The rise of brands entering NFTs
⭐ More and more brands and corporates are entering the NFT space - a recap on where we are and how we got here.
📈 Last year, 2021, NFT summer has taken the world by storm. Big publicity events like Beeple’s NFT auction or Visa buying a Cryptopunk likely raised institutional interest in that topic.
👶 First isolated experiments by brands were started mid 2021 by companies like Dolce & Gabbana, Coca-Cola, or TIME. Some started as siloed charity initiatives and some as first dedicated collections.
📅 A year later more and more companies jumped on the train. We saw multiple launches per month with more creative utilities across fashion (Lacoste, PUMA Group), automotive (Hyundai, Aston Martin), Luxury (Gucci, Prada), consumer (e.g. Katjes) and many more.
❓Motivations for NFT launches in the brand sector might not be the same for every company. To summarize, patterns we can identify are
👉🏻 Innovation: Experiment with new technology and exploring new use cases of them, potentially as part of a larger metaverse/web3 strategy
👉🏻 Marketing and PR: NFTs as a tool to generate publicity, reach new customers or reward existing customer base
👉🏻 Product: Using NFTs to extend the (core) product offerings (e.g. IP, digital twins) and potentially add additional revenue streams
🏞️ The spectrum of projects launched is therefore also broad. 2 common dimensions that play a role are art and utility. Simplified, we see 3 archetypes of NFT projects
👉🏻 1-of-1s NFT auctions: Low volume digital artwork (often unicates/1-of-1s) auctioned often as charity initiative in collaboration with established artists. (e.g. Coca Colas Lootbox Auction)
👉🏻 Generative Art Collection Drops: Larger collection size (often +1k in supply) NFT drop of trait-based generative art (e.g. PFP) often as collectible. (e.g. Pepsi ~2k Mic Drop Collection)
👉🏻 Utility-based NFT Drops: Strong focus of NFTs on the utility e.g. exclusive club memberships, physical good redeems or event access. (e.g.: Adidas into the metaverse)
⚠️ However, there are also risks associated that brands and corporates should consider.
👉🏻 Access and adoption: Crypto and wallet adoption is still scarce with limited user experience. Barriers to enter for existing customer base, especially non technical savvy ones and non-crypto natives, might be fairly high.
👉🏻 Reputation: The potential for a reputational damage due to missing fit with brand values or scams/fake collections/hacks is substantial if not fully thought through. Especially the existing customers that are sceptical of blockchain etc can be frowned upon.
👉🏻Execution: With every new topic, in-house talent adoption is limited for these new technologies. Not sourcing the right talent for e.g. technical delivery or community management might set the project success at risk (e.g. smart contract exploits).