NFTs: Do They Create Value For Your Business?
Since their introduction around 2010, NFTs have been steadily gaining credibility and popularity as valuable assets in the digital world. In March 2021, they grabbed the world's attention when the digital painting "Everydays: The First 5000 Days" was sold for $69 million at Christie’s — as an NFT.
Though NFTs are still relatively new, they offer exciting possibilities for individuals and business organizations. The following information will discuss what an NFT is, how they create value, and how businesses can leverage them for increased growth.
What Is an NFT?
The abbreviation NFT stands for "non-fungible token." An NFT is a unique digital asset that belongs exclusively to one owner and exists on a blockchain (or digital database).
NFTs are similar to cryptocurrencies like bitcoin and Ethereum in that they solely reside in the digital realm. However, unlike those other currencies, they are not fungible or exchangeable for an identical asset. Each NFT is one-of-a-kind and typically comes with a certificate of authenticity to prove its uniqueness. Thus, digital artwork is a prime example of an NFT.
How Do NFTs Create Value?
Companies are only beginning to scratch the surface of NFT value creation. Nevertheless, there are already several proven avenues through which NFTs can engage consumers, attract business, and grow brands. For instance:
1. NFTs offer unsurpassed transactional speed
NFTs can (and to some extent already have) revolutionize the transfer of wealth. With an NFT transaction, there is no wait time for a cryptocurrency to cross international borders or any need for a currency exchange. In essence, NFTs cut out the middleman and thus increase the speed of value transfer to unprecedented levels.
Regarding speed alone (along with the convenience associated with such speed), NFTs stand in a class of their own.
2. NFTs can play a crucial role in experience marketing
Research indicates that 86% of consumers are willing to pay more for a great customer experience. When given a positive customer experience, 72% of buyers will share their experience with six or more people. It's no wonder many marketing departments focus on improving their company's user experience.
Of course, adding uniqueness to the customer experience mix can drive even more business and revenue. This is where NFTs come into the picture. They offer a seemingly limitless number of possibilities in crafting unique experiences that keeps customers coming back for more. After all, they don't function like a standard cryptocurrency, just a medium for storing or exchanging value. Instead, NFTs allow marketers and sellers to create new experiences around high-value, one-of-a-kind assets and content marketing.
3. NFTs are exceptionally versatile
Non-fungible tokens aren't limited to just one type of digital asset. They can represent virtually anything, including access rights to a special event (virtually or in-person) or even a share in such an event's tickets. They can protect intellectual property (IP) rights when said IP is correctly documented on the blockchain. They can even be used as leverage to acquire another NFT or desired asset or content— not in the same way standard cryptocurrency can be leveraged, but rather as "trade chips" to make an offer more enticing to the seller.
The three areas mentioned above are just a few of the manifold ways NFTs can create value. For business executives, the more relevant question that needs to be answered is regarding adding value to your business.
How Can Creating an NFT Add Value to Your Business?
There are too many potential business use cases for NFTs to fit into a single list. However, let's talk about just a sampling of the many ways you can leverage NFTs to add value to your business and grow your brand.
Exclusive access to special events: As mentioned above, one of the more interesting applications for NFTs is granting customers exclusive access to special events. For example, if you own a consulting business, you can sell NFTs to prospects that allow them to attend a special seminar (or webinar) that you'll host. Alternately, if you operate an e-commerce store, you can use NFTs as perks for customers who purchase a specific dollar amount from your inventory.
Rewards for first-time subscribers: If you're focusing on lead generation, then consider using NFTs as the main attraction for your lead magnet(s). Of course, these would probably be (relatively) "low-end" NFTs — yet due to each one's unique nature, they would still serve as an enticing offer for new prospects.
Rewards for loyal subscribers: In addition to use case #2, you can also use NFTs to reward the loyalty of long-time customers/subscribers to your business. As just one example, imagine that you publish a weekly podcast that revolves around the latest news and trends in your industry. During each podcast, you can give your audience a "password" to type into the appropriate form on your website. Each time they do, they get a token. Finally, once they collect enough tokens, they can turn them in for a special NFT (which could include access to exclusive content, prizes, branded artwork, and so forth).
Promotions for charitable causes: Another fascinating use case for NFTs is contributing to philanthropic causes and community-based organizations your customers want to support. Each NFT has a "smart contract" embedded into it that can include an ongoing revenue split — most for your company, but a sizable portion for a charity of your choice. That means that a part of any sale (or resale) of the NFT will go to that charity indefinitely.
Proof of attendance: This application could be geared toward consumers and employees. If you want to encourage attendance at a special event, you could provide an NFT for each audience member. Suppose you have multiple events scheduled and want consumers to attend as many events as possible. In that case, you could structure your NFT distribution so that after five tokens are collected, the attendee can use them to access an even more valuable gift. Of course, you could also use this strategy to encourage employees to participate in company-sponsored events or take in extra voluntary training.
Direct sales: Finally, you can always explore the possibility of directly selling NFTs to your consumer base. True, this may be outside your core business operations. However, you may still be able to create branded NFTs that generate interest and excitement among your customers and leverage them as an extra revenue stream.
No matter how you decide to use NFTs, they have proven helpful in fostering a spirit of co-creation between businesses and their consumers. The fascinating world of non-fungible tokens is sure to expand rapidly in the next several years — and no doubt some of the use cases discussed above will become more and more common among both NFT-driven and traditional business organizations.
To learn more about NFTs, content creation, or adding value for your business, reach out to our team at the Think Global Forum today.