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While NFT trading volumes have declined, enterprises continue experimenting with the new technology. And rightfully so, as NFTs offer various benefits that have little to do with pfp collections with limited utility and are all about enhancing the relationship between businesses and consumers.
NFT is short for non-fungible tokens and describes a type of token where one token cannot be exchanged with another. Each token is unique. Consequently, NFTs are often referenced as the best way to monetize digital art and other unique digital assets.
Beyond that, NFTs can be leveraged for use cases such as identity and verified credentials. However, not all NFTs are created equally. It all comes down to the platform they run on and their token standard.
NFT standards
Ultimately, token standards define a token in any blockchain context. The standard defines features, format, and interactions one can have with the token. Standardization enabled ease of integration because as long as every project uses agreed-upon standards, it’s easy to build infrastructure to support transactions, withdrawals, and more.
ERC-721
The most well-known NFT standards have been established in the Ethereum ecosystem. ERC-721 is considered the original NFT standard and was first used prominently to mint crypto kitties. Each Crypto Kitty is unique because its token ID paired with its contract address exist only once.
ERC-1155
However, ERC-721 is still a limited standard as it doesn’t enable batch transfers or other more advanced activities. That’s why the gaming platform Enjin came up with ERC-1155, a token standard that enabled the transfer of multiple different token types within one single contract. Turned out this was a very useful standard to have for games since, with ERC-1155, gamers could transfer a variety of in-game NFTs all at once, lowering costs in the process.
NFTs 2.0
Even though Ethereum is the main go-to blockchain for launching NFTs, Polkadot has quietly been innovating what’s possible with NFT standards. The multichain layer-1 relies on a unified framework called Substrate, where code is created in the form of pallets that can be re-used and combined as needed. There are pallets for voting, consensus, and NFTs. The composable nature of Polkadot fosters collaboration and has attracted a steady stream of developers contributing to what’s also referred to as NFTs 2.0.
While Polkadot has NFT standards that mirror the above-mentioned ERC-721 and 1155, the ecosystem has also developed something more advanced where NFTs aren’t limited to being just one file.
The most prominent such standard are RMRK NFTs. This NFT standard allows NFTs to own other NFTs. RMRK opens the door to use cases such as having avatar NFTs equipped with NFT items in-game and DeFi portfolios, where positions could become NFTs.
With RMRK NFTs, NFTs can have multiple resources as well, creating different outputs depending on the context. For instance, NFTs could change depending on external factors such as the price of certain assets, the day of the week, and any other input developers specify and feed into it. This type of NFT is also referred to as dynamic NFT, which provides a more engaging experience than a simple JPEG.
Beyond that, advanced NFTs can be used to govern NFT IP through fractionalizing. There are unlimited ways to leverage advanced NFTs for fun use cases such as gaming and to enhance relationships between businesses and consumers.
Below we’ll explore how businesses can use NFTs to enhance their marketing.
Using NFTs for Marketing
It’s easy to dismiss NFTs as loud and overly financialized images. However, outside of speculation, NFTs offer a variety of ways enterprises can build relationships with their customers through them in coherence with their brand. In particular advanced NFT standards provide engaging ways to offer a digital experience.
The leading sports brand Nike, for example, bought the digital fashion studio RTFKT and started launching virtual sneakers (NFTs) that users could purchase and customize, to receive a physical version of them then.
Starbucks recently launched an enhanced version of its loyalty program called Starbucks Oddysy, which relies on digital collectibles that unlock benefits related to coffee ranging from cocktail classes to coffee farm trips.
Nike and Starbucks both realized the potential of NFTs to build closer ties with their customers.
Building community
Instead of just building a consumer base, NFTs provide enterprises with ways to build a community. Companies like Lacoste have leveraged NFTs and dedicated Discord servers to set up a community where their fans can connect and get in touch more directly with their favorite brands. NFTs can facilitate the creation of a social experience around a brand while providing fans with the ability to contribute to their favorite brand in the form of voting or co-creation.
To add more visibility to one’s community, brands can launch dedicated pfp (profile picture) collections for their members to use on social media. These foster a feeling of community while also serving as a potential way to attract interest from non-members.
Loyalty programs
In an economy where it’s easy to copy existing companies, it’s hard to maintain an edge. One of the most sustainable ways for businesses to continue on a profitable path isn’t to increase their advertising spend and attract more one-time buyers but to build out a fan base. Loyalty programs greatly contribute as they reward and acknowledge supporters of your brand.
The most successful loyalty programs are built on convenience, personalization, and exclusivity. NFTs are uniquely positioned to provide all three while giving businesses the tools to track engagement more accurately.
NFTs can replace existing points cards in loyalty programs and facilitate the creation of more customized loyalty journeys. With the advent of dynamic NFTs that change depending on external factors such as the locations consumers purchase items at or the frequency, brands tap into a way to showcase consumers ranking in a more engaging way.
Eventually, NFTs could become a primary touchpoint between brands and their consumers. What’s more, NFTs will offer consumers the privacy to still reap their rewards without having to reveal personal information.
Collectibles & POAPs
A very obvious way for brands to use their brand equity is by creating branded collectibles and POAPs. POAP stands for proof of attendance protocol and describes a protocol offering NFTs that verify attendance. However, the term is now also more broadly used to refer to any type of NFT people can collect when attending an event or after executing a specific task.
When a business issues POAPs to consumers, it doesn’t just increase loyalty with the consumer by providing them with a token of appreciation (no pun intended) but also allows businesses to better customize experiences to them. One could imagine that after attending a specific event and collecting the POAP, these users can later unlock exclusive content covering the event or discount codes for attending the next one.
Overall, the above are just three examples of how businesses can integrate NFTs into broader marketing efforts. NFTs allow them to tap into new audiences, customize experiences and create exclusivity around their brand. Whenever brands engage with NFTs it’s important for them to remain coherent and authentic to their original vision.
While the first iteration of NFTs allows for the basic distribution of single assets such as attendance tokens, tickets, or collectibles, more advanced NFT standards could evolve together with the consumers’ journey opening up exciting new relationships.
As the first public layer-1 chain from Japan, Astar Network is at the forefront of exploring enterprise use cases in the land of the rising sun. In collaboration with Sushi Top Marketing, thousands of Train NFTs on top of Astar have been distributed to train Otakus in March this year. Currently, the leading snack manufacturer Calbee is putting evolving NFTs into the hands of chip lovers for the first time in Japan.
And this is just the beginning. If you want to explore how your business can use NFTs for Marketing, reach out.