If you’ve been active in crypto over the past few months, then you’ve probably come across the term ‘non-fungible tokens’ or ‘NFTs’. Though not a new concept, it is currently one of the most talked-about in the space and is even attracting commentary from mainstream observers.
The reason it’s gaining a lot of attention right now is because blockchain proponents have seemingly found a way to represent unique assets in a verifiable digital form — as one-of-a-kind NFT tokens — that allows it to be easily traded as you would any kind of tangible property. In other words, a secure form of ownership certificates for virtual and physical assets that can easily be authenticated on the blockchain.
In particular, art immortalized in the form of NFTs is currently a continuous source for headlines, especially given the vast sums involved in their trade. On 11 March, crypto-artist Beeple sold his 5,000 piece NFT art collection for $69 million, a record not just in the NFT world, but in the entire history of art.
22 million people tuned in for the final moments of @Beeple‘s historic sale this morning, which totaled $69.3 million. Relive it from the artist’s POV in this link! #beeple #digitalart #digitalartist #artist #art #thefirst5000days #nft https://t.co/XaREV5Fdvu
— Christie’s (@ChristiesInc) March 11, 2021
Moreover, the sale was hosted by none other than the world-famous New York-based auction house Christie’s, whose endorsement not only gives credibility to NFTs but also boosts their reach and appeal in other fields.
From rapper Torey Lanez previewing his latest album in the form, to Twitter’s Jack Dorsey turning his first Tweet into an N, even AP has announced an NFT commemorating the latest US Presidential Election.
Now you might wonder why these organizations and individuals, from nearly every conceivable field, have been so quick to enter the NFT space. The answer is simple: marketing.
The popularity that NFTs have garnered makes them the perfect tool for self or brand promotion. Why? The most successful marketing strategies rely heavily on subtlety. For example, campaigns that entertain or evoke emotion, with seemingly no connection to a product or service, achieve better results than high-pressure sales tactics that focus entirely on encouraging the target to purchase something.
Take Taco Bell for example. The American fast-food chain recently created 5 taco-themed NFTs, released in a collection on NFT marketplace Rarible. The collection sold out within minutes, with the highest bids for the pieces reaching over $2,500 (1.5 ETH) at the time. However spurious this offering might seem, Taco Bell is adhering to the idea of subtlety.
In this case, Taco Bell focused the sale on the purchase of a rare piece of art using a novel form of payment, in a form currently in-trend, and that has the backing of a famous brand. However, throughout, not only is the brand present, but the collection itself depicts the very product Taco Bell currently sells.
And as is being done here and at many crypto and mainstream news outlets, Taco Bell’s brand is being embedded into popular content. While the fast-food chain might not have previously been on the minds of people in the crypto-space or outside, it is now. The fast food chain Bell is betting that this will lead to an increase in its customer base, even if only short-term; the wider marketing efforts then take over.
Indeed, we see this strategy replicated outside of crypto and the NFT space. In the UK, each Christmas sees the entire country anticipate the long-form seasonal adverts produced by the top supermarkets and department stores. Traditionally, these adverts focus not on any of these businesses’ products or services, but on the Christmas season and topical issues.
In fact, last year’s battle for the top ad saw fast-food chain McDonald’s take second place according to several media blogs, a first for them. McDonald’s strategy was essentially exactly the same as rival Taco Bell NFT approach: capture the current trend, increase brand awareness — using the current UK hit cover of Alphaville’s Forever Young.
While there can be potential ethical issues with these tactics, the advantage of trend-based marketing is that anything can be wrapped into it.
Back to the crypto space, the popularity of NFTs is actually having a positive impact on development and innovation. As we saw with CryptoKitties (a feline-themed NFT project) in 2017, the demand for NFTs caused the Ethereum network to grind to a halt.
The result? Ethereum’s core developers ramped up efforts to introduce scalability upgrades to ensure the network could handle increasing levels of traffic in the future. Moreover, a number of so-called ‘Layer-2’ solutions sprang into existence to help shift some of that traffic off-chain.
The hype caused by CryptoKitties increased adoption which led to developers and innovators taking the issue of scalability more seriously. In effect, it was a form of decentralized marketing for Ethereum, increasing brand awareness and utility in the same way as Taco Bell believes its NFT will.
While this type of crypto token continues to soar in terms of popularity, even if only in the short-term, businesses and projects alike will continue to use NFTs as a tool for promotion.