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Non-fungible tokens (NFTs) have catapulted creative industries into a state of massive transformation. This little unit of data that gets stored on a digital ledger known as a blockchain has big implications when it comes to certifying the authenticity of digital asset ownership. The market for non-fungible token art has boomed in 2021, skyrocketing by more than 800% from $52 million at the start of the year to $490 million at the end of April. These numbers present a very clear thesis on the importance of and financial upside to entertainment companies learning how best to leverage NFTs as a long term business opportunity.
As president of Create Advertising, I have naturally regarded the marketing materials our agency makes as works of art. But in the age of NFTs that predilection has taken on a whole new meaning, given that campaign creative can now be imbued with more than mere fan affinity ... it can quite literally hold its own value (and then some).
Arguably, the last big digital marketing revolution of this enormity and impact to advertisers was the dawn of the banner ad in 1994. But unlike its IAB predecessor - whose virtue of cost efficiency came with the trade off of ad depreciation and devalued regard for creative - NFTs can and do drive profit. A lot of it. Which is great news for marketers, who have lived under the constant anxiety of being considered a cost center.
However, while their future-forward and revenue-generating promise is alluring, when it comes to understanding NFT best practices the waters feel murky. So, here are the top-three tips that will help you to successfully maneuver within the market and optimize your business opportunities over the long term.
1) No lid on the bid: Undeniably, NFTs are a hot topic and have value, but the market is still very much the wild wild west. This newfound frenzy over what sells (and just about anything is selling) will eventually stabilize and form structure, but their utility as a digital ownership authenticator will endure and remain relevant for the foreseeable future.
Best to begin by thinking long term and developing a smart strategy that defines how, when, why and what intellectual property (IP) your company will leverage to maximize revenue potential. When done right, NFTs are powerful tools for monetizing expired assets and IP catalogs, broadening and deepening fan affinity and reinforcing brand relevance. However, not all IP makes for good NFTs. Smart selection, creative deliverable planning and targeted marketing rollout will determine success.
2) Quality, not quantity: From trading cards and posters to movie memorabilia, entertainment- related marketing has a long history of being a collectible artform. We may be living in times where a pixelated cat meme can sell for $600K and a single pixel sells for $1.36M worth of Ether. But these astronomical numbers reflect the ways novelty and a “quick buck” mindset are spiking the trend at best. As that novelty wanes and the market matures, NFTs will take a decidedly different twist. Production quality will matter. Artistry will be meaningful. Scarcity, originality and exclusivity will be the primary drivers of value.
So what does this mean to entertainment marketers? Your NFT content should feel like art, not advertising. As in the art world, artist collabs are cool and reign supreme. Ideation should be organic to and reflective of the strengths of the medium: short form, limited edition and ripe for display.
Most importantly, follow art’s lead and create a smart edition strategy and “fever moment” for The Drop (when an NFT becomes available for an investor to buy). With NFTs, less is more and fewer is far better. Remember, NFTs broker in the idea of scarcity. The best way to achieve that is by making your edition strategy as unique as each piece of IP and aligning run size with business goals for each NFT campaign.
3) NFTs are more than art: NFTs’ value as digital art authenticators is evident. However, there are a variety of other ways to use NFTs as tools. More and more, savvy companies are blurring and bundling NFTs with physical goods, events and services, and broadening their scope beyond the arts and into realms of music, fashion, CPG, land ownership/real estate, live concerts, sporting events and even historic landmarks such as the Hollywood sign.
As you think of ways to leverage the technology, bear in mind that NFTs can be used to access and build credibility among broader audiences, industries, collectors and creators.
In terms of best practices, the above three are just the beginning. While the NFT “gold rush” is fun and exciting, there is undoubtedly more life and other incarnations the technology will assume with huge implications to marketers around how we do business. With a regulatory landscape on the horizon and an ever-widening scope of market entrants around the globe flooding the space, now is the time for entertainment companies to do more than just recognize this global opportunity. It’s time to plan ahead and plan for the long term.
For more information or consultation to develop your company’s NFT strategy, email jonathan.gitlin@createadvertising.com. And watch this space for an upcoming podcast on this topic.
Jonathan Gitlin began his journey at Create Advertising Group almost 15 years ago as a intern while in art school. He went on to become a motion graphics designer, creative director and ultimately, partner and president.