NFTs: 5 Key Learnings for CPG Companies

In Q3 of 2021, NFT sales topped $10 billion — and with intense attention from investors and consumers across industries, it seems this figure will only grow in 2022.

It seems everyone is talking about NFTs, and the sports industry is leading the pack. The wildly successful blockchain-based fantasy football game Sorare was recently valued at a dizzying $4 billion, and NBA Topshot, a P2P NFT marketplace, has been valued at almost $2 billion. This industry has latched onto this opportunity with both hands, and other CPG players are scrambling to discover how to capitalise on this growing trend.

So, what is an NFT?

NFTS are intangible, digital assets stored on a digital ledger (on the blockchain).

Before NFTs; it was difficult to ascertain who “really” owned easily-reproducible online assets such as photos, videos or GIFs, for example. However, as all data is logged in the blockchain, it is easy to verify the owner as well as the full history of a digital asset.

Sounds nifty. NFTs may seem like an abstract concept, but ever-growing interest from investors and consumers means they are becoming more and more mainstream.

From a digital consulting perspective, NFTs don’t just mean lucrative new revenue streams. They are also a fascinating example of how brands can harness technology to create new relevance and rethink their value propositions in both the digital and analogue worlds. So, how could other industries tap into NFTs and replicate sports brands’ success?

1. Add new value to analogue, physical offerings.

Key Learning: NFTs present an opportunity to rethink the way brands provide value — and add something extra to the analogue offering. Physical purchases be fused with NFTs (some assets are not actually stored in the NFT; but the NFT contains a URL which links to the physical asset), providing ample opportunity to combine extra access, privileges, or bonuses with a physical offering. NFTs have the added benefit of being easily resaleable if the customer’s needs change.

Success story: FC Barcelona’s fan token ($BAR), which offers a host of “extras” to fans, raked in $1.3 million in less than 2 hours. Privileges such as virtual seats in the livestream stadium sell out quickly — the real value here is the “access” to livestreaming, not the seat itself!

Other ideas: Europechain.io suggests restauranteurs could abandon traditional table reservations and offer “tables” or memberships as purchasable NFT tokens.

2. Monetise brand equity in the digital space.

Key Learning: Well-known brands can capitalise on their existing equity and begin trading digital assets. Brands already know how valuable branded merchandise can be to loyal fans. Brand equity can be carried over into the digital space, and the hot but scarce nature of NFTs implies value will increase over time — a positive for collectors. Collectable, branded NFTs related to holidays, key events in the brand storyline, or limited edition product launches are increasingly popular. To publicize their commitment to a cause and bolster goodwill, brands can follow Taco Bell’s example by donating NFT sale proceeds to a worthy cause.

Success story: In the same way sports trading cards have commanded high prices for decades, NFL athletes are monetising their personas with digital NFT trading cards or merchandise. In March 2021, US Super Bowl champion Rob Gronkowski’s digital trading card collection sold for $1.2 million.

Other ideas: Within one week, popular takeout brand Pizza Hut’s limited-editions “1-bytes” (NFTs featuring an image of a slice of pizza) had been re-listed for 5 ETH ($9,000). While these assets initially sell for low prices, the brand receives loyalties every time the “rare” items are resold.

3. Monetise or personalise existing capabilities and content.

Key Learning: Brands should take stock and identify what is most meaningful to consumers — often, existing capabilities or content can be transformed into a meaningful digital extra. From releasing nostalgic collectibles to ritualising points of the customer journey, there are plentiful opportunities to create meaningful collectibles. Decentralised peer-to-peer networks, where fans trade these NFTs among themselves, can also provide interesting insights on fan engagement and help determine which aspects of the brand are most relevant.

Success story: The popularity of “NBA Top Shot” , a marketplace for trading “highlight clips” from basketball games, suggests strong consumer willingness to invest and trade their own NFTs. Athletes can monetise their persona in the form of trading cards or personalised videos, for example.

Other ideas: Mark Cuban and Coinbase have backed Eternal, an NFT marketplace where gamers can purchase clips from livestream games, such as clips of entertaining or winning moments.

4. Appeal to conspicuous consumption in the digital world.

Key Learning: Consider your brand connotations and status — this can be translated to a digital setting. There seems to be no limit to the ways in which prestigious brands “travel” and carry their high-status connotations far beyond their original format. Consider your target user and the media they engage with. There may be opportunities to extend the brand into new platforms.

Success story: Athletic brand Nike has filed for 7 “virtual goods” trademarks for branded NFTs such as digital sneakers which players purchase for their “avatar” in popular game Fortnite. Players can also unlock a voucher for a physical pair of sneakers, adding tangible value to the purchase.

Other ideas: DressX, a digital fashion store, long ago identified their customers’ tendency to buy fashion items solely with the attention of posting a photo on social media. Customers purchase a digital fashion piece and send a photo, which DressX edits to provide them a “new” social media photo.

5. Harness new insights & optimise processes.

Key Learning: NFTs can be part of a wider digital strategy to simplify operations, while increasing value. NFTs and the data surrounding them may provide highly interesting business intelligence insights. Not only do resale values suggest which brand commodities are most valuable to consumers, NFTs provide a foundation for passive loyalty programs, collecting customer data and identifying rewards. Brands can also run NFT contests to generate leads and measure hype.

Success story: A popular example of this is ticketing for sports events. NFTs which link to a ticket for a game help subvert scalpers — fans and leagues can easily verify the data, avoiding fake tickets. This verification would have been impossible in an analogue world!

Other ideas: In 2019, Nike patented “CryptoKicks”, an NFT system to verify the authenticity of a pair of sneakers. This intensifies the resale market and increases the value of products.

These are just some examples of the ways in which brands could make use of NFTs. As consumer awareness grows it seems probable NFTs will explode in popularity in coming years — get thinking now to get ahead of the pack!