What are NFTs and how to use them in an online marketing strategy
NFTs, cryptocurrencies and the relationship between the two concepts have become a recurring topic of conversation. It is, without a doubt, a complex issue on which there are many questions. Are we witnessing a change in the economic paradigm or is it just a passing fad?
What are NFTs really and how are they used?
One thing is for sure: The development of NFTs are changing the way digital content is created. According to the data collected by Nonfungible.com in its annual report on the NFT market , this new digital financial environment has generated a turnover of 10,000 million dollars in the last four years . Taking these figures into account, it is important to assess what their role will be in the design of online advertising strategies.
What are NFTs?
NFT stands for Non- Fungible Tokens . A non-expendable good is one that is not consumed by its use and cannot be substituted or exchanged for another. Consequently, NFT represent units of value assigned to this type of goods within a digital context. More specifically, an NFT is a digital certificate of authenticity that, through transactions made with cryptocurrencies, generates a digital asset linked to a unique piece.
The operation of NFT is based on blockchain technology , just like cryptocurrencies. Through a chain of blocks, put into operation by users, an encrypted database is created that allows all kinds of online transactions to be carried out. While cryptocurrencies represent a fungible good, NFTs represent the opposite side of the same coin.
NFTs on digital platforms: a rising value
Having defined what NFTs are, it is important to clarify that it is the main currency for the acquisition of goods or services in digital environments. According to the project The Virtual Economy of L'Atelier BNP Paribas , this model is based on markets where the publisher of a platform facilitates the transaction of digital assets in the form of cryptocurrencies. The main virtual markets for this type of asset are:
The very nature of the metaverses is closely tied to the development of NFTs. Virtual experiences and goods are monetized through non-fungible tokens which, in turn, work through the exchange of cryptocurrencies. According to Bloomberg Intelligence forecasts, the metaverse business can reach a volume of 800,000 million dollars in 2024 , a figure that gives a good account of the relevance that virtual environments are acquiring.
The news that Facebook has gone Meta and launched its own Metaverse has put the spotlight on the possibilities that this new technology opens up for digital business. However, different digital worlds such as Decentraland , Cryptovoxels or Somnium Spaces have been operating for some time and have been allowing their users to acquire plots, works of art or VR experiences through blockchain technology.
The development of NFT gaming has been a true revolution in the video game sector. While the big platforms are studying the possibilities of including non-fungible tokens in their products, play-to-earn video games or NFT gaming platforms have more followers every day among the gaming public.
It is a modality of online games developed based on blockchain technology. In these games, some of their elements are made up of an NFT that can be acquired through a cryptocurrency transaction . These tokens can be anything from tools, weapons or cars to clothing or housing for the avatars.
Recently Twitter has activated the option to include NFT profile photos for its users, while Mark Zuckerberg has announced his intention to also add them to Instagram profiles , in accordance with the new vision of Meta. For its part, TikTok continues its consolidation as an advertising platform. To this end, it has launched its own NFT broadcast channel, TikTok Top Moments , in which it shows a selection of audiovisual pieces that can be purchased using tokens.
How to use NFTs in online marketing strategies
The production of content for digital environments has launched what is known as the creator economy , an industry that, as a result of the pandemic, experienced unprecedented growth. Based on data from GP's Technology Predictions 2022 report . Bullhound , the creator's economy already exceeds one hundred million dollars in profits.
In this context, NFTs can be a differentiating element in branding-oriented strategies . Some of its advantages are:
They create added value through unprecedented experiences for users.
They are a way of interaction with a multitude of possibilities.
They have a wide variety of formats , which makes them a resource adaptable to different audiences.
Its use has a great impact on the brand image and shows its interest in the latest trends.
Being an emerging sector, it is important to determine the characteristics of the potential audience to generate effective KPIs. A study carried out by the Deusto Business School on the habits of young people born between 1995 and 2005 reveals that one of the points that Generation Z values most in their interaction with brands is adapting to their way of understanding life.
If we take into account that the main users of the metaverses are in this age group, as well as their vision of the crypto economy as a way to build their financial future, the use of NFTs in the branding strategies of brands is almost mandatory. Therefore, the design of advertising strategies adapted to the interests of this generation will be decisive for the performance of brands in the new scenario.