PR agency YAP Global’s Samantha Yap looks at the hype around non-fungible tokens (NFTs), and spells out the three steps that brands should consider when framing their angle on this cryptographic token: explain what an NFT is, forward the justification for it, and understand its prospective value in the future.
When a piece of digital artwork in the form of a JPEG file sold for US$69.3m at a Christie’s auction in March 2021, the world opened its eyes to non-fungible tokens (NFTs). From NBA Top Shot selling NFT collectible sporting moments to Twitter CEO Jack Dorsey’s sale of his first Tweet with bids reaching as high as US$2.5m, it is hard to ignore this new buzzword.
For brands and companies wondering whether they need to jump on the bandwagon or risk missing out on this craze, it’s important to first formulate their take on this new technology.
As the founder of a PR agency specialising in blockchain and cryptocurrency with first-hand experience of working with clients in the NFT space and pitching stories for them, there are three steps I recommend brands consider when framing their angle on NFT.
Step 1: Explain NFT
A signal of when technology is on the cusp of gaining mass adoption is when you see mainstream media publications like the BBC putting out explainers about it. In a similar vein, it’s important to spell out to your audience what exactly is an NFT, how it works and what it can be used for in the first place.
NFTs are essentially cryptographically unique items on the blockchain that cannot be interchanged. These items can be in the form of a song, artwork, handbag, land title… the list goes on. Ultimately, if you possess an NFT, you are essentially holding a digital token and the ownership rights to a one-of-a kind item.
In the real world, if you buy art from Christie’s, you would have a certificate of ownership stating that you own it, but you would need to trust Christie’s to record that in their internal database. The difference with NFTs is that ownership is traceable on the blockchain. The owner of an NFT has the rights to resell, distribute or license the digital asset as they please.
Step 2: Justify why NFT?
There must be a justification for why a brand or company would issue NFTs besides just capitalising on the hype.
Certainly, there is still scepticism that NFTs are just crypto’s latest get-rich-quick scheme because of the absurd prices people are paying for GIFs that anyone can download and ‘own.’
The Beeple artwork The First 5,000 Days has been circulated on the internet and anyone can essentially ‘possess’ the artwork worth US$69.3m. However, it doesn’t mean that they own the original and the rights to resell, distribute and license the digital asset.
For some, NFTs make sense as art but for others, it’s hard to build that connection to a digital record of a Mona Lisa versus having the actual Mona Lisa in your possession.
One sector where NFTs are really growing and gaining traction is in the gaming world. Companies like Microsoft are bringing cross-platform NFTs to games, enabling gamers to unlock perks or benefits from different games and carry their gaming assets with them across other games.
This brings value to gamers, especially as they spend much time playing games like Minecraft and collect items like swords – special features that they have to start again collecting with a new game. This NFT use case makes practical sense to users because an added benefit is the ability to make more money by collecting more NFTs.
In the fashion world, brands are using NFTs for marketing pushes. For example, Gucci has started selling virtual sneakers in the form of NFTs for consumers to try on before they decide to splurge on a pair. However, in this instance, NFTs seem more like a marketing gimmick than serving a function, like in gaming.
Brands and companies will need to have a good reason for why they’re integrating NFTs in order for them to last and serve a real purpose and function.
Step 3: Expand on the future value of NFTs
Brands need to frame their NFT products in the context of the bigger picture of the global NFT ecosystem in order for the audience and customers to understand the value their project is bringing, not just in the digital world today but in the longer term.
NFTs are digital assets bridging physical products and stores with the digital world. Opensea, which just raised US$23m to scale the largest marketplace for NFTs, should be the go-to platform for brands to list their products for them to be traded. Showing that there is a marketplace and a real community of people buying and trading NFTs might incentivise users to participate in and hold NFTs.
Similarly, in the gaming world, Enjin is one such company that is facilitating an ecosystem for gaming NFTs via its blockchain asset market place.
Ultimately, part of the appeal of collecting items today, such as coins, art, comic books or trading cards, is that they could become more valuable in the future. So, you can’t have a conversation about NFTs without also talking about the future value they may hold.
With the traction that NFTs are receiving in 2021, it is evident that the NFT phenomenon is here to stay. It might feel like it’s all hype but the use cases of NFTs from NFT-related stocks in the financial world to digital real estate indicate this technology is for the long term. I encourage all brands to consider becoming more informed about it.