What’s an NFT? Lemonade’s Guide to NFTs
It’s easy to get caught up in the NFT boom-bust cycles. For a while, it felt like every company, influencer, and individual was talking about—and indeed diving head first into—this world. Then, the recent panics and busts dominated news cycles and it became popular to (incorrectly) declare the NFT craze short-lived and entirely dead.
But beyond the hype and popular conversation surrounding Web3 in general and NFTs specifically, there are quite clearly marketing opportunities that forward-thinking businesses have already started to capitalize on.
Today, we are starting with the basics—think of it as NFT 101—before getting into some of the more exciting and advanced applications (and marketing opportunities) brands have already uncovered.
NFT 101: NFT Basics
We should probably start with basics: What is an NFT and how does an NFT work?
At its simplest, an NFT is a digital representation of something unique. That’s what the “N” and “F” stand for: “Non-fungible” meaning entirely unique. These digital representations are stored on a blockchain like Etherium. Blockchains are decentralized ledgers that track ownership.
Up to this point, the vast majority of NFTs, particularly those drawing public attention, have been works of art—essentially digital trading cards. But, as we shall see, this is only the tip of the iceberg when it comes to NFTs, which have applications for industries as varied as gaming, marketing, and even luxury.
To recap: An NFT is essentially the file format in which non-fungible items—”non-fungible” meaning it’s unique and can’t be replaced with something else—attach to the blockchain, a layer of certification ensuring ownership of the entirely unique item.
Even people relatively unexposed to NFTs and Web3 have a passing familiarity with Bored Apes, the NFT collection and community boasting celebrity members and exclusive usage rights. The same goes for Cryptopunks, which remains the most expensive NFT collection to date. Punks have become the default profile picture of choice for the rich and famous, denoting rights to an exclusive online club of only 10,000 members.
But mainstream brands have already pushed NFT collectibles in new directions. Charmin, for example, created NFTP—yes, NFT toilet paper—with five one-of-one exclusive collectibles. Coca-Cola took it one step further when releasing an NFT that includes four animated, one-of-one digital artworks that unlock surprise items upon first purchase including the “Coca-Cola Sound Visualizer,” which simulates sounds associated with the drink.
These are just two examples of the ways brands have already jumped into collectible NFTs, but, now that we’ve covered the basics, let’s get into some advanced NFT applications.
NFTs for Luxury Certification, Authentication and Origin Tracking
Nike got the ball rolling on NFTs for certification when it announced CryptoKicks in 2019, which allows owners of exclusive and limited edition IRL shoes to authenticate them with a corresponding NFT. This is particularly important as fakes and superfakes threaten relationships between brands and their consumers.
Similarly, the Aura Blockchain Consortium was established in 2021 by LVMH, Prada Group and Cartier, three titans of the luxury world. Aura uses NFTs to certify their luxury goods, not just at the first point of sale, but throughout a product’s lifespan on the secondhand market. With Aura, a consumer could use an NFT to know with certainty that the object they are purchasing from a third-party is in fact the authentic luxury good.
NFTs as Social Tokens: Community Rewards and Exclusive Experiences
In terms of NFT marketing opportunities, social tokens may well prove one of the more sustainable and rewarding applications. Also dubbed “content coins” or “community tokens,” brands and creators can give out social tokens to their fans and followers, rewarding a particular type of engagement.
An esports league, for example, may choose to award social tokens to people who watch a particular live event, while also selling them directly to fans. When fans have accumulated a certain amount of tokens or completed a certain collection, they can be redeemed for exclusive experiences. These can include access to a private Discord chat, exclusive merchandise like team branded peripherals, or really any other reward marketers can conceive. As these exclusive rewards and experiences become more popular and desirable, these tokens can be traded and even sold as their value increases based on demand and interest.
Similarly, creators (think: musicians, artists, streamers…) can use social tokens to drive engagement and interest among their fans, offering personalized rewards.
Of course, this only works with the right marketing strategy—dropping tokens that fail to move the needle will not only prove wasteful but also can turn off fans who grow frustrated with rewards systems that aren’t, well, all that rewarding.
NFT Gaming and The “Future of Play”
Though there have been some bumps along the way in web3 and play-to-earn gaming—particularly with the Axie Infinity crash—gaming and NFTs just make too much sense together. That’s why the next wave of Web3 games are already in development with several different models, ranging from mobile play-and-earns to AAA open-world games, and everything in between.
Yet, gaming studios and platforms, whether legacy or upstart, must be extremely cautious about how they describe and market their products. Axie, proving less than infinite, left a bad taste on the cultural palette, and gaming companies must not get spit out as they work to cleanse it.
Developed in Korea, Iskra is a crypto-based gaming platform, seeking to shape Web3 and the future of play. A community hub for developers, gamers and crypto enthusiasts, Iskra is at the forefront of Web3 gaming, having just this April secured $34M USD in a recent funding round.
But before it could soar to such heights, Iskra understood it needed to develop its brand identity, voice, and visual language to appeal not only to gamers and developers but to investors and potential partners as well.
Lemonade worked closely with Iskra to develop its brand and identity. The platform was already everything it needed to be, it just required some Web3 marketing expertise and the right communications strategy.
As NFTs continue to evolve, brands looking to capitalize on their marketing potential must ensure they have the right strategies and tactics in place. The space is already crowded and there have been enough controversies and flops to sour the public. But breaking through all of this noise is only the first of many hurdles, and bringing in the right Web3 marketing agency keeps brands upright and moving forward.