How Brands Leverage NFTs as a Driver For Growth
Bored Apes, Crypto Punks, VeeFriends, etc. Do you have a favorite?
We have heard a lot about NFTs in the past twelve months. We strongly believe that NFTs and its underlying technology will go into history as one of the most transformative inventions of our generation.
What the hell is NFT?
NFTs or “non-fungible tokens” represent an innovative piece of technology that allows for scarcity and ownership of digital assets. The word “non-fungible” here essentially means that no two digital assets (i.e. art or, put simply, JPEG) are the same. Each NFT is a unique asset that cannot be replaced by an identical version because there is no identical version.
An NFT can be a piece of digital art, an audio track, a baseball card, a membership ticket and so much more. Think of it as a digital asset that lives on the blockchain. And because it is created (or “minted”) on a blockchain, it is completely digital, trackable, and immutable.
One of the advantages of a blockchain is that once you create or mint something — and all of its attributes — it will live there forever. This means that an NFT can be purchased, sold, gifted, etc., and its history and value will forever be recorded on the blockchain.
How do brands interact with NFTs today?
We’re still in the very early innings of this NFT revolution, but with absolute certainty we can say that NFTs are here to stay and will further evolve. Why? Some of the most innovative multinational brands such as Nike, luxury powerhouses like Gucci and Louis Vuitton as well as consumer brands such as Coca-Cola and Budweiser are all exploring this space and investing tens and hundreds of millions of dollars into NFTs and related projects and acquisitions.
Let’s look at a few examples.
Nike Cryptokicks
According to a patent dated December 10th, 2019, Nike is planning to tokenize the ownership of exclusive shoes. When a physical product is purchased, shoes will become linked to a unique owner, with all information recorded on a blockchain.
Nike’s “Cryptokicks” patent allows for the “breeding” of 2 NFTs to create a shoe “offspring” that can then be made into custom sneakers for the real world as well as the metaverse.
This could be an ultimate dream for all the sneaker heads and sneaker collectors out there.
Nike + RTFKT
In December 2021, NIKE, Inc. announced the acquisition of RTFKT, a leading brand that leverages cutting edge innovation to deliver next generation collectibles that merge culture and gaming.
“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture,” says John Donahoe, President and CEO of NIKE, Inc. “We’re acquiring a very talented team of creators with an authentic and connected brand. Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.”
It’s very clear that Nike is taking their foray into the NFT space very seriously with a long-term approach.
Adidas + BAYC
In December 2021, Adidas announced their purchase of BAYC NFT and the start of “Into The Metaverse” strategy.
As Vogue Business reported, the complex project encompasses limited-edition drops and scarcity (NFTs grant access to physical products); logos with cultural currency (including profile pictures, or PFPs, of Bored Apes); exclusivity and community (access to digital/metaverse experiences); and zeitgeisty collaborations (Adidas is tapping into existing communities with in-built hype).
Adidas’s Senior Director of Digital Growth Tareq Nazlawy also commented on what NFTs mean for their brand and business model: “It’s a flip of the normal business model where we make stuff and hope people will buy it. You’re not just buying the product. You’re becoming a member of this community.”
Shopify + Doodles
In March 2022, Shopify partnered with Doodles NFT to create a one-of-a-kind token-gated offline experience during SXSW.
Shopify commented on their Twitter with a clear statement: “Token-gating is so much more than limited edition merch, we’re seeing brands like Doodles use NFTs to build loyal communities and unlock one-of-a-kind commerce experiences.”
What’s next?
There are currently three main options brands have when it comes to working with NFTs / NFT-native IP.
1) Brand Collaboration
Shopify x Doodles collaboration we discussed above is a great example of that. Another recent collaboration of this type is the one between Invisible Friends and streetwear fashion brand KITH that has a track record of working with brands such as BMW on limited edition products.
This also happened when Mattel Creations partnered up with Gary Vaynerchuk and his NFT project VeeFriends to create VeeFriends UNO Card Game that sold out in seconds.
2) Commercial Rights Collaboration
So far, only a handful of NFT projects allow this type of business “collaboration”. What do we mean? A few famous NFT projects, most notably BAYC and now also CryptoPunks and Meebits after the acquisition by Yuga Labs, give commercial rights to the individual NFT holders.
This essentially means that if you own BAYC NFT, you can further monetize that NFT (exactly with its unique attributes and design). That’s something accessory brands like CASTiFY and nightclubs such as E11Even did. And there is more.
Moreover, the ownership of BAYC NFT gives the holders access to the entire BAYC community which opens up unlimited options for further collaborations and business growth.
3) Creating Own Brand NFTs
This type of engagement is probably the one that will drive further adoption of NFTs and onboard the next millions of users into Web3.
We’re already seeing brands like Nike making strides in this field, Coca-Cola, ASICS, Budweiser, NBA, and even brands like Nivea are all exploring and investing into this new way of unlocking unprecedented customer engagement and loyalty.
In Conclusion
With NFTs, you’re not just buying the product, you’re becoming a member of a community. And if done right, brands can unlock a retention and organic growth flywheel which will be brands’ biggest asset in today’s competitive world of commerce.
About Yoloyolo
Yoloyolo is a web3 fashion and lifestyle app that helps brands unlock the potential of web3. By utilizing the power of web3 and NFTs, brands are able to kickstart unprecedented customer retention and organic growth which is crucial in today’s competitive world of commerce and rising customer acquisition cost. At the same time, Yoloyolo allows customers and fans to share in the value they create.
