by Chloe Markowicz, editor of Contagious
Despite the initial hype around NFTs, many businesses are now dismissing the tech as a fad. When NFT trading dropped a whopping 97% from January to September 2022, it certainly didn’t help inspire confidence.
People often scorn disruptive technologies when they first launch because their utility is not immediately obvious. As Chris Dixon, partner at VC firm Andreessen Horowitz, argued in a 2010 blog post, ‘The next big thing will start out looking like a toy.’ And what looks more like a toy than a digital asset represented by a cartoon ape?
But while NFTs might seem frivolous, they can still offer a worthwhile opportunity for brands, even in the blustering cold of this crypto winter. The key is to consider the value brands will bring by minting their own NFTs.
When the Australian Open created its NFT collection last year, it wasn’t just jumping on a bandwagon, it was enhancing the virtual experience of its Grand Slam tournament for fans who couldn’t attend in real life because of the pandemic. AO’s NFT Art Balls weren’t random pieces of digital art, they were linked to specific plots of the tennis court, creating a digital memento of the match-winning shots.
As Ridley Plummer, Tennis Australia metaverse and NFT project manager, said, marketers must ask, ‘What’s in it for your brand? Creating an NFT for the right reasons is important because you’re talking to a savvy consumer’.
When Under Armour released an NFT replica of its sneakers, it too was responding to a real-world problem. The biggest star in the sportswear brand’s roster, Steph Curry, was on the verge of breaking an NBA record for the number of three-pointers scored. To celebrate this, Under Armour was going to release a new pair of sneakers as part of its Curry line, however, Covid-related global supply chain issues meant it couldn’t get the shoes out to market in time.
Under Armour’s solution was to create a wearable NFT version of the shoe and make it available on the virtual platforms Decentraland, Sandbox, Gala Games and Rumble Kong League. The First Meta Sneaker campaign raised $1m for Curry’s charitable foundation and $17m in secondary sales.
Most brands, at least initially, were deploying NFTs to publicly broadcast how ‘cutting edge’ they were. So Starbucks’ updated Rewards loyalty programme stands out because the coffee chain is intentionally obscuring the blockchain-based nature of its scheme.
Starbucks Odyssey, which launched in beta in December, lets users earn digital collectibles to unlock real-world and online experiences. For example, members can play interactive games to win prizes that range from a virtual espresso martini-making class to a trip to the brand’s coffee farm in Costa Rica. But instead of calling its digital collectibles NFTs, the brand is referring to them as ‘Journey Stamps’.
As Starbucks CMO Brady Brewer told TechCrunch, the platform happens to be built on Web3 tech, but the customer may not even know ‘that what they’re doing is interacting with blockchain technology. It’s just the enabler.’
Starbucks’ Journey Stamps are valuable not for their exclusivity or cultural cachet but the rewards they unlock. As the shine wears off NFTs, more brands should be reimagining digital collectibles as a gateway to customer benefits, an opportunity to reward an online community or engender loyalty. Nike has been relatively mysterious about its .Swoosh digital platform (currently in beta), but has described how members will get access to virtual collectibles that they can wear in online games and that can unlock access to real products or exclusive events.
Though most brands might look down on the NFT as a silly plaything, for those that can build value and utility into their digital collectibles, it doesn’t have to be game over.