What is an NFT?
NFT stands for nun-fungible token. The non-fungible aspect is exactly what makes these digital items so valuable. Owning an NFT is like owning Van Gogh’s painting Starry Night. Sure, there are thousands of copies, amazing forgeries, but only one original.
So how do we know which NFT is the original? After all, digital artists have their work replicated and passed off by others all the time. How is an NFT any different? That’s the cool part.
An NFT is transformed from a simple digital work of art into a valuable commodity through the use of signature code that always accompanies the item. To be specific, this signature code is a smart contract that can only be authenticated with the Ethereum blockchain. (If you haven’t heard, Ethereum is a newer type of digital currency, and for the purposes of this article, very close to Bitcoin.) This is like having the painting of Starry Night always be accompanied by the papers that authenticate its originality.
Why Should Brands Care?
Why should your brand care about NFTs it already feels like there’s more to keep up with in this new digital age than most of us can wrap our heads around? NFTs are paramount for brands that thrive through community building and participation.
To explain this with a physical item most are familiar with, let’s use the brand Converse. Converse frequently partners with artists to release limited edition shoes, featuring art made specifically for these lines. These sneakers are sought after by those in the communities that intersect with both Converse and the featured artist. To anyone who doesn’t exist within this cross-section, these speciality lines are simply another release by Converse. But, to the target market for this release, these shoes become coveted pieces of art -- much like Starry Night is to an art collector. It’s important to note that the key difference between this example of a physical specialty item and an NFT is that while there may be a number of specialty Converse, they can each be traded for one other. This is similar to trading one great forgery of Starry Night for another by the same artist. An NFT - while it might look the same on the surface - is individually authenticated by the code behind it. This code is what gives the digital art its authenticity and uniqueness.
So, just like Converse will partner with an artist to create physical items to sell to consumers, brands can partner with digital artists to create digital specialty items for their consumers. While this may seem like just another thing brands have to think about when crafting their marketing and advertising plans, it presents exciting opportunities. If used correctly, this new technology can allow brands to pivot, regaining relevancy, increasing overall revenue through new streams of income, and tap into markets they may have previously been unable to reach.
Brands like the NFL, McDonalds, Gucci, Coca-Cola, and even Barbie by Mattel have entered into the world of NFTs in the past year. The list of companies releasing NFTs is growing every day, with each new release bringing a different way to incorporate the technology of NFTs into the brands’ marketing mixes. With so much new technology coming and going, it may be tempting to simply wait out this current fad. However, with Web 3.0 and the Metaverse currently under construction, brands that incorporate NFTs into their marketing mix are quickly going to be favored as early adopters and remembered as pioneers in this new age of advertising.
