Entering the Fray: NFT Promotional Models for SMBs, Sustainable Brands and B Corp Marketing
Art NFTs made a meteoric dent in the universe in 2021, bringing Web3 and blockchain terminology into the mainstream. While many folks still struggle to get their head around why people want to buy and sell simplistic digital artwork, others realize that is only one side of a multifaceted story.
One of the most exciting opportunities NFTs offer B corps and conscious brands is to reclaim ownership of their relationships with fans, followers, and best customers. Companies can begin to reduce reliance on intermediaries like expensive and increasingly controversial social media platforms.
NFTs and digital tokens are powerful tools for audience connection. This post will go over a simple background explaining why. We’ll also look at a couple of specific models impact brands can use to expand brand awareness and engage new followers.
We’ll look at the opportunities of NFTs to deepen the relationship with your superfan community and turbo boost customer lifetime value. Last but not least, change is never without controversy, so we cover some of the risks, too.
Tokens — Now We’re Talkin’
Blockchain is an important part of the emerging Web3 toolbox; that’s why you often see the term “Web3” in discussions about NFTs.
A token is a piece of code on the blockchain that records an asset or transaction. A token can also have smart contract code that includes other stipulations and instructions.
An NFT is a token that records a unique asset whose value cannot be divided. As you may know, an NFT does not have to be associated with art at all.
If you didn’t know that, don’t feel bad. We are in the early days of this world, and most people don’t have a grasp on these ideas yet. Good for you for being curious!
Keep in mind that a key characteristic of an NFT is it is a token linked to a unique object. We’ll talk more about tokens in the loyalty tokens section below.
The Web3 Advantage for B Corps and Impact Brands
Let’s say well-known artist mints (creates) an NFT for a piece of art. Or a brand partners with an aligned artist. Or a brand partners with an influencer who commissions an artist for artwork to sell to benefit an aligned NPO.
You get the picture. Lots of options for NFT drop collabs.
The “NFT drop” aspect is the promotional campaign with the goal of selling the artwork.
The campaign’s success largely depends on the strength of the community, whether for the creator, artist, or associated brand. One reason impact brands have a powerful head start in Web3 is that they usually have an emotional tie to their customers.
Customers who share an emotional relationship with a brand will recommend the company at a rate of 71%, as opposed to the average rate of 45%. They also have a whopping 306% higher lifetime value. Finally, emotionally connected customers will also spend an average of 60% more annually with a brand. (source: Motista)
So that’s awesome, right?
Not so fast. Adopting an NFT strategy may lead to a significant reshuffling in your community.
Sustainability Considerations for B Corp NFT Drops
You may take some heat from fans and customers who see NFTs as bad for the environment. Most consumers don’t care about the nuances, but the truth is that NFTs themselves don’t have a big carbon footprint. Having said that, it’s not zero, either.
The bigger problem is if NFTs rely on the Ethereum blockchain, they drive demand for Ether, which does have a King Kong carbon footprint problem. You can read more of the backstory of crypto sustainability (and lack thereof) here.
Do your homework and if you can, avoid using a marketplace and blockchain that has Ethereum under the hood. Most “How-to NFT drop” blog posts talk about OpenSea as one of the best marketplaces. Proceed with caution. OpenSea runs on the Ethereum blockchain and also struggles with high fees.
To avoid backlash, companies can consider a sustainable marketplace or have a strategy (like carbon offsets) to mitigate the impact of using a marketplace on Ethereum.
United By Blue, a certified B Corp, thought that Nifty Gateway was carbon offsetting weekly. It turns out that was not the case. This article is an interesting account of how Mike Cangi, Co-Founder & Brand Director, anticipated the pushback and why he is still committed to NFTs going forward.
At Impactoverse we spent weeks researching blockchains. We drove our developers crazy (they almost fired us) before finally settling on the Tezos blockchain. Blockchain choice leads into technical details about how to execute these campaigns. We won’t go there today, but feel free to contact me or Impactoverse co-founder Noleen Mariappen for a chat.
NFT Campaign Considerations for B Corps and Impact SMBs
Campaign design is also its own topic too big to cover in this post. Here are some basic considerations to keep in mind:
- Does the drop raise the social currency of the participants in the eyes of the community?
- How NFT savvy is the target audience? Which model below best fits their expectations and desires for what to do with their NFTs and tokens?
- Does the campaign make it easy to participate or is there a lot of tech friction with multiple steps, wallets, and confusing jargon? Brands that make it easy to sign up and participate will gain an advantage in converting people new to NFTs.
- Is there an impact benefit to the drop? For B-corps, can you scale your baked-in benefit prop? For traditional SMBs, is there an NPO or group aligned with the target audience values?
NFTs and Token Marketing Models
Below are a couple of examples of how brands are using NFT drops. This is by no means a complete list. Models can and do overlap, and the entire space is evolving even as you read this.
Art NFTs for Proof of Ownership, Provenance, and Stipulations
When an artist or creator creates artwork — digital, real-world, or a combination of both, they may mint a NFT identifier to establish ownership. When and if that artwork is sold, the NFT goes with it. This establishes an open chain of provenance for as long as the artwork or blockchain exists.
The NFT can include smart contracts stipulating conditions for the artwork. For example, each time the artwork is sold, a percentage of the sale price can go back to the creator or benefit an NPO, similar to the royalty model. (This is true for non-art NFTs, too; we’ll get to that later).
Most digital artwork is not stored with the NFT on the blockchain. The owner may store it in a library, their wallet, a gallery in the metaverse, and probably other places I don’t know about, too!
Art or collectible NFTs for Personal Interest and Community Building
Just like baseball cards, stamps, or souvenirs, some people create and collect NFTs for enjoyment and to participate in community around an interest. One example is PetDropsnft.io, powered by Impactoverse and launching this summer.
PetDrops is an edu-tech experience where people can learn about NFTs in a safe space while creating NFTs to immortalize their pet on the blockchain and eventually in the Metaverse. We envision individuals, families, classes, clubs, and teams participating. A portion of the sales of the NFTs will benefit animal welfare NPOs, too
Art NFT Drops for the NFT Investment Market
If the drop is for the collectible/investor market, the target audience includes people that invest in NFTs in the hopes of selling them later at a profit. There is a speculative aspect to their collecting.
The artist, creator, or organization sponsoring the art drop creates an edition that can contain thousands of related images.
The creators choose traits for different images to build in rarity and other trackable factors. Common trait examples include accessories, body, jewelry, and clothing.
Producing and tracking art NFT drops like this can become hella complicated very quickly. The complexity doesn’t have to spiral, though. Brands can bracket the drop design to fit their audience and goals.
Blue Diamond teamed up with TBWA\Chiat\Day LA on their #Apefuel NFT drop. The campaign included 1000 unique versions of the same basic image of an ape’s hand holding a carton of their Almond Breeze Banana Milk. They gave the images and NFTs away for free. Three of the NFTs were super rare and came with a year’s supply of the product.
The promotion percolated brand buzz on Twitter as the images filtered out into a few hundred collectors’ accounts, where they will be seen by other NFT enthusiasts. A portion of future sales of the NFTs will benefit the Future Farmers of America.
The general consumer persona for investment NFT drops is an avid collector, deeply involved in web3 culture and art NFT communities. They are kind of like stock picker analysts, people obsessed with horse racing stats, or collectors that go deep in a certain category rather than wide.
The ability to sell or trade their NFTs is very important to investor/collector buyers, so “investor art NFT drop” managers need to consider the size of the NFT exchange ecosystem. Investor-targetted drops are one reason OpenSea is still so popular; the NFT investor community is huge.
Art NFTs are only one drop in a huge ocean of NFT utility. A NFT can be minted for any unique digital or tangible object. Examples include clothing, accessories, tickets to events, and even pets. A big opportunity right now is tying digital asset NFTs to the real world, like clothes and accessories, as well as chances to meet in person and, for the right customer profile, in the Metaverse.
That brings us to the idea of promotional drops or campaigns that create layers of benefits by blending unique NFTs with tokens.
Loyalty and Reward Token Models for Building Brand Engagement and Community
Technically speaking, NFTs are a type of token, but not all tokens are NFTs.
Don’t worry if it’s not super clear right now. I’ve included more detail at the end of this post to arm you for that meeting with a geekspeak NFT consultant or developer, if needed.
The easiest way to proceed is to think about what the audience can do with their tokens and NFTs.
Let’s face it, your followers don’t care what you call a thing, they just want to know what it does for them. It is also possible that the term “NFT” will morph into usage for any token used in a B2C context. I’m already seeing this online.
A powerful shared characteristic of NFTs and unique tokens is their code can include smart contracts stipulating a range of conditions for ownership and future sales.
Brands can distribute tokens as part of rewards programs. Fans can collect tokens for different levels of benefits, unlock more perks, earn even more tokens, and potentially even sell or trade their tokens to other fans. Tokens are likely the next evolution for traditional rewards and loyalty programs.
The appearance, or format, of the token may vary. Think about video games — players collect coins, jewels, keys, and thousands of other objects. Depending upon your audience, you can create compelling, branded formats for your tokens.
The loyalty model differs from the “art NFT investor drop” model in that the fan’s primary goal is to collect tokens and NFTs to gain perks in regard to the brand’s product or service.
The brand may grant tokens in the brand community ecosphere rather than via a big exchange. Access to a huge community of collectors, like on OpenSea, SolSea or Solanart, may not be as critical to “loyalty drop” campaigns as it is to art NFT investor drop campaigns.
Sustainable Brand NFT Drops In Action
Now that you know a bit more about NFTs and Reward tokens, here are a couple of examples that included a charity tie-in.
Sustainable brand Katla NFT drop
Katla’s NFT drop contains 3 Golden Ticket NFTs. In collaboration with Icelandic artist Hendrikka Waage.
Winners of the golden ticket receive a $500 gift card to spend on Katla.com, a “Wonderful Beings” print signed by the artist, and a limited edition Katla X Hendrikka Golden Lady hoodie.
100% of profits from March hoodie sales were donated to Care’s Ukraine Crisis Fund. You can read more about Katla’s NFTs here.
Sustainable Brand United By Blue (UBB), a Certified B Corp
UBB’s First drop “Clean Up The Ocean” happened in December 2021, on Nifty Gateway. It included four different NFTs from three popular artists (Andy Best, Julien Tabet, and Ted Chin). Each artist benefitted from the drop as well. They also launched Eddy Earth, the brand’s newest mascot.
For every Eddy Earth NFT purchased, 100 pounds of trash will be removed from oceans and waterways through United By Blue cleanups. Anyone who holds an Eddy Earth NFT will have access to exclusive benefits, rewards, and surprises from United By Blue including a first edition Eddy Earth hoodie for all holders, early access to United By Blue products, events and NFT launches, free shipping on all future orders, and surprise product gifts directly from Eddy.
NFTs for Sustainable Brands and B Corps: to B or not to B?
The promise of NFTs for B corps and sustainable brands is twofold — reclaim ownership of your customer community, and a potential to dramatically scale the results of your campaigns over time.
The risks range from a failed campaign to negative press and customer complaints.
When the World Wildlife Fund team planned their first NFT drop, they chose a blockchain with lower carbon impact. There was still controversy and they pulled their NFT drop due to criticism. This may have placated the critics, yet many new fans were disappointed, too.
One pointed out that the WWF would have raised far more money from the NFT sales than any additional carbon offsets would have cost, especially if the NFTs had smart contracts stipulating that all future sales would result in additional donations to the WWF.
I also didn’t see any holistic analysis of their NFT campaign comparing it to the carbon footprint the WWF incurs with their extensive real-world, old school promotional and catalog merchandise manufacturing and shipments.
While navigating the choppy waters of marketplace transitions, brands may benefit from weighing the sustainability pros and cons of their existing promotions and clearly communicating the tradeoffs to their audience.
NFTs are the future of B2C brand engagement. B Corps, sustainable brands, and even NPOs may need to weather a bit of a storm to capture new customers and capitalize on the coming clearer skies ahead in the NFT marketing landscape.
As promised, here is more detail about unique vs. non-unique tokens.
It’s tempting to get a bit nerdy, but we won’t get bogged down, I promise.
Technically speaking, a token can be unique or non-unique. For example, non-unique tokens may be stored as a balance on the ledger and don’t have a unique identifier. Kind of like a jar of gold rings that are all the same with no serial number.
Unique tokens may act more like “coins”. Token and coins can overlap into cryptocurrency utility, and THAT gets more involved than we need to, so this post focuses on non-currency marketing use cases.
A group of unique tokens can be identical. How? The thing that makes them unique is not their innate characteristics, but their ID, kind of like each dollar bill is the same and has its own serial number.
So is a unique token the same thing as an NFT? No, Unique tokens that can easily be exchanged one for the other are not NFTs. This is because an NFT represents something that is intrinsically unique and can’t be divided.
Like everything in the Web3 space, there are nuances and likely exceptions to the rule in this discussion. Let me know if you come across any or if you have questions. Thanks!