in the digital art market,
this fee can be assigned by the creator
or even an agreed upon split
with the IP owner and licensee.
Fully automatic payments
without a middleman.
What’s better than that?
In comparison,
once an item or product is sold
and then auctioned on marketplaces,
such as eBay or Amazon,
the original creator or IP owner
receives zero percent.
This alone could create a paradigm shift
in how brands strategize their next move
and what has become a shift
in focus to the digital realm.
At the end of the day,
everyone is a fan of something.
From snail mail to smartphones,
technology growth
is not linear but exponential.
With millions of brands out there
looking for new ways to engage
with a global audience on the back
of disruptive technologies such as NFTs,
I leave here with one question.
“Will I see you in the Metaverse?”
(Applause)