Picture this: you're at a family gathering, and Aunt Judy starts talking about Non-Fungible Tokens (NFTs). You roll your eyes, recalling the eye-watering prices some digital artworks fetched and the subsequent crash. "It's all hype," you say. "Just another crypto bubble." But what if we told you we were all wrong about NFTs?
Fast forward to 2023, and the NFT market has been through a turbulent year. The hype has cooled down, and the market is expected to stabilize, putting an end to its "Wild West" attribute. The World Economic Forum (WEF) in Davos was an indicator of this shift. Fewer crypto companies attended, and those who did were regarded as the "real deal," focusing more on the promise of the underlying blockchain technology than the hype around NFTs and cryptocurrencies.
Experts, including PayPal President and CEO Dan Schulman, emphasize the potential benefits of blockchain technology. The UN representative even mentioned the successful use of blockchain technology in distributing humanitarian aid in Ukraine. Industry predictions suggest that the primary use cases for NFTs will be in music, luxury goods, supply chain, and ticket sales.
But as the market stabilizes and NFTs find their footing, we need to rethink our approach to NFTs and look at them through the lens of a new form of marketing: collector marketing.
While NFTs have been synonymous with high-priced digital art, they are so much more than just digital art. NFTs have emerged as a new way to interact with customers, especially for businesses such as museums that are looking to think outside the physical parameters.
To understand why, let's first understand what makes NFTs unique. Unlike traditional digital files, which can be copied and shared infinitely, NFTs are one-of-a-kind digital assets that can be bought, sold, and owned just like physical assets. This uniqueness and the ability to establish ownership in the digital realm is what makes NFTs attractive to collectors.
For museums, this opens up a world of possibilities. Imagine digitizing rare artifacts and turning them into NFTs. Not only does this help preserve the artifact, but it also allows the museum to reach a global audience, creating a new revenue stream. A museum could even turn an entire exhibition into an NFT, complete with a virtual tour, and sell it to collectors worldwide. The potential is endless.
Collector marketing revolves around creating unique, limited-edition products that customers would want to collect. It taps into the human desire to own something rare and unique, creating a sense of exclusivity. This approach is what luxury watch brand Breitling used when it announced that it would use NFTs as digital certificates of authenticity for its watches.
The beauty of collector marketing is that it can be applied across industries. BMW, for instance, launched a color-changing concept car and mixed reality functions using NFTs, bridging the gap between offline and online. Even fashion house Maison Valentino has entered the NFT space, unveiling its "Essential" line of luxury products using AI.
But collector marketing isn't just about selling products. It's about creating experiences. It's about transforming customers into collectors who don't just buy a product, but buy into a story, a legacy. This is where NFTs shine. By turning digital content into collectible items, NFTs allow brands to create unique, personalized experiences that resonate with their audience.
The art world has been revolutionized by NFTs as well. Artists have found new revenue streams and ways to appreciate their art as unique collectibles on the blockchain. Yet, this rapid expansion has also made it challenging for artists to navigate through. The pressure to keep up with trends and gimmicks, the rise of quick flips and pump-and-dump schemes, and the shift in marketplace focus from supporting artists to catering to speculators have all made it difficult for artists to establish a sustainable market for their work.
But with every challenge comes an opportunity. For artists willing to stick to their vision and create meaningful work, NFTs can provide a platform to build strong communities around their art, offering support and validation in a turbulent market. By understanding the mechanics of the blockchain and the various platforms, artists can make informed decisions about pricing, distribution, and marketing, diversifying their income and reducing dependency on the NFT market.
As with any new technology, regulation plays a critical role in shaping the future of NFTs. Leaders like Singapore’s Senior Minister Tharman Shanmugaratnam and European Central Bank Governing Council member Francois Villeroy de Galhau have emphasized the need for crypto regulation. This sentiment is echoed by the Central Bank of Ireland (CBI) in its Consumer Protection Discussion Paper 2022, which supports the development of blockchain technology-based products but also highlights the need to protect consumers' interests.
Regulation can bring legitimacy and trust to the NFT market, which can, in turn, encourage more businesses and individuals to explore the potential of NFTs and collector marketing. However, it's also essential to balance regulation with innovation to ensure that NFTs can continue to evolve and transform industries.
Let's circle back to Aunt Judy. The next time she talks about NFTs, maybe you'll see them in a new light. Yes, the NFT market has seen its share of ups and downs. But looking beyond the hype and the high prices, it's clear that NFTs are more than just digital art. They are catalysts for a new form of marketing that taps into the human desire for ownership and exclusivity.
As we move forward, it's important to remember that NFTs are still in their infancy. There will be more challenges, more ups and downs. But if we look at NFTs through the lens of collector marketing, we can begin to see their untapped potential. For museums, artists, and brands willing to rethink their approach and embrace this new way of engaging with customers, the possibilities are endless. So, let's get ready to ride the wave of collector marketing, and let's see where it takes us.