“You taught me what’s up and then I bought an ape!” exclaimed Jimmy Fallon.
The ape in question is part of the “Bored Ape Yacht Club,” a limited collection of non-fungible tokens (NFTs) signifying one’s membership in the club, with an illustration of a disgruntled-looking ape to prove it.
Socialite Paris Hilton showed off her own chosen ape during a guest spot on Fallon’s Tonight Show, marking one of the first times the NFT space has gained recognition within mainstream media. Google searches for “Bored Ape NFTs” skyrocketed following the episode as people looked for answers to the strange new phenomenon. Why were the rich and famous suddenly purchasing pictures of a cartoon ape?
What is an NFT?
The Bored Ape Yacht Club is one of the many NFT digital art collections available for purchase on the Ethereum blockchain, an open-source cryptocurrency and application code platform.
An NFT is a one-of-a-kind digital asset that can range from an original tweet to videos or artwork such as the cartoon Bored Apes. Purchasing an NFT gives one exclusive ownership over the asset, similar to buying a painting that hangs in your home and can’t be copied brushstroke for brushstroke.
Blockchains track and maintain records of transactions, such as the transfer of an NFT from one person to another. This digital ledger allows all the files and work hosted on this network to be recorded in a way that is irreversible and open for anyone on the blockchain to see.
However, since digital assets like NFTs are purchased with digital capital, one must first purchase cryptocurrency like Ethereum. As of this blog’s publication, one hundred dollars can buy you 0.0653984008 Ethereum (ETH), which has significantly dropped in value due to the cryptocurrency market crash.
NFTs have brought a whole new meaning to collectible items and continue to challenge the idea of ownership over an asset. They seem an inevitable byproduct of the world’s rapid adoption of digital systems.
How are NFTs Used in Marketing?
For Brand Awareness
The excitement around NFTs in the cryptocurrency marketplace has caught the marketing industry’s attention. Brands such as Nike, which has significantly benefitted from the scarcity business model, released a collection of 20,000 NFTs called “Cryptokicks.” Generic pairs of these virtual sneakers range in price from $5,000 to $9,000. A rare pair designed by Takashi Murakami sold for $134,000.
For Social Good
Other brands such as Norwegian Cruise Line have used the buzz around NFTs to fundraise for charity. The launch of their Norwegian Prima Class vessels corresponded with the release of a series of NFTs, which were auctioned off, and the proceeds donated to Teach for America.
When asked why NFTs were a part of the marketing campaign for Norwegian Cruise Line, President and CEO Harry Sommer said, “The Prima Class is the future of NCL, taking innovation and guest experiences out of this world… and into the metaverse! Art plays an important role in the guest experience across our fleet, and we are thrilled to add to our legacy of pioneering firsts with this venture into the world of NFTs.”
For Maintaining Brand Authenticity
One of the main pulls of using a blockchain to track transactions is the ability to verify the authenticity and ownership of an asset. Robert Mondavi Winery took note of this and partnered with French porcelain designer Maison Bernardaud to create a limited-edition series of 1,966 custom-made bottles filled with To Kalon Vineyard Cabernet.
Each bottle was sold in conjunction with its corresponding NFT. Buyers had to purchase the NFT before receiving their bottle, accompanied by invitations to exclusive wine tastings. This creative combination of real-life products and digital assets helped refresh the brand’s image while combatting the counterfeiting problem that persists in wine collecting.
For Event and Ticket Promotion
Live events were put on pause during the pandemic, which is why the Coachella Music and Arts Festival decided to come back with a bang for its 2022 run. The Coachella Keys Collection, one of three Coachella NFT collections launched this year, includes a lifetime pass to the festival for each owner, as well as access to its metaverse experience. Coachella ticket holders were also able to claim a free Desert Flower NFT, which unlocked perks such as exclusive merchandise, dedicated entry lanes, and food and beverage vouchers.
NFTs and the Future of Marketing
Incorporating NFTs into a digital marketing plan is a relatively new frontier as companies gauge whether the demographics and loyalty of their customer base warrant investing in NFTs. While there is a strong community growing within the cryptocurrency space, the adoption of virtual assets and property still has entry barriers for most of the public. Many platforms require cryptocurrency, which is expensive and difficult to understand. The cryptocurrency knowledge gap, coupled with a lack of regulations within the industry, has also given rise to scammers.
One of the main factors that marketers must weigh is the environmental impact of NFTs. Blockchains require an extensive amount of computing power to continue hosting transactions. The amount of energy needed to mint a single NFT is roughly equivalent to 4.7 days’ worth of energy for the average household in America. The level of carbon emissions from actions on the blockchain may be a cause for concern for brands that put sustainability at the forefront of their ethos.
Whether or not the NFT craze will continue to be paired with high-profile brands is yet to be determined and is highly dependent on the future of cryptocurrency. Nonetheless, marketing in the digital age is constantly changing, and we can expect more virtual ventures in the coming years.
By Alyssa Nepomuceno
Photo by Adrien Olichon on Pexels.