The Rise Of Digital Collectibles: What Does This Mean For Brands?

By Aqilliz  

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Nft

From Charmin to Taco Bell, no brand has been spared from the continuing allure of the latest acronym to make the rounds on news headlines and social chatter — that’s right, we’re talking about NFTs. Having made waves across the worlds of art, sports, and of course, marketing, non-fungible tokens effectively embody the next innovation that has the potential to disrupt the US$370 billion global collectibles market. In fact, in Q1 2021 alone over US$2 billion was spent on NFTs, representing an over 2,000 percent increase from Q4 2020, pointing to a promising growth trajectory that hardly seems to be slowing.

So what are NFTs and why are they so appealing?

To be fungible or non-fungible — that is the question

Before we unpack NFTs, let’s understand what a fungible asset is. If I withdrew a $10 note from a specific ATM then lent it to a friend who then paid me back with a different $10 note, it would still be just as valuable. Fungibility is a quality that allows an asset to be interchanged with other assets of the same type.

On the other hand, a non-fungible asset is different. Think of a prized-collectible that you own — maybe it’s a rare baseball card or a vintage luxury handbag. If you lent this baseball card to a friend and they returned a different one to you, even if it’s of the same player, you might not accept it. The colour, texture, condition, and even age of the card would be different and it would not be an equal replacement. Now let’s digitise that: welcome to the world of NFTs.

NFTs are unique digital assets that represent a wide range of tangible and intangible items and are distinguished for being unique, rare, and indivisible. These assets are stored on the blockchain, a digital, transparent, and immutable ledger of transactions. This helps to ensure that the asset is unique and not interchangeable. It’s important to remember that NFTs are a representation of something — that can be a photo, video, audio, or another digital file. While anyone can access an NFT, these assets are tracked on the blockchain to provide a digital signature that represents proof of ownership of an asset and its authenticity.

The value of virtual

The attention around NFTs for the past few months exemplifies the contagious nature of hype across today’s digital-centric approach to engagement. Whether it’s virality for virality’s sake, some brands have jumped on the NFT train with some success as a means of boosting brand awareness or highlighting a specific cause as part of their CSR efforts.

As brands continue to explore avenues to generate as much value as possible for their customers, maintaining relevance is key. Enabled by CRM data built upon valuable data points gathered throughout the customer journey across multiple platforms and channels, NFTs can be encoded with discounts and vouchers, special loyalty programmes, freebies, and offers that are specifically personalised to a consumer’s habits and preferences. This can be anything from age, demographics, spending habits, and other traits that share insights into a consumer’s preferences. These insights could first be aggregated based on audience profiles that are masked with privacy-preserving enhancements such as differential privacy to ensure that insights are appropriately masked and encrypted to ensure user privacy.

With that in mind, NFTs can be personalised in a compliant way while enabling real-world value. One such case of an NFT being paired with real-world rewards was a recent album release by American rock band Kings of Leon which saw NFTs being tied to a special album package, front show tickets at the band’s concerts for life, as well as exclusive audiovisual art. Now, consider that consumers can also go on to sell these NFTs on secondary marketplaces. This effectively enables them to maximise the value of their brand relationships, even using these opportunities as a form of word-of-mouth amplification of a brand’s initiatives.

As brands continue to explore innovative new technologies, NFTs represent a natural progression in how they must evolve in engaging with their customers, both old and new. Within a crowded commercial landscape, brands must ensure that they’re always capitalising on greater opportunities to generate value in each and every engagement.

With their emphasis on shareability, rarity, and monetisation, NFTs offer a valuable gateway for brands and content creators to boost visibility in a radically meaningful way. Whether that means owning a rare piece of toilet paper-themed crypto art, a universal 3D collectible wardrobe cascaded across in-game avatars or Instagram filters, or even lifetime access to a travelling Star Wars exhibition, there’s clearly something for everyone and there’s clearly only more to come.

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