What is the industry impact of Instagram reducing NFTs?
Instagram’s parent company, Meta, cut NFTs from its offering on March 13, as part of the company’s broader cutbacks to focus on profitability. Whether it will have an impact on fashion depends on the company.
In a chirping On March 13, head of trading at Instagram’s parent company Meta Stephen Kasriel said the company will cut NFTs and instead focus on different ways to monetize Reels. He also mentioned that the company is exploring ways creators and brands can connect with fans through Instagram’s messaging.
Meta previously rolled out NFTs in a pilot program in May 2022. A select group of US creators and collectors were able to link their crypto wallets to their profile. They can also showcase NFTs on their profile grid by using a special tag that verifies that the image is an NFT. Access to these features was extended to global users in August.
In November — again, to a limited number of creators — Meta expanded the program to allow users to create NFTs on Instagram. Through an “end-to-end” toolset, users could create, display and sell NFTs. The November update was the last in the Instagram NFT program.
The focus was on creators, rather than brands, but any brand could upload created NFTs and display them on the platform, starting in August 2022.
While NFTs have been less popular recently, their crypto connection and fallout is partly dying FTX, the fashion industry has developed several PFP (picture of proof), POAP (proof of attendance protocol) and NFT art collections over the past 2 years. Many have developed new web3 communities as a result. Brands that have done it successfully, based on NFT sales, include Gucci, Nike x RTFKT and Adidas. Blockchain analytics company Dune said the fashion sector earned $245 million from NFT sales in 2022, with Nike generating $91.2 million in royalties and another $93.1 million in revenue.
Some brands have also been testing NFTs this year as a loyalty play. YSL Beauty recently launched its third NFT drop focused on loyalty. Diane Hecquet, Chief Digital and Marketing Officer at YSL Beauty International said: “Web3 is an opportunity to reinvent customer relationship management. And it’s not about duplicating our web2 CRM in web3. We want to reinvent the link between users and the brand; traditional CRM is more based on purchasing behavior, whereas with web3 it will be based on engagement. With web3, we can have this long-term loyalty program that’s always on, with our community.”
Instagram pulling back on its NFT tools means brands will no longer be able to offer NFTs on the platform and users won’t be able to add them to their profiles. The dates for when these will be cut from the platform will be decided in the coming weeks. It is unclear what will happen to existing NFTs that users have uploaded to their profile.
Instagram was one of the biggest social media platforms to experiment with NFTs, with a projected audience of 1.44 billion monthly active users by 2025, according to data analysis company Statista.
Cathy Hackl, chief metaverse officer at metaverse experience company Journey owns several fashion NFTs and has uploaded a few to her Instagram feed. From a practical point of view, she understands the company’s approach. “Seeing Meta shift its focus away from NFTs to other ventures isn’t a bad thing, it just means that other organizations will take the lead and continue to explore new ways to connect with customers in web3 – like Salesforce, for example,” she said.
CRM software company Salesforce launched an NFT loyalty tool called Salesforce Web3 on March 18. The goal is now to help brands develop their NFT loyalty programs. The tool allows brands to create and sell NFTs, view real-time customer data and monitor blockchain activity. The platform was launched with different subscription levels. Salesforce is used by over 150,000 companies. A company of this size jumping into the space shows that for brands there are still unexplored opportunities for customer experience with NFTs. Toy company Mattel and clothing brand Scotch and Soda have already launched several NFTs in Salesforce’s pilot program, and other fashion brands will join the loyalty program in the coming months.
“The Salesforce announcement is pretty interesting because it happened the same week that Instagram took the really dumb move to cut NFTs,” said Ian Rogers, chief experience officer at blockchain hardware company Ledger. Rogers is also on the advisory board for Salesforce’s new program, starting in December. Advisory board members include representatives from online gaming platform Sandbox, as well as Unilever, Ticketmaster and Adidas. “This is the same company that has devoted itself to digital worlds and somehow doesn’t believe in digital value.” Rogers believes that the prospect of customers wanting NFTs or digital collectibles will become more apparent as the digital presence increases over the next 25 years and as Salesforce taps into a growing market.
Meta’s decision also provides an opportunity for newer, younger NFT platforms. “It will open the way for more startups to create new things and fill a potential void,” Hackl said. “At the end of the day, many companies, both large and small, are exploring new ways to interact with their audiences and take loyalty programs to new heights, and are using web3 to do this.” Ultimately, she sees the decision as a great opportunity for others in the space to fill a growing consumer need to express their identity online and share their digital collections.
