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2022 has been an interesting year for NFTs (non-fungible tokens) to say the least. This was the year public knowledge of NFTs moved beyond Bitcoin and other cryptocurrencies into the realm of digital collectibles, such as art and photographs.
But while buying art and other collectibles gets most of the public’s attention, they tend to overlook some of the more practical (and profitable) business uses. In reality, NFTs can have a variety of practical applications that help organizations achieve their existing business goals.
First things first: how do NFTs work?
NFTs are cryptographic assets based on blockchain technology. The non-fungible aspect is important, as it gives NFTs distinctive properties that make them impossible to replace or replicate. They are unique and cannot be manipulated or counterfeited. Usually we see NFTs associated with digital assets, such as art, sports cardsgames and other collectibles, where the blockchain provides a certificate of authenticity.
NFTs can be bought and sold in the market, with prices based on market demand, just like a physical product. However, the unique data that is part of the NFT makes it easy to validate ownership and verify the authenticity of the token.
NFTs are also used to display ownership details, memberships and more – and these varied use cases have proven essential for business applications.
Related: Here’s a beginner’s guide to crypto, NFTs, and the metaverse
Linking digital tokens to physical benefits
A key to generating business growth through NFTs is linking the tokens to a physical, real-world product or experience. As the report Brands in Web3 Q3 2022 by NFT Tech Highlights, Fashion Brand Tiffany & Co. was able to convert NFTs into a set of exclusive physical goods. The company teamed up with CryptoPunks to create an exclusive line of 250 “NFTiffs” pendants. Priced for 30 ETH (about $50,000 at the time), the one-of-a-kind pendants sold out in 22 minutes.
Another example comes from the Australian Open. In 2022, the Australian Open launched a very successful metavers initiative by minting AO Art Ball NFTs which is linked to data from live matches. This was coupled with hosting the Australian Open virtually in a 3D virtual reality platform to provide an unprecedented level of access to one of tennis’ biggest events.
While the initial launch was a success in its own right, the Australian Open’s commitment to this NFT initiative will be even greater in 2023, with the announcement that holders of each Art Ball NFT will receive two free seven-day Ground Passes for the finals week of AO23. Art Ball holders will also gain access to additional exclusive experiences such as streams and viewing suites through the ‘SuperSight’ fan experience and access to other United Cup matches.
At both Tiffany & Co. as the Australian Open, pairing NFTs with products or real-world experiences proved to be a highly successful method of deepening relationships with their target audience.
Furthermore, when NFTs are used in this way, they invite mass market participation, turning fans into financially incentivized brand ambassadors who enjoy a high level of usability – and of course, can seamlessly trade their digital assets for real money.
Related: Putting the Intangible Into Your NFT Project
Reach new demographics
NFTs don’t just help brands strengthen relationships with their existing customers – often they can prove to be key to reaching completely new audiences.
Case in point: For some time now, clothing brand Polo Ralph Lauren has seen its primary customer base largely concentrated among older adults, while younger demographics such as millennials and Gen Z are less interested in the clothing brand.
In 2021 and 2022, however, Ralph Lauren was fully committed to digital initiatives such as NFTs and the metaverse. These include launching a “phygital” fashion collection in Fortniteas well as an exclusive digital clothing connection through the game Roblox.
These digitally focused efforts have been a huge success for the brand. As reported by Vogue Business, Polo Ralph Lauren saw its third-quarter sales jump 27% following the launch of its Roblox collection – with that growth largely driven by a 58% increase in new digital customer acquisition.
In this case, the strategic implementation of digital assets enabled Ralph Lauren to reach a younger audience in metaverse-like spaces where they would have the greatest appeal and potential impact.
Done right, NFT initiatives can help revitalize sales and revitalize a brand’s image, making it more relevant and attractive in today’s competitive marketplace.
Use NFTs wisely for your business goals
As these examples illustrate, the potential use cases for NFTs extend far beyond selling digital art. With a strategic approach, companies can use NFTs to find new ways to connect with younger, more tech-focused demographics. NFT-based projects can help position your company as an innovator at the forefront of disrupting the market.
That said, any business investment in NFTs should be made strategically. Major NFT outages in 2022 received a lot of media attention and should serve as a powerful reminder for companies when they enter this space. All investments in NFT must take into account the interests of the end customer.
When you focus on how your audience could realistically benefit from your use of NFTs, you can identify strategies that are truly lasting and will build better rapport between your brand and the most tech-savvy customers.