Anyone who has spent time scrolling through a social media platform is familiar with the image below of “Side-Eyeing Chloe” Clem. Her “unimpressed” image went viral and was meme fodder for everything from celebrities to suspect political promises. Well Chloe and the Clem family will finally get the last laugh as they have sold the original image at auction to a Dubai-based 3F music production company for $75,000 thousand dollars! The image was offered as a NFT or “Non-Fungible Token”, which is a way of owning an original digital image.
What is a Non-Fungible Token?
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own. The digital tokens can be thought of as verified certificates of ownership for virtual or physical assets. Non-Fungible basically means “something unique, which can’t be replaced by something else that is the same” NFTs can really be anything digital (such as drawings, music, videos) but much of the excitement is surrounding the buying and selling of digital art.
What’s the point?
Why would someone want to buy or sell digital assets this way? Well, that depends on if you are, a buyer, a seller or a speculative investor. If a buyer, it’s a way you can support artists financially. It also brings you some usage rights, along with the bragging rights and a blockchain validation. Although, depending on the art and how its established, some NFTs will automatically pay out royalties to their creators when they’re sold. This is still a developing concept but it’s one of the most powerful. Original owners of EulerBeats Originals earn an 8% royalty every time the NFT is sold.
Why do NFTs matter?
Much like the speculative nature of fine art or even the value at any given time of cryptocurrency, it’s a way to invest or speculate what the value of a digital art piece or item is. Most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH coin.
The NFT tokens are used to represent ownership of unique items. They let us “tokenize” things like art, collectibles, even real estate. They can only have one official owner at a time, and they’re secured by the Ethereum blockchain
Once someone has purchased a NFT token, that token value can go up or down based upon the perceived value of that item or art. Unlike cryptocurrency, it cannot be split up or divided currently. Depending on the perceived value of the token, some platforms are splitting ownership into owners’ shares, to deal with higher values. This has not become commonplace yet but is on the rise.
This is where the Advertising value comes in. Businesses can buy and leverage these tokens as rewards for visiting sites or buying a company’s products. They can use them in contests as reinforcement of a brands name by providing the items within online or VR games.
Companies like State Farm want to ride the wave of incorporating buzzy NFT’s into their marketing strategies. Their virtual football treasure hunt allowed for virtual footballs to be redeemed for custom prizes like Autographed merchandise. Bacardi used NFT’s to hold an auction to raise money and grow awareness for aspiring musical artists with a custom NFT Mix tape. McDonald’s is giving away McRib NFTs to 10 lucky winners in a new Twitter sweepstakes that begins on Nov. 1.
NFTs have seen a lot of interest from game developers. NFTs can provide records of ownership for in-game items, fuel in-game economies, and bring a host of benefits to the players.
In each case the companies are trying to leverage this uniquely Millennial-centric platform to encourage, reward and strengthen their company’s ties with the community and demographics they each aspire to reach. This is done to engender loyalty and brand awareness for their products and services.
Creative agencies should be looking for new ways to leverage NFTs for their clients, especially ones with a younger more cutting-edge demographic consumer.
Will it work? That remains to be seen. It’s certainly grabbing attention and exciting people that are fans of bitcoin and speculative art investments. Companies are constantly seeking new ways to leverage the latest technology and remain on the cutting edge of what is new and exciting to its potential targeted consumer bases.