As we look back at 2022, it is clear that NFTs have taken the world by storm. No longer just associated with cryptocurrencies like Bitcoin, NFTs have now entered the world of digital collectibles. From art to photographs, it seems like everyone is trying to get their hands on these unique digital assets.
But while the hype around buying and selling NFT collectibles continues to grow, it is important to remember that these tokens can have more practical applications as well. In fact, businesses can benefit greatly from using NFTs in a variety of ways.
Priority number one: Understanding NFTs
Non-fungible tokens are cryptographic assets that are based on blockchain technology. What makes them unique is that they are non-fungible, which means that they cannot be replaced or replicated. This is a crucial aspect that makes NFTs a powerful tool for authentication.
The most common use of NFTs is in connection with digital assets, such as art, sports cards, games and other collectibles. By using blockchain technology, NFTs provide a certificate of authenticity for these items, making them more valuable and easier to verify.
NFTs can be bought and sold on the market, with pricing based on market demand, just like a physical product. However, the unique data that is part of the NFT makes it easy to validate ownership and verify the authenticity of the token.
But NFTs are not just limited to the world of art and collectibles. They are also used to represent ownership details, memberships and more. In fact, the varied use cases of NFTs have proven to be key to business applications. As the world continues to embrace blockchain technology, NFTs will likely become even more prevalent.
Connecting virtual assets to tangible rewards
Brands are finding creative ways to use NFTs to deepen relationships with their target audience and drive business growth.
One key to generating business growth via NFTs is linking the tokens to a physical, real-world product or experience. By doing so, brands can create an exclusive and highly sought-after product that fans will want to own. Take Tiffany & Co., for example. The luxury fashion brand partnered with CryptoPunks to create an exclusive line of 250 “NFTiffs” pendants. Priced at 30 ETH (roughly $50,000 at the time), the unique pendants sold out in just 22 minutes.
Another example comes from the Australian Open. In 2022, the Australian Open launched a highly successful metaverse initiative by minting AO Art Ball NFTs that linked to data from live matches. This was paired with virtually hosting the Australian Open in a 3D virtual reality platform to provide an unprecedented level of access to one of tennis’s largest events.
This is because holders of each Art Ball NFT will receive two complimentary seven-day Ground Passes to AO23’s finals week. Art Ball holders will also gain access to additional exclusive experiences, such as streams and viewing suites through the “SuperSight” fan experience and access to other United Cup matches. By linking the NFTs to a real-world experience, the Australian Open is deepening its relationship with fans and turning them into financially-incentivized brand ambassadors who enjoy a high level of utility.
When NFTs are used in this way, they invite mass market participation, turning fans into brand ambassadors who enjoy a high level of utility – and of course, can seamlessly trade their digital assets for real-world cash. By linking NFTs to real-world products or experiences, brands can create a sense of exclusivity and value that fans will want to be a part of.
Expanding the audience base
NFTs are revolutionizing the way brands connect with their customers, particularly when it comes to reaching younger audiences. Polo Ralph Lauren, a brand that had been struggling to attract millennials and Gen Z, has seen a significant increase in revenue after implementing NFT initiatives.
Traditionally, Polo Ralph Lauren’s customer base has been predominantly older adults. But by embracing digital initiatives such as NFTs and the metaverse, the brand has managed to connect with a new audience. In 2021 and 2022, Polo Ralph Lauren launched a “phygital” fashion collection in Fortnite, as well as an exclusive digital clothing connection through the game Roblox.
These efforts were incredibly successful for the brand. Polo Ralph Lauren saw a 27% increase in revenue in the third quarter of 2022 after launching its Roblox collection. This growth was driven by a 58% increase in the acquisition of new digital customers.
The key to Polo Ralph Lauren’s success was strategic implementation of digital assets. By creating a presence in metaverse-style spaces where younger audiences are most engaged, the brand was able to make itself more relevant and appealing in today’s competitive market.
Employing NFTs strategically for your enterprise objectives
As businesses look for new ways to engage with younger, more tech-savvy demographics, NFTs can offer an innovative solution. With a strategic approach, NFT-based projects can position companies as disruptors in the marketplace.
However, it is important for businesses to approach NFT investments carefully. Major NFT failures in 2022 received widespread media attention and serve as a reminder for businesses to invest in NFTs with their end customers in mind. It is crucial to identify strategies that will benefit the target audience and build a stronger connection between the brand and its tech-savvy customers.
Some potential uses of NFTs include creating collectibles, offering exclusive access to events or products, and even creating digital real estate. NFTs can also help with ownership verification and provenance tracking in various industries.