Disrupt and Innovate

Non-Fungible-Tokens or NFTs. You may have heard this new term bubbling up in cyberspace as of late and assumed it was more internet jargon, the likes of which you had no need to concern yourself with. However, NFTs are far more than just the internet’s newest transitory, niche hot word. Global brands have thrown their hats into the NFT game and with some of the world’s biggest collaborators paying close attention to them, it may be time to educate yourself on what this pseudo-complex buzzword actually means.

So, what is an NFT? Boiled down to its basics, an NFT is a digital asset best characterised by its unique properties and, by extension, non-interchangeability. They can be used for various decentralised transactions and even as a form of investment and curation for unique digital art pieces. Minted on the blockchain, NFTs are often seen as a natural extension of the innovation brought about by cryptocurrencies and the whole notion of keeping digital rather than physical catalogues.

The first wave of NFTs came mostly in the form of digital collectibles. A great example of this is the NBA Top Shot. It is a platform that allows fans to buy, sell and trade numbered versions of video highlights from NBA games – the digital equivalent of an already popular market: the physical basketball trading card system. A LeBron James highlight, for example, was sold for $200,000, and the platform has generated over $308 million in gross sales.

There was a resounding consensus opinion by experts that said consumers would not want to embrace digital collectibles and virtual ownership because of its stark diversion from traditional physical and tangible media, and yet, Millennials and Gen Z have proved them wrong. RTFKT, the first luxury brand operating in the NFT space, has been a runaway success, with its virtual sneakers selling for the same prices as haute couture. Kering’s powerhouse Gucci also released its own NFTs in 2021, showing a clear market for NFTs, especially among younger generations more open-minded in their approach to ownership and collectibles.

So how is this relevant in the realm of marketing? NFTs have created a tectonic shift in the way people perceive and trade digital content. From art to music, digital collectibles to virtual real estate, NFTs offer a new frontier for those interested in marketing.

NFTs present many challenges and opportunities in the digital marketing landscape and it is crucial to stay up-to-date and familiarise ourselves with them.NFTs are often seen as a more personal way for brands to connect with their consumers. Ownership is a powerful concept and can establish a closer relationship between a brand and its customers. For example, NFTs allow musicians to sell their music directly to their fans instead of going through streaming platforms. It essentially allows creatives and businesses to skip many conventional avenues thought necessary to streamline and commercialise products.

Brands can leverage NFTs to create unique and exclusive digital assets, such as limited-edition collectibles or virtual experiences and foster deeper engagement with their audience. They are also vital in eliminating business friction like shipping costs, product defect rates and storage costs. Ultimately, luxury brands are not driven by selling physical products as much as they are selling the brand itself, so the question arises: why not sell virtually?

However, it must be kept in mind that, as a fairly new concept, NFTs are also rife with controversy and many issues. The NFT market is characterised by extreme speculation. Prices for some digital assets often skyrocket without a clear rationale, driven by hype and speculative trading. This leads to issues concerning market bubbles and volatility. Investors and brands may find themselves susceptible to sudden price crashes, similar to other blockchain technologies like cryptocurrency markets, highlighting their speculative nature.

These issues can mostly be directed towards one main defect with NFTs in their current form: a lack of market regulation. The NFT market operates with minimal regulatory oversight, leading to larger concerns about money laundering, tax evasion and consumer protection. Blockchain technology is decentralised, therefore presents hurdles in incorporating it into existing systems. As such, it is necessary to come up with fresh strategies that safeguard the openness and responsibility surrounding NFT transactions.

Many experts also see NFTs as lacking long-term viability, with digital art generally seen as not having the same intrinsic value as tangible properties. Among others, a major threat is considered to be the rise of more efficient technologies over time that render existing blockchains obsolete, thereby leading to complicated asset migrations. Market saturation and devaluation remain a possibility because of the high demand for such products, as well as speculative trading leading to a loss of faith in NFTs for many.

Functionality is also crucial to the question of NFT’s survival in the fast-moving corporate market. NFTs that provide interactive experiences and/or are integrated within the metaverse will more than likely hold on to their own worth as opposed to being esteemed simply due to their scarcity. Also, economic considerations contribute additional confusion; simply put, the speculative nature of the NFT industry poses a huge risk of dropping their prices greatly when there is an economic recession or a change in investment mood.

The market will be influenced by cultural trends and generational preferences requiring NFTs to remain relevant culturally if they are to avoid appearing like just another temporary craze. Preservation and provenance help assure that things are authentic and long-lasting, especially when they pertain to digital property since it can easily be lost in cyberspace as a result of corruption.

NFTs have also shown particular prevalence in the Pakistani market, with many attempts (successful or not) having been made to integrate them further into the business climate. The Pakistan Cricket Board (PCB) explored the idea of digital collectibles to rouse fans and earn a profit, and although the idea was eventually abandoned, it shows that efforts have been made to promote NFTs on a national level. A more successful example of NFTs being implemented in Pakistan would have to be Granaa.com, a website that in early 2023 began to use NFTs to tokenise property ownership for customers. Virtual grants, like the ones Granaa offers, give users more control over properties they have purchased and can be extremely helpful in many ways, further solidifying the convenience NFTs can offer in today’s digital world as well as their place in Pakistani markets.

There are over 36 companies in Pakistan that provide NFT services and with Statista projecting that the NFT market in Pakistan is set to reach almost one million dollars it should be clear that Pakistan is in the midst of a digital NFT revolution. Recently, a popular Pakistani meme ‘Friendship ended with Muddasir’ sold for close to 50 million dollars online, showing how deeply entrenched the NFT market is in Pakistani culture, especially among the younger generation.

So how exactly can NFTs be utilised by those involved in the world of marketing? NFTs provide marketing specialists with groundbreaking functionalities that enable rare brand differentiations and unique engagement plans. In other words, firms may create exclusivity for customers by using NFTs to generate privacy articles like limited edition digital arts, music, or making themselves ready for a stage performance. This gives consumers a sense of something reserved for only exclusive people, making them feel distinguished.

 If NFTs are incorporated into loyalty programmes, people can receive one-of-a-kind digital collectibles based on what they have bought or done to take part in them, thus entitling them to unique privileges like discounts or admission into special occasions as rewards. Working together with artists and influencers to generate proprietary NFTs may be vital in reaching out to different markets and expanding reach for many brands. By having customers earn, trade or collect NFTs, marketing campaigns have been gamified, enhancing engagement and promoting further interactions. In addition, NFTs may also be combined with AR and VR scenarios, leading to even more engaging experiences with the brand.

In conclusion, NFTs are a fledgling concept that needs nurturing, regulation and streamlining. However, they also present a mountain of untapped potential that could be crucial for those seeking to innovate and disrupt. It would be hasty to consider NFTs as just another fad that is past its prime because it is clear that they can be so much more.

Fauzia Kerai Khan is CEO, I&B Consulting, Assessing, Learning, Consulting.fauzia@iandbconsulting.com