There’s a lot of discussion about NFTs right now.
We’re seeing brands full of nervous energy. Should they jump in? Some are hesitant, others fear missing out on an amazing opportunity to innovate.
NFTs are polarising. There’s a community of passionate NFT fans, who are drawn closer by hostility and indifference from detractors outside the community.
The current NFT scene is mysterious to outsiders and could be risky for some brands – but has huge opportunities for others.
Businesses trying to innovate in this space know they’re taking a risk, but they see potential. The whole NFT scene is still at a very experimental stage, and – outside a fairly close-knit NFT community – the general public don’t really know what to make of it.
NFTs have a reputation for being a bit pyramid-scheme-like. While some brands are coming up with great ways to use NFTs (in areas like loyalty, for example), there are some people giving NFTs a bad name by exploiting them to make serious money, fast.
It’s a bit like the Wild West right now. That doesn’t mean great things can’t come from using NFTs, just that it’s at such an early stage that no-one really knows what the future looks like yet.
Let’s not forget there are some great opportunities for brands – check out what our North American MD, Ashley Cooksley said to Meditel recently. Influencers could sell unique experiences or content to fans. Music brands could sell digital rights for music or content, generating income that’s been largely lost since the death of physical music distribution.
When is the right time to get involved with NFTs?
Listen to your community
The success of NFTs will be led by the community. Why should people want to buy or use them? What’s in it for them that they can’t get easily somewhere else?
There are some great examples of brands using NFTs. For example, video game publishers are looking at ways they can use NFTs to provide exclusive rewards. EA Sports is doing this with its FIFA franchise, and Ubisoft has already started using NFTs (in Tom Clancy’s Ghost Recon Breakpoint). They’re using them to create a play-to-earn system where gamers can be rewarded for in-game activities with real or virtual world value.
However, while games industry executives are excited about the potential of play-to-earn, some developers, games journalists, and consumers are sceptical.
It comes down to what your community wants. You can have a great idea and buckets of enthusiasm, but if your community is largely against the concept (or just doesn’t know enough about NFTs to be comfortable with using them), your great idea won’t fly. You might have to do some groundwork to introduce the idea and its benefits.
For example, using NFTs as a way to provide extra rewards for people (for playing a game or shopping at your supermarket, for example) acts as a good introduction to NFTs. The lower the barriers to entry, the more will get actively involved.
Listen to concerns. There are genuine questions about the environmental impact of NFTs, so consider how you’ll balance using them with your ESG goals, for example.
Stick to your brand’s vision, mission and values
No matter what visionaries, entrepreneurs, and executives think of NFTs, it’s the public perception of them that matters. An NFT project will only succeed if it meets your brand’s vision and values, and those of your community.
The World Wildlife Foundation (WWF) tried to get involved in NFTs by selling digital art. The charity quickly ended its trial after an intense backlash from people who were outraged that the wildlife charity would use an “energy intensive” technology (even though the WWF stated it was using “green NFT” technology). The resulting coverage and conversation online jarred with the values of the WWF.
Have a solid strategy in place
Once you’ve established how NFTs will go down in your community and fit your values, it’s time to plan out your strategy.
NFTs are facing an issue of supply and demand. You have a potentially unlimited supply of NFTs with limited demand right now, so there’s limited value. It’s a bit like what happened with MP3 when digital started taking over from CDs. It takes a while to catch on, and it’ll take time to establish the true value of NFTs.
For many brands, now is a time to watch and learn. It’s often worth waiting for the initial wave of early adopters and innovators to pass, and learn the lessons from it, creating a better product or service as a result.
While NFTs have a lot of potential, no one really knows where the technology is going right now.
It’s still at the experimental stage, which means brands can’t really provide definitive answers to consumers’ concerns and questions.
NFTs are, at their core, a social contract between the brand (or producer) and the consumer and there needs to be much more certainty around the technology before NFT projects will really succeed. For now, we’re seeing most mainstream brands watching and waiting.