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The rise of NFTs seems unstoppable following the recent sale of CryptoPunks to Yuga Labs, and the minting of metaverse land by Yuga just recently netting the company over £250 million. However, while this may seem just another chapter in the rise of NFTs in the digital collectable world the striking thing in 2022 is how they are going mainstream. The signs of mass adoption are already to be found online in social media channels, as people start to use their favorite NFTs for their Twitter or Reddit profile pictures; in turn the popularity has undoubtedly caught the imagination and marketing budgets of big brands, with both retailers and global brands like Adidas joining the NFT movement. With recent news that Facebook-owned Instagram will start testing the integration this week and will not charge any fees for posting and sharing NFTs on the platform it’s time to start taking the business use of NFTs seriously.
While the majority of consumers may be skeptical for good reason, as the user interface remains complicated for many people, this is not a passing trend, NFTs are here to stay. Which begs the question, how can businesses both large and small make use of this fascinating technology for the benefit of their customers and their own profitability? Clearly a major motivator for business involvement in the NFT market is to generate their own revenue. This is true for businesses looking to give away their NFTs as a promotional campaign, to consider the value of the NFTs on the re-seller market, and how that could also generate revenue. However, it’s worth underlying the fact that NFTs are just one small part of the broader new wave of the web called web3, which includes the metaverse and cryptocurrencies. And with Facebook going in hard with billions of dollars in metaverse-related spending (around $10 billion on AR, VR, and related hardware as well as the development of metaverse apps and services), and US theater chain AMC recently announcing significant customer spend using crypto, now’s the time to take a closer look at why NFTs have a real business case to consider.
Its perhaps useful to consider the comparison with the early days of the internet, when some industries found the new online world easier to take advantage of than others, with books sellers facing an easier task to e-commerce than say fresh food retailers. Similarly, now NFTs are more readily used by sports and media companies looking to create new sources of revenue from media assets. While the NBA’s Topshots is often cited, having become an integral part of the NBA fanbase, with a valuation of up to $7.5 billion (Sept 2021) the real expansion of the use of NFTs in 2022 has been in European football. Like the NBA it’s a way to engage a younger section of fans, and like the use of NFTs in the music business it has the advantage of building on an existing community of fans. The example of Sorare, which has built on the market for digital football trading cards, is the standout example of a business which originally built its revenue as a fantasy football league buy moved into NFTs. However, while this is one niche business that has seen the opportunity to expand its appeal and revenue through NFTs it does point to a powerful engagement element that all online businesses, particular consumer facing ones, namely community.
As business owners know, and marketers even more so in this competitive multi-channel online world, serving and sustaining a customer base over time that reduces the costs of customer acquisition and retention requires building and sustaining a loyal community. As shown with the case of football or music fans, each of which come with respective ready-made communities, NFTs are a great way to reach and retain communities. These include loyalty programs, which reward customers for their loyalty and encourage them to continue to do business with you, to B2B style membership programs, that allow businesses to give exclusive members-only content or discounts. **The bulk of the NFT community, as of right now, is on Twitter and Discord. There are many overlapping correlations between building a community on Twitter or Discord and doing so on more traditional social media platforms like Facebook or Instagram but there are some things to keep in mind with the current NFT community.
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