NFTs aren’t dead, they’re just shifting gears | Advertising

Remember NFTs? The non-fungible tokens that peaked in fascination in 2021-’22 before the generative AI boom took over?

At their peak, some spent eye-watering amounts on popular NFT collectible projects, such as CrypToadz, Cool Cats, and Robotos—so-called “digital art” that often looked like it came straight out of a kindergarten. Nevertheless, several big brands rushed to jump on the NFT bandwagon as well, buying into the hype and hoping to be early adopters.

But then came the scams, crypto crash and, before long, day trading of NFTs jumped off a cliff and the hype died down.

“Most of the NFT campaigns from 2022 fall in the short term,” says Vincent Wong, CEO of Lab3.io, a consultancy helping brands unlock growth in the Web3. “Much of the activity was opportunistic and driven by a combination of FOMO, pressure to appear innovative and greed – big brands can make millions AND generate lots of free advertising selling NFTs.”

But while crypto markets have taken a downturn and momentum has faded for brands using NFTs for short-term goals, brands invested in a long-term NFT strategy are reaping the rewards.

An example is the NBA, whose NFTs are not stand-alone campaigns but part of a long-term strategy. They have three NFT projects. The most successful, Top Shot, brings the tradition of collecting physical basketball cards into the NFT era. Fans can collect rare NFTs by watching games, which they can use to unlock real-world rewards like VIP access to meet NBA players in the All-Star Game.

The rise and fall of the NBA Top Shot explained in one graph. Photo: CryptoMode

“For the NBA, NFTs represent an entirely new way to engage and reward fans watching live sports,” says Wong. “And on the business side, Top Shot has already generated over $1 billion in transactions – it’s part of a long-term strategy and could potentially be the next big driver of growth.”

NFTs that create concrete value for the customer will create concrete business value

Jivan Tulsiani, Head of Marketing at TZ APAC, a leading Asia-based public blockchain consultancy, says that when NFTs are linked to clear tools and can be accessible to fans in a seamless user experience, they remain a strong value proposition.

“Fans and customers will see value in purchasing an art or collectible on the blockchain within a few clicks if they are whitelisted for a limited edition single released by their favorite band, meet the team manager of their favorite Formula 1 team, or get a significant discount on their next haircut,” says Tulsiani.

The key word is benefit – NFTs must create concrete value for the customer, which in turn creates concrete value for the business.

Sharon Lewis, senior director of accounts, at Web3 brand experience agency Invnt.Atom, says the entire ecosystem is changing and those brands that are bold, adventurous and willing to take the first step – albeit with a strong long-term and holistic Web3 strategy – are those who will be rewarded.

“It’s an exciting place for brands and should be a consideration for digital marketing strategies, especially if brands have a desire to connect with a younger audience – which they almost always do!”

Asian markets are leading the way in NFT adoption

While other markets may have cooled down due to interest in NFTs, there is still plenty of action in Asian markets such as China, Japan and South Korea.

Statistically, China ranks first globally in terms of search interest for NFTs, with Hong Kong in fourth place and South Korea in sixth place. In addition, China is ranked fourth for NFT adoption.

Wong says that digital audiences in China, Japan and Korea have different motivations and behaviors than other markets. And there are three main factors why NFTs are particularly popular with consumers in these markets.

First, it comes down to the fact that Asian consumers have a strong appetite for luxury goods, which account for over half of global sales. “Many luxury brands such as Gucci, Burberry and Louis Vuitton have launched NFTs that appeal to their sense of exclusivity and status,” says Wong.

Second, Asian consumers are interested in investing, which is driving many NFT purchases. “China, Japan and Korea are among the top countries in terms of crypto trading volume and number of retail investors,” adds Wong.

And third, Asian consumers value digital identity and culture, which NFTs can express and enhance. “They are more willing to pay for digital goods that enhance their online experiences, such as skins, emojis and other accessories.”

Wong also believes that brands can capitalize on this opportunity by tailoring the NFTs to the specific needs and preferences of Asian consumers.

“This means taking cultural sensitivities, preferences and behaviors into account, and adapting to their digital ecosystems, such as WeChat, Line and Kakao,” says Wong. “These platforms have different functions and features than Western platforms and require native language communication and content.

“In the future, we will see brands create dedicated Web3 APAC teams to help them with localization, just as they do in today’s Web2 environment,” adds Wong.

The continued interest in NFTs in markets such as China, Japan and South Korea is linked to the fact that they are some of the most technology-driven markets in the world, with consumers extremely open to experimenting with new forms of technology and products .

“All of our Web3 campaigns over the past year have more often than not seen China, Japan and Korea listed in the top 10 buying countries,” says Lewis. “There are so many opportunities for unique brand collaborations in this space.”

For example, last October, Invnt.Atom, in collaboration with Connecting Dotts, delivered the world’s first NFT artist X K-Pop collaboration of super talented Blake Kathryn and one of the strongest girl groups in K-Pop Aespa.

The Aespa X Blake Kathryn Collection marks the world’s first collaboration between a K-pop group and a global NFT artist

“The Æ girls drop brought a whole new meaning to fandom with three different tiers available for purchase: 1-of-1, limited edition and open edition,” says Lewis. “From NFTs that unlocked secret messages to gifted NFTs that incorporated the different personalities, elements and signature identity of each member; the project had incredible sales and drew 749 million media impressions globally.”

Where are NFTs headed?

While we can expect some major new NFT activations this year, their nature will be different.

“By 2023, we are already seeing a shift from many short-term, opportunistic, smaller, stand-alone campaigns to fewer, but much larger, long-term projects that are much more fundamental to the core business strategy.” says Wong.

Going forward, some of the most important NFT use cases will include NFTs as access tokens that grant users exclusive rights or privileges to certain content, services or experiences, such as VIP tickets, backstage passes or personalized interaction with celebrities or influencers. (eg Budweiser and the NFL).

NFTs as loyalty tokens that reward users for their engagement or contribution to a brand or community, such as points, badges or discounts that can be redeemed for real-world benefits or exchanged for other NFTs. (eg Clinique and NBA)

Estée Lauder owned Clinique’s first NFT. Photo: Clinique, NY

And NFTs as identity symbols that allow users to express their personality, style or affiliation through their digital assets, such as avatars, skins or accessories that can be customized and displayed across platforms or different virtual spaces. (e.g. Adidas and Ready Player Me)

Adidas X Ready Player Me’s personality-based AI-generated platform for creating avatars. Photo: Adidas

“Integrating NFTs into a brand loyalty program can provide unique and deeper levels of engagement through the use of token-gated rewards, virtual collectibles, personalized NFTs, exclusive rewards, gamification and more,” says Lewis. “It’s a whole new world of creative possibilities and community engagement for brands.”

But beyond specific use cases for NFTs, usability remains a top priority for technology vendors and brands alike.

“The whole crypto wallet user experience is still way too intimidating for the average person,” says Wong. “We need to make accessing NFTs as easy as unlocking an iPhone with Face ID.”

“Most people don’t know how many megapixels their iPhone has, the technology is already so advanced that it’s invisible, it’s just running in the background,” adds Wong. “We’re still a few years away, but eventually it will be the same for NFTs and blockchains, we won’t talk about the specific technology anymore, we’ll just use it to solve problems.”