What skeptics and the general public see as an internet fad is a tool that many large enterprises have been using in order to grow their customer base. As prior Web 1.0 adoption patterns have suggested with ecommerce, integrating NFTs into a company’s business model today will position a business well in the future.
NFTs are Non Fungible Tokens, a financial security that stores digital data in a blockchain. Blockchains are used to record ownership of an NFT and can be used to transfer ownership afterwards. NFT tokens can come in many different forms, such as apparel, art, real estate, music, and experiences.
What companies today are noticing is that NFTs can be used to increase branding and even gain a larger customer base. What NFTs allow companies to do is engage directly with their customer base in ways they have not been able to before. A company may have a large web presence such as having millions of followers on social media platforms. What the companies are unable to do is engage directly with their fans. NFTs allow for this engagement to occur. Brands such as Coach have been using NFTs as a way to engage directly with their fans. Recently, holders of Coach NFTs also received a custom Coach handbag as being an NFT holder.
NFTs are an engine to increase brand loyalty. One aspect of NFTs that has created a large spending frenzy has been the nature of their exclusivity. Brands can leverage this aspect to allow fans to engage with their products uniquely. For example, Nike’s CryptoKicks patent connects a physical pair of shoes to an NFT drop of a copy. Loyal Nike Fans may be able to breed multiple shoes into a unique custom digital shoe via NFT drops.
NFTs have allowed brands and influencers to increase revenue streams by monetizing experiences. Recently, Coachella and the Super Bowl created NFTs for ticket holders to hold on to in the digital space. Ticket holders for Coachella received an NFT of a flower that bloomed on two of the Fridays at the festival. Similarly, the Super Bowl has been using NFTs as a form of ticketing. The NFL was able to create non transferable NFTs that had unique codes associated with each one, preventing fraud and allowing fans to keep their experiences afterwards. Athletes such as Lebron James have been leveraging NFTs to create new revenue streams by monetizing experiences in his life. NFTs of Lebron James have included personal moments in his life, such as deciding to go to the NBA and iconic dunks. The results of these added revenue streams have proved to be successful as Adidas reports to have made 43 million dollars off of their NFT drops.
As Web 3.0 grows and matures, adopting NFTs as a means of monetization will prove to be a successful method in growing customer bases. Participating in drops and engaging in fans will create brand loyalty but also exclusivity. In 2021, over 25 billion dollars in transactions occurred in this space, and this figure will only continue to grow as the development continues and more companies begin to utilize NFTs.