How Brands Are Revolutionising Consumer Engagement with NFTs
Big corporates are guilty of the bandwagon effect having jumped onto the NFT (non-fungible tokens) hype train but failing to accurately leverage the ideology behind these trendy projects. The success of an NFT is not determined by the floor price, but rather by the community that has been cultivated. Inspired by the gaming community, learn how brands can use NFTs as a foundational tool to connect with consumers to drive engagement and boost loyalty.
The branding game
Asia is at the forefront of NFTs as the region accounts for one-third of the $22 billion global trade. This comes as no surprise as over 82% of Southeast Asia's urban online population are gamers, given the once out-of-reach expensive consoles and computers have now been traded with everyday mobile devices.
A once shunned hobby becomes a lucrative industry that even luxury brands began joining forces with the virtual world. Brands have been riding on the gaming and e-sports wave for reasons beyond diversifying themselves with another digital channel, as the global gaming market is expected to reach a value of $340 billion by 2027.
Consumed by over three billion gamers worldwide (over 40% of the world's population), the community is what the brands lust after, capitalising on entertainment to build brand equity within the virtual world. With the gaming community now composed of individuals with different personalities and niches, brands hawk over the prized opportunities to connect with a fresh group of audiences.
The next evolution of rewards
Video games are designed to be addictive as the brain constantly chases pleasure and encourages ongoing engagement. While traditionally players paid to play, blockchain games have shifted to a play-to-earn model, integrating crypto tokens and NFTs as a rewarding mechanism for gamers. For example, UniX is a community-centric platform that enables gamers to generate revenue and even earn scholarships, through virtual games.
While many brands started with designing avatar skins as an entry point, these virtual collectibles provided no real value other than in-game skills or plain aesthetics. The cosmetic skins are also not available to be transferred to other virtual environments nor have any trading value, which is why developers have now evolved to blockchain games that allow consumers to own their assets as NFTs.
Luxury label Louis Vuitton is active in gaming collaborations and has recently launched its own mobile game with collectible NFTs as a reward. A shift to in-game NFTs is rising in popularity as users can now own digital assets as rare collectibles, with an opportunity to flip for profit. Today, consumers seek to be compensated for their loyalty and earn the title of brand ambassador for their favourite brands.
A community to connect
NFTs hold more value than just a monetisation opportunity as the fundamental nature is to be associated with the community behind the project. "The key is to be creating a strong brand that can be determined by their marketing. So the questions to ask are - how are they perceived by the community on their social media platforms?" shares Mirko Basil Doelger, CEO & Co-founder of UniX.
The social element of gaming fulfils the human need to be part of a social group, encouraging social interaction, cooperation, and competition. Knowledge sharing is actively practiced amongst gamers, from strategies to daily life discussions - also what marketers refer to word of mouth.
Social status on the blockchain
Brands are also using NFTs as a digital membership pass and curate unique offline experiences to drive engagement with their online cliques. DNNR is an NFT platform that enables holders to visit a Metaverse Dining Club and attend real-world events at some of the world's trendiest restaurants. Another Hong Kong-based luxury marketplace Wear also utilises memberships to unlock exclusive product drops and insider events within the fashion community.
Much like buying a high-quality replica versus a real designer piece, there may not be much a difference to the naked eye. When it comes to luxury purchases, the motivation to buy an Hermès Birkin or a Bored Ape Yacht Club NFT is not for its functional aspect, but for the social status where the majority of the value lies. What really matters to the owner is becoming associated with the brand upon purchase - and flex of wealth. Prices of these assets in digital form are often appreciated at a higher value as virtual ownership allows the consumer to flaunt their collectables for everyone to see on a global stage.