Major consumer brands have been taking a bite out of a space that grew 645 percent between January and March 2021: the world of NFTs. As unique digital collector’s items, NFTs are providing an unusual creative canvas for clever brand marketers.
Contrary to popular belief, NFTs, or non-fungible tokens, are not the artwork or media itself, but a unique and non-replicable piece of code on the blockchain that links to a URL where the media lives on the internet.
To date, the focus for NFTs has primarily been on digital art. However, constant innovations mean that NFTs are expanding beyond visual images and gifs, and into video games, writing, and more. Original, scarce, and collectible, NFTs closest comparisons might be pop art, which was just as divisive when it first emerged.
NFTs entered the mainstream consciousness with some eye-watering auction prices. Digital artwork by self-taught artist Beeple sold for $69 million (690,000x more than his previous piece of work), Twitter founder, Jack Dorsey’s first tweet sold for $2.9M, and a 56-sec YouTube clip titled ‘Charlie bit my finger’ sold for $760k.
Adidas recently sold a limited edition digital card (and signed pair of cleats) associated with Trevor Lawrence, the first pick in the 2021 NFL Draft, for $53,000. It could be the most expensive product Adidas has ever sold, even if the company would still have to sell almost 120,000 NFTs to achieve their first-quarter revenue for 2021 ($6.351B). So, NFTs obviously have some commercial value for brands, but what else might we learn from brand activity in the NFT world?
To explore this new-ish space through the lens of branded content, we examined an NFT marketplace called Rarible and analyzed all of the NFTs created by consumer packaged goods (CPG) and quick service restaurant (QSR) brands, such as Pringles, Charmin, Dunkaroos, Pizza Hut, Dole Sunshine Company, and Taco Bell. We focused our analysis on the type of assets that brands are creating in the NFT space by measuring four creative elements: the presence of a logo, product, and brand character, as well as static image vs gif.
Framed as an opportunity to own a digital version of customers’ favorite products, it’s not surprising 91 percent of all NFTs analyzed included a product. But it’s not all just going toward corporate profit — proceeds for many of these digital products go towards charitable organizations.
Taco Bell, one of the brands analyzed, raised thousands of dollars for the Taco Bell Foundation’s youth scholarships when they sold all 25 of their NFTs within 30 minutes of launch. Each NFT was priced at $1 and some were sold for thousands of dollars, with buyers receiving $500 e-gift cards to order from the Yum! Brand chain. Taco Bell gets 0.01 percent for each subsequent sale, and with some pieces reselling for over $3,000, the clear winners are the original buyers.
“Taco Bell holds a space in internet culture that is fueled daily by die-hard fans that are always looking for new ways to not just eat our food but uplift and be a part of our brand,” said Christian Silva, an ACD at Deutsch LA, in a Muse by Clio interview. “These most avid fans are the ones we launched NFTaco Bell for, and they are pushing the value of the offering daily.”
Despite the strong link between NFTs and digital ownership of certain products, branding remains far from the norm. Just 29 percent of NFTs included a brand logo and 11 percent included a brand mascot or fluent device such as the Charmin bear or Duncan the Dunkaroos Kangaroo. While NFTs are not ads, they are creative assets largely positioned as an opportunity to own a piece of your favorite brand.
A staple of 90s TV commercials, Duncan the Dunkaroos Kangaroo is back promoting Dunkaroos after the cookie-and-frosting product’s eight-year hiatus in the US. Tapping into the nostalgia that helped maintain Dunkaroos’ diminishing market share in the early-2000s, Dunkaroos have minted 90s inspired-NFTs with 30 percent containing the well-known kangaroo mascot.
Mascots like Duncan are among the most effective creative elements available to brands when it comes to winning over new customers and creating market-share gain. But the use of such fluent devices in brand marketing is in decline: their presence fell from 41 percent of campaigns in the IPA Effectiveness Awards database in 1992 to 12 percent in 2016. Today, just seven percent of UK campaigns and four percent of US campaigns contain a fluent device.
When it comes to NFTs in the form of still images versus video, the latter format wins out handily as 63 percent of NFTs take the form of gifs. These short video clips require more resources to make, but their popularity in the NFT marketplace is perhaps representative of the broader industry shift to video.
Brands have an opportunity to create ownable moments that can bring their fans into a more niche community. In these cases, videos or gifs may do better than static images. For example, the NBA launched Topshot, a website that gives fans the chance to own their favorite NBA moments as officially licensed NFTs. It has raked in $500 million in sales, with one LeBron James dunk shot selling for over $200,000.
Our analysis so far reveals that brands are already using NFTs in a wide variety of ways: creating new communities, rewarding customers, and generating hype for new releases. There is much more at work here than just brands selling digital versions of their products for charity.
Taking a bigger step back, it’s also clear that this move by brands to create NFTs is representative of a larger shift that is currently shaking up advertising: content proliferation. NFTs represent one of the latest additions to the seemingly infinite options for creating and distributing content today.
This can represent both an opportunity and headache for brand marketing. Content proliferation is a pain felt by all marketers because the fragmentation of media channels requires them to create more content than ever before. Furthermore, NFTs come with their own special rules of engagement that are still evolving due to the rapid pace of technological innovation.
The NFT market is down more than 90 percent since its market peak, but that doesn’t detract from the future commercial opportunity for brands. As marketers explore new ways of reaching and engaging consumers, they must remember that one of the primary reasons why creatives fail is a failure to brand. The relatively low proportion of branded NFTs suggests that there are still plenty of opportunities in this space for creative marketing efforts.