NFT, the gateway for companies to experience the new, 'phygital' world

Photo: Companies harness NFTs to reach out to customers in innovative ways. Credits: Rawpixel/Freepik. 

By Isabel Reviejo 

"The first tweet in history, sold for 2.9 million dollars". "The first fully digital collage was auctioned for more than 58 million euros". Headlines like these, often accompanied by staggering figures, are a sign of how interest in NFTs (non-fungible tokens) has been growing in recent years.  

NFTs are unique digital assets that cannot be copied and whose traceability is guaranteed by blockchain technology. With the aim of owning or offering exclusive and innovative goods, both individuals and companies have joined this trend, which has sparked the enthusiasm of those who see in them a great disruptive potential, especially in sectors such as art or high fashion.  

One fact that highlights this boom is that, between 2020 and 2021, the value of the NFT market went from $232 million to $22 billion, according to the firm Market Decipher, which forecasts that by the beginning of the next decade it will reach $60 billion. 

Although periods of instability during 2022 in the world of cryptocurrencies - such as last May's cryptocrash - have slowed this rapid growth, companies continue to integrate these tokens into their strategy and take advantage of their benefits. "NFTs offer companies the opportunity to experiment with new business models and ways of interacting with customers, which helps to stay at the forefront of technological innovation and remain competitive in the market," explains Nicola Papaleo, Head of Corporate Innovation and Venture Builder at Opinno Italia.  

These assets also offer other advantages, such as the possibility of monetizing new content and greater control over the ownership and use of digital assets, although the possibilities will depend on the specific needs and objectives of each corporation.   

Exclusivity as a marketing ploy 

One of the most popular ways that organizations have adopted to tap into this world is the issuance of NFTs to commemorate a special event or date, or of unique creations of curiosity or value to the brand's followers.  

Here, the restaurant industry has been one of the most fruitful. Taco Bell sold 25 tokens inspired by its product line for charity, and McDonald's developed and raffled off an NFT of its McRib burger to celebrate its 40th anniversary. Pizza Hut and Pringles are other brands that have undertaken similar strategies.     

Beyond this sector, we find cases such as Audi, which ventured into this market with a limited series of NFTs, or Campbell's, which launched an NFT collection of artwork based on its soup cans; an initiative with echoes of Andy Warhol's iconic work. 

The value of diversifying revenues 

Some companies are promoting platforms where they market NFTs of their own creation or those of third parties, which can become a new source of revenue for the organization or to raise funds for social initiatives.  

One notable initiative is that of the NBA, which, similar to classic sticker collections, sells NFT packs of basketball players, including some of their best plays. Telefónica NFT Marketplace is one of the telecommunications giant's latest ventures into the Web3 universe (the decentralized Internet), and houses items such as exclusive stories by writer Arturo Pérez-Reverte.       

The trend has also reached news organizations. Both the AP news agency and CNN have opened marketplaces offering NFT of photographs or pieces created from journalistic coverage of historic moments, such as Nelson Mandela's release from prison. Time magazine, in addition to launching a complete issue in NFT version, has TIMEPieces, a community that has already made available to collectors 20,000 non-fungible tokens.    

A new way to build customer loyalty  

NFTs can also be a way to improve the customer experience and encourage customers to return. Starbucks will use them to update its loyalty program and engage with customers in a new way. Starbucks aims to create a community where members can earn, sell and buy non-fungible tokens that will give access to "new and immersive" experiences.  

Another example is Burger King and its Keep It Real Meals gamification initiative. With it, consumers could scan QR codes on their products to unlock a game that, once passed, entitled them to an NFT associated with different gifts. 

The leap into the metaverse 

Since Mark Zuckerberg unveiled Meta's (formerly Facebook) bet on the metaverse at the end of 2021, forays into this innovation have multiplied. This virtual and immersive universe also comes hand in hand with the new economy of goods and services based on NFT and other crypto assets.   

There are already cases of companies that have set up their stores in the metaverse or where users can buy NFT wearables to customize their avatars. Fashion firms, and specifically high fashion brands, have taken the lead. For example, Dolce & Gabanna presented in 2021 Colezziones Genesi, its first tokenized collection, composed of digital replicas of existing real-world garments and new virtual creations. Its auction brought in millions of dollars. 

In 2022, Metaverse Fashion Week was even held on the Decentraland platform. A twist on traditional catwalks in which big names such as Valentino, Emporio Armani or Tommy Hilfiger participated. 

Multiplying the possibilities of the phygital environment. 

On the other hand, NFTs can serve as a passport to a phygital experience, in which digital ownership of the token is linked to certain rights or benefits in the physical world. For example, Coca-Cola auctioned an NFT packagethat combined items such as a coat that could be used in Decentraland and a retro-style physical refrigerator. Other examples are Air Europa, with an NFTicket that included a flight to Miami and activities in that city, or the musical group Kings of Leon, which released an album in NFT format linked to benefits such as a ticket to one of their concerts.   

In addition, the connection between the physical and virtual worlds can take other forms. The possibilities are endless: from Alfa Romeo's proposal to implement an NFT that acts as a car service book, to Tiffany & Co.'s proposal to turn NFTs from the CryptoPunks collection into diamond pendants.   

Looking to the future 

In the coming years, "NFT could continue to be important for businesses because of its ability to provide transparency and trust in the supply chain, generate revenue through the sale of authorized digital content, and protect copyrights and intellectual property," says Papaleo. 

What should organizations that want to enter the NFT arena consider? First of all, it is advisable to be clear about the motives and, above all, how these virtual assets will bring value to customers.  

Before embarking on this journey, the expert recommends that organizations "carefully research the market to better understand the NFT landscape and how it fits in", covering aspects such as competitor analysis and the needs and preferences of potential buyers.  

Subsequently, "develop a solid marketing strategy to promote the launch of the NFT," which may include creating strategic partnerships with influential players in the industry. In addition, the organization needs to ensure that it has a "robust and scalable management and distribution system" to effectively manage demand for the assets.  

As the development of NFTs is in its infancy, there are possibilities and use cases that are yet to be defined. For the moment, the experience of companies has shown us that there is no single formula for success, but that each company can find the application that best responds to its strategy and the interests of its community.