NFTs, or non-fungible tokens, usually surface two other words in a person’s brain—artwork and collectible. And that’s for a good reason. Victoria Dickson, product manager, Web3, Veritone, looks at the NFT movement in art and how this is a trend that will shape future digital communities.
Headlines of NFT art purchases have drawn massive attention to the technology, with some breaking records like Pak’s The Merge, which went for just a little more than $91 millionOpens a new window . When you look at the top categories for NFTsOpens a new window based on total sales in 2021, the top spot goes to collectibles, with art getting edged out by gaming for the number three spot.
With this in mind, companies should be thinking beyond NFTs being merely a way to sell branded art or gamify web applications. Collectible and gamified NFT projects are important to understand for the value they bring to fans and the communities, but with more industries applying NFT projects to their business plan, brands are looking to the utility when aiming for a successful web3 strategy. To achieve success in the future, rights holders need to build engaging communities with tactics that are not siloed in one aspect of value but incorporate both physical and digital approaches.Â
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Creating Demand
One allure of collectibles is that there’s a finite number of NFTs being offered for each project, often with tiers of value and exclusivity. For example, getting the platinum tier instead of the gold tier in a collection could give you VIP access and the ability to win exclusive giveaways on top of the gold utility of Discord chat room access and quarterly discount codes.Â
On top of exclusivity, there is rarity tiering within the collection that makes certain attributes more or less desirable. For example, Bored Ape #7495Opens a new window  in the Board Ape Yacht club has the highest rarity score in the collection since it has six attributes that all have less than a 2% appearance ratio in the collection. Within the Lazy Lions collection, the ‘Lazy Hat’ attributeOpens a new window has a 3% occurrence and speaks to the ‘branding’ of the collection. Within collections of all sizes, from Goblin Town to Dragon Fam, it is common to have some ‘legendary’ NFTs that are unique (aka 1/1) from all the other NFTs in the collection.
In addition to the exclusivity and rarity components, there can also be a passion or interest in the topic represented by the collectible and the associated community. For instance, there are a handful of women empowerment collections like World of Women and Crypto Chicks, as well as collections that strive to raise awareness for the conservation of endangered species like Non-Fungible AnimalsOpens a new window put together by the World Wide Fund for Nature. Human emotion is powerful and can bring together like-minded people with similar interests and various causes.
Businesses are tapping into that spirit of limited supply and passion for a topic by harnessing this enthusiasm and combining it with NFTs as utility keys for access to exclusive spaces and offerings. NFTs as digital keys are being used by businesses, brands, and celebrities as an entryway to communities, physical goods, experiences and much more for rights holders. Developers and companies are already using NFTs to confirm a consumer’s ownership before providing the offered value, such as access to events, discounts, or access to the private Discord uses to share exclusive information.
Blending In-person and Virtual Events
One-time events coupled with an NFT that controls access create the demand that can help feed your digital community and move people along the fandom spectrum. To effectively do this, rights holders shouldn’t treat the physical and digital as entirely distinct. Blending traditional tactics, such as in-person events, conferences, and digital experiences, and combining them with new access technology like NFTs will maximize the effect. You do not want to think in silos with your strategy, focusing on one thing in traditional channels and another in the digital world. Instead, your strategy should synergize the physical and the digital so that no matter where your fans are, the experience is seamless.
For instance, Heineken launched a virtual brewery in the metaverse with the first “metaverse beer†called Heineken Silver. It was meant as a self-deprecating joke highlighting how Heineken and many others are diving into the metaverse with products that are best enjoyed in the physical world.
However, they followed up this stunt with physical events across Europe that blended the metaverse experience, NFT art, and an actual beer called Heineken Silver that you can drink. This is just one example of new “phygital “strategies. The omnichannel blending of digital and physical realities can create constant touchpoints to continuously engage and grow a content IP owner, such as a brand’s community.
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NFTs as the Lynchpin for Phygital Strategies
While in the example above, NFTs were used in their more widespread adoption as art collectibles, which is a viable option if it’s not a standalone tactic, rights holders, including individuals rights holders and enterprise content IP owners, should be thinking about how NFTs can bridge physical and digital spaces. And this starts by looking at their IP in the light of not separate entities but a continuum of products.
In doing so, rights holders can leverage their IP to gather communities in physical and digital spaces without completely departing from their “bread and butter.†The mistake many make is thinking because the metaverse and NFTs are such new technology that they must reinvent the wheel—but that’s not the case.
Rights holders and brands alike should focus on what they do best. For Heineken, it’s making beer; they have not deviated from that. It might take some trial and error and maybe a few swings and misses, but if brands hold true to their core IP and audiences, they can avoid making one-off NFTs try and “fit in†and instead treat them as a tool to engage, build, and drive the brand into the future.
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