The Internet is becoming more and more decentralized as we move towards the introduction of web3 at the global scale. Businesses are using it as an opportunity to build digital assets and promote themselves to a larger audience. One unique digital marketing trend that is becoming popular in this regard is the use of NFTs.
Companies are using NFTs in marketing in order to build a unique brand image and secure their assets in the digital world. But is this really a game-changer strategy or just another gimmick? In this article, I am going to answer this question by analyzing different aspects related to NFTs in marketing. Let’s start.
What are NFTs?
NFTs, also known as non-fungible tokens, are a certain type of digital assets that are stored on a blockchain. People use these tokens in order to secure their ownership of actual assets such as expensive art, music, videos, and even domain names. These tokens have been around for more than a decade now.
However, they gained a lot of popularity in the recent few years because of the increased financial and digital literacy around the world. Both individuals and businesses started using them to secure their assets and benefit from them. In a general case, these tokens are transacted using cryptocurrency which is a more secure way of buying and selling stuff.
How Do NFTs Work?
Understanding the working process of NFTs won’t be an issue for you. It’s a simple process that begins with the creation and tokenization of the digital token. An artist first designs and creates an NFT according to the user’s requirements.
Once the creation is completed, the art is then tokenized into a unique token on a blockchain. To secure the ownership, a contract is added within their code that includes the terms and conditions of the ownership. Once the token is recorded on the blockchain, the owner can then easily save or sell their property through NFTs anytime he wants to.
How do Businesses Use NFTs in Marketing?
Business can utilize NFTs in multiple ways which are listed below in details
1. Showcase Modernization
A large number of the audience believes in the modernization of businesses. They only stay attached to the companies that are constantly evolving according to the new digital standards. Companies use NFTs in marketing in order to showcase their modernization and help the audience realize that they’re introducing new ways to serve the customers.
There aren’t a lot of companies or individuals around the world that use these tokens for marketing purposes. So, the ones that use them are considered to be some of the most advanced organizations.
2. Offer Exclusive Memberships
Service-based companies are using this marketing technique in order to offer exclusive memberships to their loyal customers. These tokens are a great way of offering special passes for events or any other product subscription.
For example, a fashion brand can offer NFT-based VIP passes for exclusive fashion shows to people. Offering such perks helps companies with customer retention and constant growth.
3. Selling Limited Edition Products
Many franchises sell limited edition products in order to create a high demand. To make this trend even more interesting, they attach these products with NFTs so that more people would be interested in buying them.
Also, these tokens also enable companies to use features like royalties. It helps them make money in case a customer resells the products to someone else.
4. Social Media Campaigns
Social media has become a huge part of marketing in the business world. Companies run different campaigns on different platforms in order to get more audience engagement. This thing becomes even more promising when you attach the non-fungible tokens with it. It gives the campaign a unique nature and helps companies make a better impact on the audience.
How Using NFTs in Marketing is Beneficial?
NFTs in marketing are beneficial for the following reasons:
Better Brand Image
As I have mentioned earlier, there aren’t a lot of companies that are using NFTs for advertising purposes. It helps companies create a better brand image in the minds of their audience, customers, and competitors.
It portrays the company as the leader of the industry promising the introduction of modern techniques in its operations. For example, Gucci gained a lot of fame when it introduced its NFTs collection “Aria”.
Building a Unique Customer Community
Although these non-fungible tokens are a very promising technology, not everyone in the world is interested in them. Even if people are interested, not all of them can afford the tokens.
Marketing with the help of this technology allows companies to build a unique customer community. It lets them pick a certain type of audience and turn them into a community that uses the company’s NFTs.
Good ROI
The non-fungible tokens are a marketing technique that offers a good ROI. They have the ability to generate revenue with direct sales. Besides direct sales, the tokens also have the capability of generating indirect revenue. I mentioned earlier how companies can integrate royalties in the tokens. The secondary revenue is created with such techniques giving a good return on investment.
Transparency and security
It’s not hidden to anyone how blockchain technology has become one of the most secure and transparent ways of dealing with financial transactions. Since NFTs are also recorded on blockchain as well, the marketing benefits are transparent here as well.
It builds trust among the audience and makes them realize what you’re offering is actually a secure and beneficial asset. For example, by giving away tokens, the ownership is declared clearly and securely to the owner.
Challenges Related to NFTs in Marketing:
I have described very clearly how these tokens in marketing are beneficial. However, they come with some challenges as well. I’ve listed the major ones below:
- It is a highly technical strategy and not all businesses are able to utilize them.
- Despite good ROI, their creation and recording on the blockchain requires a decent amount of investment.
- They’re also very expensive due to the high transaction fees on some blockchains.
- It is not considered a very environmentally friendly technique due to the use of a great amount of energy.
- Not many people around the world are aware of the benefits of these tokens. So, running a marketing campaign based on them may not offer the required results.
- It’s a volatile field just like any other cryptocurrency. So, their value can go down or up without any clear warnings.
Is it a Gimmick or a Game-Changer?
NFTs in marketing are indeed a game-changer. It offers lots of opportunities for growth and modernization for companies that have high ambitions. Not only do they create a good brand perception but also offer a great revenue opportunity.
If used the right way, this technique can build a company that will have the potential to grow a lot in the future. It’s true that it has several challenges and isn’t a very promising way for small businesses.
However, the companies that can afford it should utilize it in their marketing campaigns for better results.
Conclusion
NFTs in marketing are a huge opportunity for growth for a lot of modern companies. Although they require a decent initial investment, their ROI is very huge. Besides generating revenue, these tokes create a better brand perception and help companies build a unique customer community. It’s a complete game-changer if a company knows how to use it the right way.
Frequently Asked Questions (FAQs)
Is it possible for small companies to use NFTs?
Of course. Small companies can utilize it also as long as they have the resources.
Will this technology grow in the future?
Yes. This technology has a good potential to grow in the future.
What type of businesses should use this technique?
Any business that wants to create a digital presence and innovate itself can use this technique.
