NFTs and the opportunity for brands

While it’s currently fashionable to dismiss NFTs, let's not forget this technology will become ingrained in all aspects of our digital lives going forward, writes Jonathon Miller.

Non-fungible tokens (NFTs) are a radical solution to the problems creators face when building and protecting their brands in the digital world. Whereas value created from individual contributions used to be appropriated by singular, centralised, for-profit entities in their ring-fenced domains, NFTs enable content creators to enjoy the form of their contributions.

While the noise around NFTs may have died down in the market downturn, the innovation of the technology remains and cannot be dismissed. To clarify, NFTs are blockchain-based digital records of ownership and authenticity associated with a piece of media. While often used to tokenise things such as art and collectibles, an NFT is more than a multimedia file; it is a public record of historic information associated with that media. Music, in-game items, membership to exclusive events: basically, any medium where individuals want to assert rights of digital ownership – something previously thought impossible – can now be realised by an NFT. For the first time, scarcity can exist in the digital realm.

Although conceptually simple, profile pictures (PFPs) perfectly demonstrate the raw potential of NFTs. Digital artists and content creators can monetise creativity by selling directly to interested buyers, rather than being forced through an intermediary gallery or broker. The artist, the original buyer and any secondary buyers, can share in the success of the NFT collection by contributing to the surrounding community, including sharing artists’ creations on social media, increasing the value of the original work. These actions create a virtuous cycle that incentivises further positive actions; original creators can earn a steady income by adding a fee to any subsequent sales of their work. For brands, this offers whole new levels of cooperation between individuals and companies in digital landscapes, facilitating a much deeper engagement and understanding of their communities.

Equally compelling is that NFTs are attracting attention from people of all backgrounds, and more specifically, they are attracting Australians. Google Search data analysed over the last 12 months revealed Australians ranked second-highest in the world in terms of interest in NFTs per capita. According to research from Finder, as of October 2021, 4.6% of Australian internet users owned a non-fungible token (NFT) while an additional 7.1% said they planned to. Furthermore, data shows that NFT owners are even younger than the average crypto investor. According to a 2021 study by Christie’s, millennials are most likely to purchase NFTs (23%), followed by Gen X (8%) and Gen Z (4%). With a growing number of younger Australians taking an interest in the space, it makes sense that some of Australia’s biggest brands, including the Australian Open, AFL and Australia Zoo, launched their own collections last year. While experimental, these efforts received positive feedback – the Australian Open’s NFT-metaverse project was recognised by Cannes Lions for pushing the boundaries of new innovative consumer experiences.

NFTs are inherently accessible and flexible for different use cases. While big money sales have dominated media headlines, science journal Nature found the average NFT sold for less than $20 as of late 2021, proving NFT’s aren’t just for the well-to-dos. They carry all the benefits of distributed ledger technology, including transparency and traceability. Some predict major fashion brands may be able to authenticate their goods on the secondary market, using NFTs to earn resale revenues.

So while it’s currently fashionable to dismiss NFTs, let’s not forget this technology will become ingrained in all aspects of our digital lives going forward. Big Tech can create platforms to aggregate content, but value created will be equitably shared between the original content creator, the community and the platform, rather than the one-sided state of play that prevails now. That is a huge shift for industries like marketing and it is likely just the beginning – the use cases are endless, things we can’t even imagine right now. Brands that pride themselves on being innovative should start looking at the ways NFTs can add value to their business as it is only a matter of time before it becomes the norm.

Jonathon Miller, managing director for Kraken Australia


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