- They are in essence digital certificates
- Although NFTs exist on a blockchain; the assets that they however represent may or may not exist on the blockchain.
Image: Pixabay
When a new concept is suddenly ubiquitous and part of consumers’ vocabulary, it is sure to feature prominently in brand war rooms sooner or later.
The latest buzzword – is NFT, and they are everywhere today, in news cycles and debates with even the government weighing in on this new exciting frontier.
Now, what exactly are they? NFTs are Non-fungible tokens which are unique digital assets that prove the ownership and provenance of an item.
They are in essence digital certificates. The simplest way of looking at them is similar to a logbook for a car or a title deed to a piece of land. A logbook shows ownership of the vehicle, but it isn’t the car itself.
Similarly, an NFT token holds the metadata (a set of data that describes and gives information about other data) about an asset. This could be the asset’s ownership properties, description, and provenance – the asset’s history.
Although NFTs exist on a blockchain; the assets that they however represent may or may not exist on the blockchain.
This means that NFTs can represent digital and physical assets, from concert tickets and baseball cards to online in-game virtual assets.
With brands jumping in on the bandwagon it’s important to understand what the NFT revolution is and what it means in terms of potential opportunities in the marketplace.
A good example is the Adidas Originals: Into the Metaverse. Now you may wonder why one of the world's largest sneaker brands is now making NFTs. But think about this, when they release limited editions they are normally sold out in a matter of seconds if not minutes.
They are then resold at 5 times the price and Adidas no longer gains any additional profit. But with NFTs, when royalty is set Adidas will receive a portion of the sales in perpetuity, in this case, 10 per cent of all future sales.
The NFT in this example also serves as a ticket, those who own the NFT have the ability to receive limited-edition merchandise and thus offer customers a guaranteed way to get that merchandise by paying a premium. Adidas too has also tapped into a new market of consumers, where blockchain enthusiasts also now become part of their consumer group.
Although the Adidas NFT will have more future utility it already shows an effective way for a brand to capitalise more efficiently from their products using technology.
As a potent medium on the blockchain, NFTs provide a vast array of opportunities for brands to capitalise on their products and brand. Whether it's a members club or actually a ticket, NFTs are introducing consumers and brands to a new mode of interaction.
While NFTs are not directly part of the core product they can create symbols of brand love where consumers can enjoy them as a place of pride and identity.
With e-commerce sales becoming an increasingly important part of industries' route-to-market strategy, brands are becoming more adept at experimenting with and investing in online spaces. Hence NFTs are now at the forefront of this experimental phase in tech history.
As Kasuku NFT launches on the Marula Network there is an opportunity for brands in Africa to provide consumers with a unique opportunity to pull back the curtain and connect in ways that have not previously been available.
These brands have a chance to demonstrate to consumers that they are listening and are willing to adapt to this new frontier that continues to define the new boundaries of branding.
The writer is the chief executive officer of Kasuku NFT.