How NFTs Can Unlock Brand Loyalty

Now that the NFT bubble has burst, practical use cases beyond $600k cartoon cat GIFs are becoming clear. Consider Gen Z for example, who lack brand loyalty but are also early adopters. As an innovative store of value, NFTs represent lucrative whitespace for brands to leverage and deepen relationships with young consumers in compelling new ways.

Simply put, brands have an opportunity to turn customers into loyal fans by issuing NFTs with purchases that can be collected, sold, and traded. Since branded NFTs can be sold on secondary markets for profit, purchasing a brand’s NFT is a new way for consumers to invest in their favorite companies and generate returns as they grow. Gen Z loves being the first to discover new brands, and since NFTs issued to early customers can increase in value over time, it's an opportunity to reward them financially for their vision. Three examples represent the near future for NFTs as a brand-building strategy.

Nike patents digital sneakers that buyers can breed
According to US patent data, Nike is developing a way to incorporate NFTs into sneaker purchases. This will provide ‘genotype’ information related to each pair of “Cryptokicks” allowing customers to “breed” the NFT versions with other designs to be traded as digital collectibles or made into physical versions to be worn, or sold in secondary markets. As virtual goods continue to expand into apparel and accessories (i.e. Gucci's Roblox purse) it's easy to imagine the outsized role NFTs can have on purchase intent.

Experiential perks powered by NFTs
As the first band to incorporate NFTs into their marketing, Kings of Leon offered fans options for NFTs that included limited-edition vinyl and a chance to win a “golden ticket” for a lifetime of front row seats to future concerts. Similar to a subscription model (i.e. Amazon Prime, Restoration Hardware membership, etc.) NFTs deepen the relationship fans have with a brand over time without the long-term financial commitment.

Luxury leaders see NFTs as a bespoke fit
Uniquely coded NFTs that accompany luxury purchases guarantee authenticity, materials provenance and resale value. LVMH recently joined forces with Prada and Richemont to design the Aura Blockchain Consortium to begin providing exactly these types of services. As the resale market continues to scale (with rollups like Etsy buying DePop), quick reliable authentication will become increasingly important pre and post-purchase.

Clearly, NFTs represent a paradigm shift that will create value in ways we've yet to comprehend. As cryptocurrencies like Ethereum 2.0 evolve and become more sustainable along with the rise of more environmentally friendly NFT platforms like Palm, the benefits will align even further with the values of Gen Z, solidifying their staying power for the long run.

This article originally appeared in the June 8th, 2021 issue of Moving Image & Content’s agency newsletter. Subscribe here