…That is the question we are increasingly hearing from brand owners.
As marketeers, we are becoming acclimatised to the blurring of lines between what constitutes a brand or product as we once defined it and the value of branded content, through which consumers can access that brand in another shape or form. Provocateurs such as Elon Musk have disrupted and continuously fed markets with an intoxicating blend of technical product supremacy and good old human folly that has kept people guessing, talking and ordering new Teslas. The true value of a brand has never been more ambiguous. Are we drawn to the recklessness of a CEO, channelling old-school pioneering values? Or is it really about the better batteries? Both of course, and it’s that compelling tension that is integral to Tesla’s brand equity. Valuable things just don’t make sense anymore.
Enter web 3.0, or the Metaverse as it’s more affectionately known. The Metaverse is a fast-emerging virtual space that can exist without interference, governance or profiteering from a single institution, platform or brand. It’s a new internet, driven by shared value, that is operated collectively by its users and contributors with an emphasis on communal ownership and prosperity. Born from a ground up cultural movement towards a decentralised digital landscape and fuelled by exponential growth in blockchain based technologies, the Metaverse now presents a very different habitat in which brands will need to adapt and collaborate to survive. A place far removed from the heavily guard-railed brand worlds of the past, but one that offers almost infinite potential to reimagine brand content and consumer connections. And it is along the fringes of this new frontier that NFTs have appeared as potentially low cost of entry.
What is an NFT?
An NFT (Non-Fungible Token) is a record of ownership for digital assets. These assets cannot be exchanged for one another, each possessing a unique underlying code, but they can be traded via crypto currencies, with values fluctuating based on supply and demand. Practically anything can be turned into an NFT from art to tweets, videos to songs, web domains and even virtual real estate. When you buy an NFT, you are buying the underlying code and rights to the asset. A public record of ownership is encoded into the blockchain making it indisputable. The transaction process itself, whether issuing the NFT (minting), or acquiring and trading it, is relatively simple and cheap, hence its current explosion in popularity. Determining the perceived value of the asset on offer is not. As Damien Hirst aptly described his recent NFT project “It’s an experiment in belief.”
On one hand, NFTs can appeal to a long held human desire to collect, own, speculate and profit from rare and covetable paraphernalia. They are also a means to democratise brand content and reach new audiences. Ultimately the value of an NFT lies in the engagement it offers the community, and its ability to inspire patronage. Early adopters of the media were independent artists and creators, leveraging the opportunity to display and sell their work directly to fans via a more accessible channel, free from middle-men, and embracing the underlying ethos of peer-to-peer value. But many global brands are now entering the fray, presenting brand owners with a conundrum in terms of navigating this new user empowered digital world. Like early forays into social media, the ‘Can I?’ often came before the ‘Why should I?’ line of questioning when deciding whether to participate, leaving brands exposed without fully appreciating the cultural dynamics at play. The founding principles of the Metaverse, are somewhat at odds with the more traditional commercial models that continue to underpin today’s brands, corporations and their investors. Not to mention, you can delete a tweet, but you can’t delete a blockchain.
We are already witnessing smart brands get it right. Unlike social media, it is hard to measure the direct impact on brand perception, but there is no doubt NFTs can attract positive attention. Key themes for successful NFT behaviour are emerging, and brands that approach the space with a spirit of creativity and innovation, rather than simply repurposing existing assets fare better. NFTs are an opportunity to create new dimensions to a brand through exclusive content and unexpected collaborations with like-minded individuals. They can act as a bridge between online and offline experiences, opening new entry points and enticing fresh audiences in. And for the majority, revenue from successful NFT sales can contribute to supporting good causes close to a brand’s heart. Gucci have been a notable experimenter. They’ve leveraged NFTs to offer up affordable brand paraphernalia in digital form to followers of the luxury label who would traditionally have found their goods out of reach. At the opposite end of the price spectrum, Campbell’s soup reimagined their own legacy of inspiring contemporary art with a newly commissioned run of NFT artworks celebrating the iconic can – and a hefty auction price to match. In both instances these brand owners recognised the disruptive roots of the media and embraced its potential to reframe value and engagement around their brand.
Delivered with purpose and conviction, NFTs are a platform to demonstrate brand values and authenticity within a discerning community who can now vote with their digital wallets.
But with any new channel, brands need to take a step back before jumping on the bandwagon. For every good example of a branded NFT, there are hundreds of cases of digital fodder. And with the ecological credentials of blockchain based technologies under intensifying scrutiny, brands need to carefully consider their play. There is a fine line between being seen as an experiential pioneer or being dismissed as an opportunist speculator. The potential for NFTs to build brand equity is tangible. That doesn’t mean it is simple to execute. Novelty value is not enough. NFTs are challenging deeper notions of ownership and patronage, exclusivity and democratisation, and the perceived value of brands and products in physical versus digital guise. The landscape is shifting and there are opportunities abound. But the Metaverse will become a challenging headwind for brands who do not start building equitable foundations fit for a world where shared ownership and value creation are drivers of choice.
We’re being approached by brands across different categories, eager to step into this brave new world. Our advice is consistent. Start with the brand, it’s attributes and equity building objectives – don’t be seduced by the technology. We help brand owners to unpack the fundamentals and define the story, assets and experience the brand needs to offer, in sync with the cultural and community values developing around NFTs. A scalable and sustainable approach is key, allowing the brand and its stakeholders to learn, adapt and grow with confidence, while navigating considerations around intellectual property and corporate governance in a largely unregulated playground. Ambitious brands thrive on first mover advantage, but those winning with NFTs are asking the right questions before taking the plunge.
Here are three questions to get you started:
- COMMUNITY: You need the backing of a community before launching your NFT or it will disappear into the ether. How will you leverage existing touchpoints and platforms to create a following?
- BRAND: An NFT must elevate the brand experience to command a value. What within your brand’s repertoire – heritage, future or collaborations – can become exclusive and covetable in digital form?
- NARRATIVE: One-hit-wonders do not sustain consumer interest. How will you invite your audience on a journey of discovery that continues to inspire and reward deeper engagement with your brand?
By Scott Mason, Head of Strategy, StormBrands