Like people, the internet can be classified into generations. To understand web3 and NFTs, let us start from the beginning.
Web Evolution From 1.0 t0 3.0
Web1(or Web 1.0) is the first generation of the web, the earliest form of the internet. It is accurately referred to as a read-only web. It allowed users to search for information and read it. There were no comment sections or platforms to air views or share opinions.
The same way Web3(or Web 3.0) is causing a stir in the internet today, Web2(or Web 2.0) broke the internet when it emerged in 2004. Web2(or Web 2.0), emphasizes User Generated Content and participatory culture on the web and it is currently the internet we are using. Also referred to as the ‘social web’, Web2 involves a number of tools and platforms where people can share their opinions, day-to-day, and perspectives, in a hyper-interactive way.
Web3 is described as “read-write-execute”. Like Web2, Web 3 wants to make the internet more inclusive but take control away from big corporations like Meta, Google, and Amazon. It will operate through the founding blocks of blockchain and cryptocurrency technology.
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Why Are NFTs So Hot Right Now?
That said, we now know that Web3 is all about the decentralization of ownership and control. Users, developers, and builders alike can now own pieces of the internet via tokens, both non-fungible (NFTs) and fungible. This gives users property rights: owning a piece of the internet in essence.
Non-fungible tokens are not interchangeable with other items because they have unique properties. Fungible items, on the other hand, can be exchanged because their value defines them rather than their unique properties.
NFTs give the end-user the ability to own digital objects that can be an array of things. Owning these digital assets (art, photos, code, music, game objects, 3D models, credentials, access passes, memes, videos, collectibles, etc.) that exist on top of blockchains gives the users a layer of control of their assets. One example of NFT is the video by Beeple that was recently auctioned for $6.6 million.
NFTs have other practical uses for brands, their customers, and partners. But first, why are NFTs so hot right now?
- The blockchain technology that backs NFTs is taking over the world from traditional internet 3.0 to metaverse and virtual reality.
- NFT projects are being launched and supported by some of the world’s largest, most innovative brands and artists including Meta, McDonald’s, Spotify, Stephen Curry the basketballer among others.
Why NFTs Are Relevant To Marketing
Not surprisingly, for the year 2022, there has been a lot of talk about how NFTs can assist. Brands like Coca-Cola have already launched successful projects using NFTs.
To marketers, NFTs will be vital in providing the following:
Creating your own NFT and making it available for the world to see and purchase. Brands like Adidas, Budweiser, Twitter, and hundreds more have been jumping on the bandwagon to create their own NFTproducts. For Adidas, that meant you get exclusive clothing and first-in-line access to future products. Adidas made over $22M from their first NFT mint.
The more people want a product, the higher the price can go for resale. So if you have a big following, minting is a great opportunity to make money or provide other value (tax offsets, charitable donations, DAOs, funding).
2. NFTs and Community Building
If you are going to mint an NFT, you need a strong community around it to drive up the value. It’s the foundation to drive up the demand for your product. However, the community itself is also a massively important tool for marketers.
Discord and Twitter are the most popular platforms for NFT communities. We’re moving to a cookie-less internet, which is going to make it impossible to track and advertise the way we have over the last 5 years. As we move off of cookies, zero-party and first party data become king. NFTs give brands the opportunity to start building the new email list for a decentralized, private web3.
NFTs can express the identity, uniqueness, and scarcity of physical and digital objects throughout the digital and the physical world. Whether an NFT represents a copyrighted image, financial instrument, or digital asset, an NFT can be secured, and its custody chronicled within a blockchain.
For example, LoanSnap is opening mortgage underwriting to the masses by assigning NFTs to property loans. They are using a new protocol (BACON) and NFTs to encapsulate the data about a loan, its underlying asset, and its mortgagee, all to facilitate an individual’s ability to invest in loans
4. Identity, Transparency, and Data Privacy
Blockchains’ transparent, decentralized nature, and immutability have valuable applications in preventing ad fraud and securing the ad supply chain. Those same benefits also deliver great value for brands that are dedicated to building strong first-party data strategies since consumers want to be able to opt out of data sharing, and they want transparency into what data is being collected.
With blockchain, brands can offer transparency, win consumers’ trust so they share their data, and incentivize them to stay loyal by continuing to engage.
5. NFTs in the Metaverse
For brands, NFTs can generate brand value and brand love in a number of ways, but as a virtual souvenir, it makes the digital object more personally significant to the customer. When operating in a virtual environment, those NFTs can follow a user wherever they go. This makes NFTs essential to the VR experience, and a reason why they would grow in importance as a VR metaverse takes shape.
This is a chance to reimagine virtual experiences and find better ways to do all the things we’ve been trying to do in the real world, including building community among customers, experiencing physical goods virtually, understanding shopper behavior, and creating more personal (AI-powered) concierge-style services. There are a million directions retailers could go, but those with clear intentions and a desire to enhance the total experience with the metaverse will be able to pull ahead.
6. Environmental Responsibility
One thing marketers should pay attention to is the bad reputation certain blockchain technologies get for using up lots of energy. To update the ledger for each unique token or coin, computers in a decentralized network are put to work generating a new chain. Many blockchain vendors have gotten out ahead of this concern by pledging their sustainability practices.
When marketers introduce an NFT promotion or other blockchain strategies, they will want to let consumers know that the technology they are using is environmentally responsible. Consumers will be thinking through the impact of carbon emissions released by the creation of NFTs and other digital tokens
More and more NFTs are being created with utilities or added benefits to owning that given NFT. In other words, NFTs are evolving away from being solely valued on hype and intrinsic value, but also the real-world utility they can provide. For instance, if you own a Bored Ape Yacht Club NFT, you get access to meetups and party access that only token holders can access. When celebrities like Steph Curry own one, this becomes an enticing perk. The easiest thing to think about utility when it comes to your business is customer loyalty. Providing tokens with additional value to your top customers.
8. The Smart Contract
Right now, NFTs are mainly contextualized as digital art, but the true long-term value comes in the technology, the blockchain, and smart contracts. A smart contract is some code that runs on blockchain and enables a secure value exchange. Smart contracts can remove the need for a mediator when two parties want to exchange valuable digital or physical assets such as access to events and other premium content.
9. The Paid Creator Economy
Blockchain technology will give the power back to creators, no more stealing content. This can be contextualized in something as simple as a meme. Memes are some of the most-viewed pieces of content on the web, yet we usually never credit the creator. They simply get screen-shotted and re-shared with no gain for the creator. The blockchain will be able to credit all re-shares back to the creator, potentially compensating them for the value they’ve created.
10. NFTs and The Future of Advertising
The move to web3 means more privacy and less ability to reach customers the way we do now. Platforms like Google, Facebook, Instagram, and TikTok will likely cease to exist as we see them now. This cuts back on the massive marketing channels that we’ve relied on for years to acquire customers. Instead, we’ll need to look for new opportunities in blockchain and NFTs.
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