NFTs to connect with consumers: Lessons from big brands
Physically supported NFTs have the widespread relevance brands need to make the most of their web3 initiatives. Ben Plomion, Chief marketing officer at Dibbs, discusses how physically supported NFTs can help connect with consumers and shares three key lessons learned from major brands in the space.
Brands’ interaction with consumers has developed rapidly in recent decades. The internet, mobile and artificial intelligence have all had a huge impact on the nature of this relationship – and there’s a good chance that web3 will usher in another paradigm shift. This wholesale update of online technology can affect every aspect of the consumer-brand relationship, from payment processing to the products themselves.
Although it is still unknown what web3 will become, it would be wrong to think that the technology is only potential. Many premium brands are already using web3 technology, such as physically supported NFTs, to create unique connections with consumers.
The power of physically supported NFTs
Before we dive into specific campaigns, let’s define what physically supported NFTs are – and explore why brands find them powerful engagement tools.
ONE physically supported NFT is a type of blockchain-based token linked to a real-world object. These items can be practically anything: trading cards, high-end clothing, or even multi-million dollar estates. Possession of the token establishes the holder’s ownership of the physical object, and the history of this ownership is secured via the blockchain.
While NFTs are relatively new, they have gone from the edge to the front page at record speed. In eight years, NFTs have climbed to one global market value of 3 billion dollars and is predicted to reach $13.6 billion within another five years. This rapid growth has caught the attention of a number of major brands, including Adidas, Toys “R” Us, Starbucks and Paramount. However, as this trend has developed, physically backed NFTs have become an increasingly popular approach.
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The reason is simple – they are just more relevant to the average consumer.
While the most tech-forward of a brand’s audience may find any NFT campaign compelling, physically supported NFT campaigns have a much broader appeal. For consumers new to the technology, connecting a digital token to a real-world thing can serve as a convenient—and exciting—introduction to the web3 world. For the already initiated, adding a physical item will sweeten an already good deal. In both cases, physically supported NFTs prove more engaging than digital alternatives.
This advantage, combined with other NFT features such as guaranteed authenticity, perfect ownership history and additional revenue potential, has led brands such as Nike, Tiffany & Co and Patrón to use physically backed NFTs in high-profile initiatives.
How Nike forged connections
Nike has been one of the most enthusiastic (and successful) brands to implement an NFT strategy, even choosing to buy the creative NFT outfit RTFKT Studios to strengthen their internal web3 expertise.
While the brand has used crypto-tokens in its campaigns before, Nike has recently moved towards physically backed NFT initiatives. Under the banner of RTFKT Studios’ CloneX project, Nike enabled holders of Clone X NFTs to purchase exclusive shoes and apparel associated with their token for a limited time through a process known as “forging.” The authenticity and ownership of each item is supported by the associated NFT, where the brand takes a small cut of each future used sale via NFT’s smart contract functionality.
this “phygital number” approach improves the brand’s consumer appeal across the spectrum. Those primarily interested in real-world Nike collectibles now have a digital bonus value to explore that also doubles as a fraud protection layer. Web3 enthusiasts, on the other hand, can bring their digital assets to life in a new way, allowing them to more easily share their interests with those outside the room.
How Tiffany & Co shaped engagement
When it comes to web3 adoption, luxury brands such as Balmain, Burberry, Givenchy, Gucci, Louis Vuitton and Dolce and Gabbana have been at the forefront. In the second half of 2022, Tiffany & Co joined this group with its own physically supported NFT campaign: NFTiff.
The NFTiff project allows holders of Cryptopunk’s NFTs to transform their digital art into matching gold-plated pendants. The piece of jewelery comes with an additional NFT – called an “NFTiff” – which links the item’s ownership record to the blockchain. While it is 10,000 Cryptopunk NFTs exist, Tiffany & Co offered only 250 phygital packs for 30 ETH each. The campaign sold out in less than half an hour and the luxury jewelry generated a staggering $12.5 million.
Like Nike, Tiffany & Co’s decision to use physically supported NFTs rather than purely digital NFTs helped bridge the gap between the products and the web3 world, furthering the campaign’s success. The pendants celebrated a well-established web3 project, adding traditional cultural cachet to the best of the NFT space.
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How Patrón won over spirits enthusiasts
Many top-shelf spirits brands use a sense of exclusivity to create demand. While partnership with premium events and celebrities will always be part of that playbook, physically backed NFTs give these companies another way to develop that mystique.
The Bacardi-owned brand Patrón is among the first in this area to explore this potential. In early 2022, Patrón ran an NFT drop offering 150 digital tokens at 1.5 ETH a piece (nearly $4,000 at the time). The purchase of one of these tokens entitled the holder to redeem a matching limited edition bottle of Chairman’s Reserve. The tokens also served as tradable assets on the BlockBar marketplace. As of this writing, the premium tequila brand has sold just under 90% of these NFTs and followed this campaign up with more success.
This approach allowed Patrón to elevate the experience of buying spirits. The use of physically supported NFTs reinforced the feeling that buying this bottle was an investment. It also reinforced that doing so put you in weird air: a powerful hook for the luxury spirits crowd.
How to use innovation to inspire your entire audience
Ultimately, the brands that chose to go the physically supported NFT route are banking on the power of mass appeal. As compelling as web3 is to many, most consumers are as unfamiliar with this technology now as most consumers were with the internet in the 90s. If brands want to fully benefit from incorporating NFTs and other web3 components into their strategy, they need to start with the elements most people can easily understand and care about.
Buying digital sneakers makes sense for someone who has already sold on the metaverse. Buy a pair of real sneakers with one digital counterparty that adds value makes sense to just about everyone.
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