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While NFTs took a hit in 2022, Kent Lewis looks at how forward-thinking brands can still find value in them while also taking advantage of Web3 capabilities.
By Kent Lewis
Published: January 9, 2023
As an evangelist of NFTs and a crypto investor, 2022 has been a rough year.
In less than nine months, the nonfungible token (NFTs) market declined 97%, according to Dune Analytics. Crypto didn’t fare much better. In early January 2022, Bitcoin was valued at more than $46,000. That same coin is worth only around $16,800 as of this writing, which is a 63% decline.
But these numbers don’t tell the whole story, or hint at a much brighter future ahead. Marketers and consumers alike are educating themselves on the potential of NFTs and Web3, which I predict will lead to a second wave renaissance for brands later in 2023.
Let’s get some rough numbers out of the way before I start spreading hopeium. NFT collectible creator RTFKT was generating $3 million in NFT sales in a mere 6 minutes at its peak, leading Nike to acquire it in 2021. The big slide started in May of 2022. For example, The Nike x RTFKT Monolith collection was worth $500 million in April (based on purchase activity) but was valued at only $10,500 as of November. Even celebrities were caught up in the buzz. Justin Bieber spent $1.3 million for the Bored Ape #3001 collection in January, which is currently valued at $95,000, a 93% decrease in value.
The reason for this massive drop, other than the realization that the market was way over-hyped, was that a majority of NFTs on the market had virtually no utility value. Once the early adopters pulled their investments out of the market, leaving the rest of us holding the virtual bag, it forced consumers and brands alike to reassess the market opportunity.
While everyone is equally jaded moving forward, I believe that mindset will lead to smarter investments that reignite consumers’ imaginations and create new value for everyone involved.
There is hope, however, based on new releases of NFTs by forward-looking brands. AMC and The History Channel have developed new NFT products that go beyond mere content assets into influence and inspiration. Purchasing NFTs from these brands allows owners to have increased status and brand influence.
They also are invited to provide input on future show storylines and gain additional benefits like access to actors and directors through ownership.
Lastly, the NFT owners are able to collaborate with the brands to create their own assets that also provide value to the brands.
An even greater value to NFTs and their associated marketplaces, are the communities being built and curated by owners and brands. Purchasing an NFT often includes VIP access to online communities (think Discord or Telegram) and events where owners can communicate with each other and collaborate with other creators, artists and notables. This bi-directional communication allows brands to learn from their biggest fans and help inform future content. Of course, access can include physical and virtual events in the metaverse. Based on engagement, brands can identify and reward influencers with product, access and exposure that further fuel marketing flames.
Perhaps one of the most exciting opportunities for NFTs in 2023 and beyond is the potential for real revenue. Brands can create (if not co-create) merchandise, limited edition collectibles, funding for new projects and even charitable giving that sustains over time, as charitable contributions can be built into NFT sales.
The concept of “twinning” also is gaining momentum and should become native vocabulary by the end of 2023, with brands organically creating virtual twins of offline products (like Puma Fashion Week) or vice versa with the McLaren Solus GT (who developed a real hyper car based on a video game version).
Last but not least, NFTs provide a unique opportunity to build momentum for customer participation and engagement in the metaverse. NFTs can act as VIP tickets, providing utility within virtual worlds in the form of skins, weapons, clothing or accessories.
With crypto and the metaverse stealing headlines, it’s easy to forget the underlying infrastructure plays a critical role in the evolution of NFTs and other Web3 technologies. There are three primary areas of opportunity within the Web3 universe: extended reality, investing and omnichannel extension.
The first and most intriguing Web3 trend for 2023 and beyond is the concept of brands engaging consumers in the phygital (intersection of physical and digital) world. There are a host of other terms that describe the opportunity of blended real and virtual world experiences, including extended reality and the simulverse. What matters most is understanding the possibilities of hybrid events, as the Solana Spaces Gallery demonstrated earlier this year.
The second opportunity is the tokenization of hybrid collectibles. Luxury fashion brand Gucci launched SuperGucci early in 2022, providing opportunities for fans to purchase hybrid collectibles that live in both the physical and virtual worlds. The virtual version of the products naturally tracks the provenance and allows for monetization as NFTs.
The third opportunity is in the extension of omnichannel marketing. Web3 provides a host of channels, assets and communities to marketers, ranging from NFTs and the metaverse to augmented reality and gaming. Each of these channels includes multiple platforms, many of which are tied to other channels like chat rooms and physical events. The primary hurdle facing marketers is cross-platform and channel targeting and tracking, which will be a focus for many brands and adtech players in 2023.
Even if you invested in crypto and NFTs at their peak pricing over the last 9 to 12 months, there are still a myriad of opportunities to recoup your funds by building compelling experiences for customers and influencers in 2023 via NFTs and Web3 enabling technologies. The only limitations are your imagination, and of course, cash on hand.
Hopefully, you still have the budget to explore your own Web3 marketing strategies in 2023.
Kent Lewis is chief marketing officer for Deksia, a strategy-driven creative marketing agency. He also is founder of pdxMindShare and co-founder of SEMpdx, both based in Portland, Oregon. Kent’s industry recognition includes Marketer of the Year by the American Marketing Association and Top 100 Digital Marketing Influencers by BuzzSumo.
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NFTs ⋅ Kent Lewis ⋅ Web3
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