NFT Programs as New Revenue Streams for Brands
In today’s market, when businesses talk about web3, the idea seems novel and disruptive. However, the buzzword itself has been around since 2014, when Galvin Wood, one of the founders of Ethereum, first coined it as a decentralized online ecosystem on the blockchain. Regardless of the web3 market adoption curve, we are still in the high early market, even before the early adopter stages. Yet, companies like Nike, Adidas, Gucci, Dolce & Gabbana, and Tiffanies are making a combined $250 Million in sales from NFTs alone.
Why are big brands spending millions on NFTs? This question is multifaceted, but it has to do with moving quickly to serve the rapidly growing new market. McKinsey predicts that the metaverse market alone could be worth $5 trillion by 2030, with eCommerce, virtual learning, advertising, and gaming driving this growth. How does this translate to brands? The metaverse is a virtual space for engagement where brands or creators can use NFTs to exhibit digital forms of art and property and where users can buy or use their NFTs to interact within this space. NFTs allow this content to be priced with proof of ownership.
Should using NFTs be a part of your brand strategy?
There are several ways businesses are leveraging NFTs to engage and excite their customers. These initiatives depend on your business type — i.e. a Hollywood studio, a major retail brand, or a marketing agency. In the case of studios or entertainment companies, creators use NFTs to create entirely new product lines that serve digital communities. They can be either full ownership (buying an NFT and owning a song by an artist) or partial ownership (owning a line in the song). An apparel brand, for example, might extend its product line to include a digital twin, often considered as an expansion of a sizing garment — i.e., size ‘D’ for digital. Marketing agencies and brands looking to enhance their marketing strategies might use digital tokens as loyalty ownership.
Whatever type of business you are, there are numerous ways to engage in the web3 journey. The best place to start with is an overarching goal — decide if this is to foster a community, create meaningful experiences, or create new revenue streams.
NFT Strategy Based on The Stage of Business in Web3
Existing web2 businesses have a leg up in the world of web3 since they already have an existing and often large customer base that is typically not web3 native. If you are a brand just getting started, a part of your brand strategy should be to educate and onboard your users into web3. This begins with the support to create a wallet and exploration of ways you can engage these wallets. If you are a business that is already using NFTs to excite your customers, measuring the value of your NFT offering and optimizing it will make sure you move and grow quickly in this new space.
Getting Started
Start with your existing customers. Empower them to participate in the conversation on how you can serve them better and what would make them more excited and engaged. Use this information to create an NFT collection that serves the community with those offerings. At Alpha Trend, we help brands create NFT collections and assist their customers in accessing the NFTs in the collection with wallet drops. Don’t just focus on the concept of Web3; create an opportunity to collaborate more closely with your customers, and create a new value system for your business.
Owning a digital asset of a brand makes consumers feel more invested and loyal to the brand. This new digital identity often drives consumers to create a bond between the community members through a shared platform — an experience similar to those of fans from a sports team or a musician. In return, brands create a direct link with their customer base, as they now have access to customer wallets. The feeling of ownership allows more alignment between brands and their consumers, creating incentives for everyone. Alpha Trend helps brands build a community less adversarial than in the past and with more derivatives in circulation — making the brand ecosystem grow faster.
Measuring Success
When it comes to measuring the success of a collection, there are several metrics that can be indicative you are investing in the right strategies. Here are five metrics to look out for:
[both quantitatively and qualitatively. ]
Brand Prominence
You likely already have a community of customers if you are an established brand. These customers like your product and want to associate themselves with it and participate in your offerings. If you already have loyalty programs, you should start by observing volumes and frequency of engagement within existing products. Use token offerings to elevate this growth, and incentivize your most loyal customers. These customers drive up the demand for your tokens by promoting your business. You can measure this growth by seeing how quickly your new collection gets adopted in the market (i.e., is it sold out within the expected period).
Estimated Market Capitalization
The market cap of your NFT collection is calculated by multiplying the total number of NFTs in your collection by the average price of your NFTs. The higher the market cap, the more attractive your value is for your customers.
Alpha Trend provides detailed and actionable insights to grow your market cap using financial indicators, such as the number of high-net-worth individuals in your NFT offerings. The collection’s value depends on the community’s interests, so indicators that you have a strong community are likely to drive more traction into the community.
Community and Unique Holders
The number of unique holders of NFTs in your collection can tell potential customers a lot about its value and appeal. The larger the community (defined by a unique wallet ID), the more demand around the project, which highly benefits collections value. The number of active holders can change at any moment based on the perceived sentiment of a brand. This is why it’s critical to understand your collection’s brand and community sentiment.
Alpha Trend empowers brands to measure the perceived demand for the brand (otherwise called hype), so brands can take quicker action around managing the collection growth.
Floor Price
The floor price is the lowest cost of your NFT, as measured by the lowest price listed on the secondary marketplaces. It is the minimum someone can pay for your token. The higher the floor price, the stronger an indication that you’ve created a higher-value project.
While projects with higher floor prices are worth more, they make it more difficult for community members to buy them because they are more expensive. At the same time, a project with a meager floor price is less desirable. As a brand, you must focus on balancing supply and demand to maximize community engagement.
At Alpha Trend, we provide insights on real-time floor prices and bids for your NFT collection, so you can determine the collection’s value and take the necessary steps to excel in your brand’s growth.
Usability and Preferences
Another metric to consider when creating a new NFT project is its intended function for your customer’s needs. This is more speculative than other metrics.
At Alpha Trend, we work with your community to understand the type of incentives that would make them participate in a collection and be an advocate.
Building Loyalty By Understanding Your Customers
The most significant benefit of having a customer or a fan base with a digital wallet is the existence of a direct link between you, as a brand, and the customer. Anytime your customer uses an NFT within a wallet to contribute to your brand, you have direct visibility of this usage (via the blockchain). To understand the engagement of your customer base and the success of your NFTs, both on a micro and a macro level, a set of analytical tools that look into on-chain data and off-chain signals will be critical for driving the success of this engagement process.
Loyalty is driven by trust, which starts with transparency. To stay loyal to your brand, customers should trust that your brand is truly set to elevate their experience. This can be done by sharing the roadmap with your customer base and engaging them in creating this roadmap. Furthermore, you can show transparency in your collection community and performance. Help people understand that you are paying attention — share patterns you see from the participating wallets and how they are used. Display metrics around your collection performance as well — overall price patterns, how actively it is being used or transacted, and the general sentiment for the collection. Even if the metrics are not good, your transparency will drive the loyalty of your customers and their participation and engagement in improving it.
At Alpha Trend, we look at the market signals as a combination of on-chain and social data. You can report on your brand performance from a quantitative angle as the overall sentiment of your collection, volumes of transactions, redemption on utilities, or who notable influencers are. You can also benchmark your collection against other collections for competitive intelligence — know what signals you should strive for and how others are going about it. Lastly, Alpha Trend’s wallet insights allow you to understand what is in each wallet of the customer in your community. You can use this information to excite customers with partnerships of brands or creators from most other commonly held collections. Show them you are invested, watching, and listening.
Alpha Trend is here to help you expedite your entry into Web3
Alpha Trend is helping brands grow new revenue streams and empowering brands to build closer relationships with their customers via web3 infrastructure.
If you’re exploring if this is the right path for you, you can set up a consultation with us. Please email us at hello@alphatrend.ai to learn more about how we can help you leverage the benefits of Web3 today.
