After countless conversations with businesses, brands, and rights holders looking to make a foray into the NFT space, there is a single question I consider a death knell in their aspirations before even getting started: How will I monetize this project?
Now wait a minute. Isn’t the entire point of running a business to make money? I’m not so blind to the paradoxical nature of this observation, but what is happening in NFTs and the larger Web3 movement is a paradigm shift from a focus on monetization to one of value creation between brands and their most loyal fans. This is what many brands, athletes, artists, and entertainers have gotten wrong so far and what is most worthy of consideration.
The NFT community model flips the traditional marketing funnel entirely on its head. In an old world, brands would look to various ad platforms to identify past or potential customers and serve them ads while optimizing conversion costs with the end goal of selling them something like a T-shirt. Once that journey is completed, the process resets with remarketing and other retention campaigns. In the NFT world, the transaction happens upfront through a customer’s purchase of an NFT, and the revenue is used to deliver NFT utilities and holder benefits.
Does that not make this a zero-sum game? Whether the acquisition-related costs occur before or after transaction, the same result is reached.
The secret sauce of NFTs for brands lies within the community dynamics created in launching a collection to bring a group of like minded individuals together. NFTs turn anonymous consumers into brand advocates and loyalists who see their brand affiliation not only as an asset, but a badge of honor. It unlocks the potential for these customers to find incremental value well-beyond the brand’s core business by building connections with other like minded community members, with those relationships nurtured by the brand itself. It’s the phenomenon of two strangers on the street becoming fast friends while wearing the same streetwear brand scaled to global proportions through digital distribution.
The power and impact of this community in its ability to drive additional consumer interest in a brand through network effects cannot be understated, but with the above dynamics in mind, there are a few key mandatory considerations for brands to take seriously when launching an NFT strategy.
In most cases, consumers will distrust a brand until proven trustworthy. Especially before asking customers to purchase an NFT offering, there needs to be a sense of comfort created such that a customer is prepared to monetarily commit to a brand relationship. Brands should take the time to learn the NFT space before participating, and then make their entrance in a way that is communicative and transparent while remaining true to its core tenets.
It’s not enough to launch an NFT project as an added revenue stream. NFTs are a perfect instrument for building connections between and amongst brand loyalists. It should be the goal of the brand to create an environment for those loyalists that drives positive sentiment towards the brand itself. This is done through events, experiences, interactions, and other mechanisms. It’s worth noting that in many cases, the cost of delivering such value is not incremental.
I like to consider an NFT community as the ultimate focus group. The added benefit of assembling this community of like minded brand loyalists is the creation of a direct channel between brand and customers. They say the customer is always right, and such remains true in the world of NFTs. Consider their input for decisions that relate to the future of the collection and its value delivery, allowing the community itself to have a say in its own destiny.
It’s not necessary to create an owned and operated collection prior to entering the NFT space. There is a wealth of existing communities with potential customers eager to interact with or discover new brands. Identify those communities that align with your brand most closely and find ways to participate. Participating could include purchasing collection assets on behalf of the brand, allowing the brand itself to join those communities, or simply interacting on public forums including Twitter and Discord. These small steps go a long way to establishing brand credibility in the NFT space.
Above all else, brands should bear in mind that the NFT space remains in its infancy, and there doesn’t yet exist a clearcut playbook on how they should take part. Organizations of all sizes continue to try different strategies. Some will succeed, some will fail and all will serve as learning opportunities.
The best approach for brands looking to get involved is to learn, listen, and plan. We’re all so early in this wild new world of NFT technology, but by using value delivery to customers as the litmus test for an NFT collection over monetization strategy, I’d be willing to bet on a successful market entry.