Despite criticism that the cryptocurrency market has gone bust, global companies have been accelerating their entry into web3 (digital assets) since 2021. In this article, we will analyze how global companies such as Starbucks have utilized digital assets and discuss marketing strategies using NFTs.
Understanding NFT Marketing Easily
What are Digital Assets and NFTs?
Digital assets, commonly referred to as cryptocurrencies, are digital assets traded online. They are created and traded using blockchain technology without the interference of central institutions such as banks or governments. Cryptocurrencies have high value due to their advantages of low or no transaction costs, high security, and popularity as an investment.
The representative digital assets are coins (FT) and NFT. Coins are referred to as Fungible Tokens as they strongly resemble currency and are replaceable with each other. On the other hand, NFT stands for Non-Fungible Token, which refers to tokens (unique assets) that cannot be replaced with each other. Digital creations, art pieces, and the like fall under this category. NFT allows anything that can be recognized as an asset using blockchain technology to be uniquely identified.
What is the difference between “fungible things” and “non-fungible things”? Fungible assets refer to assets that have identical value and exchangeability with each other. This means that one asset can be replaced by another and they can be mutually exchanged at the same value. Examples of fungible assets include currencies such as the US dollar and the Korean won, and among virtual assets, Bitcoin and Ethereum can be cited as examples.
On the other hand, non-fungible assets refer to assets that have unique characteristics and are not replaceable. Each asset cannot be equated with each other, and they cannot be replaced by other assets. Although people are used as an example in the picture to help with intuitive understanding, some typical examples include artwork, game items, and digital content. Applying blockchain technology to these examples can prove ownership, and this is where NFT (non-fungible token) comes in.
Exploring the Advantages of NFT
NFTs have created various use cases as they can be easily created and distributed through platforms such as BaaS.
What were some of the reasons that enabled the NFT market to become active?
First, authentication of digital ownership
As the information on NFTs is recorded on the blockchain, ownership, transfer, and holding records are clearly tracked. Moreover, transparency is difficult to tamper with and duplicate, making it a helpful tool for authenticating and trading digital ownership. It is also becoming increasingly recognized as the most suitable technology for the transparency that is more important in today’s society.
Second, value creation from uniqueness and distinctiveness
Everything created through NFTs has unique attributes and is irreplaceable, which increases its value as a possession. Naturally, NFT technology is creating even more value by seamlessly connecting physical and digital objects, such as art and digital art, without distinguishing between the two.
Gucci Grail NFT, source: Gucci Hompage
Third, Activation of the Digital Art Market
With the further development and activation of NFT technology, a wave of innovation has blown into the digital art and collection market. This has led to the emergence of new platforms where digital artists can create and sell their works, resulting in increased demand and supply, thus activating the market. This has also created a new revenue model for digital artists and a way to promote their name. It has become a starting point for digital content publishers and consumers to clearly confirm ownership and copyright.
Fourth, Royalties and Income Generation
Along with the art market, many platforms have emerged for trading NFTs. With the emergence of NFT-exclusive marketplaces, the concept of royalties has also emerged. Royalties allow artists to receive ongoing royalties each time their NFT artwork is traded. This is made possible by blockchain technology, which automatically adds royalties every time a transaction is made.
Fifth, Wide and Diverse Applications
NFTs are items that can be applied to any domain. They are used in various fields, such as game items, music, information, sculpture investment items, videos, and photos. This has led to the steady activation of new business models and markets, and many strategies are being poured out to secure loyal customers.
Thanks to these advantages, NFTs have received steady attention from people even amid economic crises, and the trend is to quickly introduce them into various businesses, led by global companies.
What is NFT marketing?
Nike NFTs sold on Opensea, a global NFT exchange
NFT Marketing and NFT Branding: Global Corporations are Already on Board
Because of the characteristics of NFT explained earlier, many places with intellectual property (IP) or attractive items are creating NFTs using blockchain technology. Global corporations such as Nike and Starbucks have already started moving.
Nike’s NFT marketing is one of the representative success stories of existing corporations. Nike created various sneaker NFTs using its own products and the swoosh logo. Having already secured a strong base of enthusiasts through various sneakers, Nike collaborated with virtual fashion company RTFKT to create digital sneakers as NFTs. Like resell prices on existing shoes and clothing, NFTs also formed high prices ranging from 2 million to 5 million won, and over 10,000 Nike NFTs registered on the global NFT marketplace, OpenSea, were sold within two weeks of their release.
Why NFT marketing?
NFT Marketing: Loyalty Customers
From music to characters, comics, art, and everything that can be called content, the keyword “worldview” has started to appear, and MZ generations, who have become the center of consumption, are enthusiastic about this keyword. Today’s consumers, including MZ generations, do not simply buy a product because it has good features or because it is from a traditional company. They have started to value storytelling, such as the background, production process, and philosophy, if the company and product have a certain level of functionality and design. This change has allowed brands with intellectual property to increase their brand value through attractive worldviews and storytelling and to produce loyal customers, along with other revenue models such as NFT.
What does NFT mean that companies are taking on challenges, and consumers are enthusiastic about it?
Targeting the New Generation & Rebranding
MZ generation cannot be excluded from the main target customers in the NFT market. They are relatively open to new technology such as blockchain and the digital world and are full of passion and ideals. From the perspective of brands, when they issue NFT and conduct events or promotions, customers think of the following keywords because they have used the emerging blockchain technology:
- Young and trendy
This makes consumers feel that the products or services they use are innovative and trendy. Similarly, conservative and outdated companies can transform into a new image through NFT, which allows them to break away from their existing image.
Providing a New and Unique Experience
Existing companies have made a lot of effort to provide customers with new experiences. To give customers a new experience, we need to consider all the novelty, creativity, and trends that catch the eye and can actually collect active users. When the MBTI test became popular, perfume companies and flower delivery companies created and promoted test apps like “Finding the scent that suits me” and “What flower would I be if I were born a flower?” Electronics companies also make efforts to provide visually pleasing experiences through offline stores and outdoor displays. Similarly, if you create NFT and web3 culture and approach customers, they will have a new experience with the brand, and the number of loyal customers will increase.
Online communities and social media platforms play a role as a bridge for users to share their interests and experiences. With the emergence and activation of NFT projects, users can contribute directly to the project through discussions and voting within the community, which will contribute to the growth of the brand and the NFT ecosystem. As the community becomes more active, the value of NFTs and brands will grow, and as NFTs and brands grow, community users will become more active, creating a mutually beneficial cycle.
NFT Marketing: A New Revenue Generation Model
Cryptopunk PFP, Source: larvalabs homepage
PFP stands for Profile Picture and refers to the practice of using an NFT (image) owned by an NFT holder on social media, community, or other online platforms as their profile picture. PFPs have gained significant popularity among digital natives and the so-called Gen Z users who value personalization and seek to express, share, and be recognized for something unique that they own. PFPs can serve as a good item, a new identity, and an investment for users who want to showcase and share their individuality and seek acknowledgment.
From a business perspective, understanding the concept of NFT and the consumption patterns of PFP collections can create many opportunities. Incorporating a company’s brand identity or product into a PFP can add value to the image and attract attention as a profile picture. Moreover, creating a dedicated platform or community and using
PFPs can help activate users and turn them into loyal customers.
Companies can encourage users to customize their PFP by offering items such as backgrounds, characters, clothing, and accessories for purchase or acquisition. They can also create events or benefits that are only available to users who own specific PFPs, such as a fan signing event for Justin Bieber fans holding his NFT or offering wireless earphones or watches to users who purchased Samsung Galaxy community NFTs when they buy new products. This is similar to the membership marketing model used by many companies.
If the model is well-established, the benefits offered can increase the price of NFTs, and users can naturally engage in a series of activities such as community participat
ion, activity, and promotion to obtain NFTs. The most crucial factors for success will be designing a well-thought-out business model and creating NFT designs that can attract users’ attention.
In mobile games, users react not only to elements such as leveling up, winning, and boss raids, but also to various factors such as character customization, character clothing, character abilities and specs, and socialization within the game. Especially, famous RPG games made in Korea or China sometimes create their own communities to share information and their own characters for nurturing. In Korea, when users began to share information through a platform called Naver Cafe, game companies even started to build their own communities to collect users and gather feedback from them from the outset of game development.
With the emergence of the MZ generation as icons of personal expression and the trend of Web3, a community can be built to showcase and prove ownership of one’s own characters or items as NFTs, creating added value. This can also be used as a gamification element for general companies, measuring the data necessary to maintain customer attraction and retention and providing a new brand experience.
Lambda256’s CyphrlyStudio supports the operation of a daily ticket and pass system, implementing grade-based benefits and linking them to the community to increase user activity. Utilizing the technology of Fusion and creative implementation, users can maximize their desire for ownership by combining different NFTs to create evolving digital items. (Refer to the video above)
How to win the NFT brand marketing
To succeed in H2 NFT brand marketing, simply owning an IP and creating an NFT is not enough to market or secure loyal customers. What should companies planning NFT marketing prepare for?
Companies can generate continuous revenue, enhance brand influence, and generate revenue by regularly releasing new NFTs or content and promoting user community participation. To achieve this, companies can update new series centered around collectible NFTs and release collaborative NFTs through partnerships with various influencers and companies. If various events and promotions are backed up and customers have more privileges and rights through NFTs, it would be even better.
In general, there is a community involved in web3 projects such as NFTs. Representative examples include Twitter, Medium, and Discord. Especially in terms of community features, Discord is widely used, and users also develop their own platforms for communication. A community that allows users to create content, discuss with users and management, and make project decisions through voting is essential in NFT businesses, so it can be considered an important professional area in terms of operating methods and concepts. It is recommended to collaborate with talented individuals or partners who have a lot of know-how, as well-operated communities can lead to marketing, branding, and revenue generation.
Understanding of NFT and technology
To issue NFTs, it is necessary for planners to have an understanding of NFT business and blockchain technology, and developers are also needed to develop them. However, if you try to delve deep into things like ERC-721, Tokenomy, Smart Contract, etc., and hire a lot of staff to proceed with the project in a short period of time, it can lead to resource shortages and risk issues. Therefore, if only rough ideas or business directions are being discussed, it is common to collaborate with professional company partners who have expertise in blockchain technology and NFT business.
First, Utilize BaaS
If the NFT utilization scenarios and business models have already been clearly defined and tightly designed, and if there is a shortage of NFT design and community management personnel or development resources, it is advisable to utilize Blockchain as a Service (BaaS). BaaS is a platform where pre-created images, videos, information, and more can be entered through a console, allowing for the minting (issuing) of NFTs with just a few clicks. From a corporate perspective, it has the advantage of allowing developers to comfortably develop on the web console without the need for additional hiring, enabling them to easily and quickly allocate these resources elsewhere. Quick decision-making, design, and business model planning take a significant amount of time, so any delays in development can result in substantial losses. One notable platform is Luniverse by Lambda256, which utilizes side chains to create NFTs without gas fees, making it an efficient platform in terms of both cost and time.
Second, Utilize NFT Total Solution
If you want to enhance your brand’s lifetime value or have IP and are considering the direction and technical aspects of NFT, finding a solution partner who can solve all of these processes together is the most efficient way. Ultimately, to create a sustainable business environment by combining brand influence and customers through NFTs, all processes from reliability and originality through NFTs, trendy technology and creative design and concept, community building to increase customer contribution, blockchain technology, and business model establishment should be designed in detail. Lambda256’s Branded NFT Solution is a total solution that provides all of these processes in One Stop. It can be considered an attractive solution as it helps brands and customers successfully operate NFT projects with unique designs and concepts that do not compromise IP and brand colors.
NFTs are primarily used as blockchain tokens that represent ownership of profile pictures (PFPs), avatars in games or metaverses, collectibles, digital art, and assets. This is possible because NFTs are stored through blockchain technology, making it impossible to tamper with. If you already have attractive IP or are considering marketing and branding for brand influence and customer acquisition, why not think about using NFTs?