‘NFT2.0’ — From $300K JPEGs to a Marketing Leader’s Best Friend
A New Way For Marketers To Engage Their Audiences and Measure Campaigns
When I first entered the NFT space in March 2021, it was right before the NFT frenzy began with the $69M sale of Beeple’s ‘Everydays: The First 5000 Days’ digital on-chain art piece. For months to follow, NFTs quickly surged to the top of social media feeds and TV sets across the world. Tens of millions of dollars worldwide flew into the NFT market as hopeful investors seized their opportunity to participate in this new digital gold rush; before anyone knew it, BOOM! NFTs saw a massive uptick that reached monthly sales in the billions!
Roughly a year after, macroeconomics leveled out the market sentiment of all investment vehicles, ultimately destroying the highly speculative world of NFTs, ending what we call ‘NFT1.0‘.
However, as most innovations do, there is a cycle in which disruptive technologies are introduced to the public, mainstream hype builds, and market sentiment tanks. The technology then grows back at a leveled pace over time–this process, as expressed in the image below, is known as the Gartner Hype Cycle.
As NFT technology moves from the “Trough of Disillusionment” to the “Slope of Enlightenment,” the actual value of the technology begins to come to light.
While the mainstream may continue to scream, “NFTs are dead,” that is far from the truth. Even today, as I write this blog post, NFTs are selling for millions of dollars from a single image; however, this NFT1.0 example is the exception, not the rule. Instead, it will be a different use case of NFTs that will transcend the technology and bring it into our shared reality.
It is the idea that NFTs convert from a novelty (NFT1.0) to a utility (NFT2.0). In this new reality, NFTs replace gift cards, ticketing, brand loyalty programs, coupons, and so much more–we call this forthcoming era “NFT2.0.”
NFT1.0, otherwise known as the PFP (profile picture) era, was the purchasing of NFTs as a financial vehicle, a way for investors to store their crypto in on-chain images that they can flip for profit.
NFT2.0 is the era when corporations and brands come into the space, and NFT technology becomes a backend, under-the-hood technology brands can use to track and measure gamified experiences for brand loyalty and marketing.
Brought to the mainstream in March 2021, this was the onset of NFTs in the public eye. The Beeple NFT purchase mentioned in the intro would spark a global NFT frenzy for the next year to follow.
Opensea–the largest NFT marketplace–grew over 800% to $3B in revenue alone in August of 2021. NFT projects were released hundreds by the day, and investors couldn’t buy them fast enough. So that model was replicated repeatedly, forming a new standard known as the 10K PFP project. This type of project is when NFT creators roll out 10,000 similar but different images in separate phases where an investor could get in early and buy NFTs before mass release, then sell them right before–or during–a ‘public sale.’
The PFP method gave investors, typically crypto enthusiasts, an opportunity to buy NFTs early and hold onto them until they could convert the 3D or 2D images into serious profits.
Due to ‘rug pulls’ or scam projects, macroeconomic headwinds, and lousy press, NFT1.0 hit a drastic decline, with Opensea sales dropping 99% from May ’22 to August ’22, ending the early NFT1.0 gold rush.
Like the dot-com boom (and bust), NFTs follow a similar trajectory. Like internet projects in the late ’90s, creators would make a website and raise millions for a web domain without a fundamental business concept. When that bubble popped, the internet didn’t end; in hindsight, it became stabilized, bringing us the internet we know and use today.
Similarly, NFTs are going through a rise-and-fall trajectory, which is why some see NFTs today as dying technology, and others see them as the future. Queue NFT2.0, as our company views it, is a true beginning for NFTs.
This technology will allow fellow marketers to: collect data in a new way, gamify brand loyalty more effectively, and give digital assets of all kinds (coupons, tickets, giveaways, content, gift cards, etc.) an unprecedented lifetime value (LTV).
Marketers can understand the benefits of NFT2.0 in four ways–explained in the screenshot below. I found this conceptualization of NFTs for brands from an article by Fortune.com extremely helpful; the article breaks down NFT utility through the following features: game-able, stackable, trackable, and programmable. The screenshot below is an excerpt from the Fortune.com article titled “Beyond Bored Apes, NFTs will revolutionize customer engagement“
Since the NFT2.0 era began, numerous headlines about the world’s most prominent media companies and consumer brands entering the NFT arena have circulated in the media. In collaboration with digital artist RTFKT, Nike has generated ~$200M in the last twelve months through their digital collectibles and NFTs.
Starbucks launched their ‘Starbucks Odyssey’ NFT-based rewards program.
Disney is looking to hire an NFT attorney, and Tiffany’s partnered with the NFT project ‘Cryptopunks’ to roll out a one-of-a-kind token-gated (must have an NFT to access) NFT campaign.
The future of NFTs is an under-the-hood technology that brands and marketers can use to create, manage, and track digital movements in a way marketers have never seen. We predict that when this technology takes off, the users, both brands and consumers, will have no idea they are even using NFT technology.
NFT1.0 brought the market into existence, but the fundamentals of that era led to a quick demise.
While NFTs are still being sold for millions of dollars today, the NFT1.0 format of selling 10,000 NFTs in multiple phases while offering utility as nothing more than a piece of a roadmap on a website will not be what makes NFT technology an everyday reality.
The thing that will, however, is the high-frequency digital asset creation that will occur in NFT2.0 and how this usage of NFT technology will increase the LTV of brand-made digital assets, giving marketers a new way to learn, reach, and retain their customers.
Some of my favorite examples of how brands are already exploring NFT2.0 include:
sporting leagues turn tickets into NFTs as we already saw with the partnership between Dapper Labs and Ticketmaster
Web3 brand loyalty programs like Starbucks Odyssey
New ways of reaching customers as “Apple and Google are phasing out cookies on web browsers and preventing internet tracking on devices.” (Adage – HOW NFTS FIT INTO LOYALTY PROGRAMS AND FIRST-PARTY DATA FOR BRANDS)