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Has the hype died off? Is the fad over? With Google Trends reporting an 80% drop in search interest for Non-Fungible Tokens (NFTs) since its peak in late March, do NFTs have a future in the digital marketing ecosystem?
Early adopters have started to settle down and the flashiness of the latest shiny object looks like it’s starting to fade. However, the topic of NFTs still looms in headlines, suggesting curiosity hasn’t entirely dissipated.
Marketers would be smart to keep an eye on the NFT industry as it matures and becomes mainstream. The potential is not in what has already happened; it’s in the ideas of what copyright, production and ownership mean in a digital world.
The cost of getting involved
Though brands as diverse as Gucci, Taco Bell and the NBA have benefited from the NFT PR wave, there are a few issues that will need to be resolved before more marketers innovate with the concept:
The price of selling NFTs
The cost of selling NFTs is a double-edged sword. The high price reduces mediocre products on auction blocks but also prohibits brands from entering the market. Other costs associated with selling NFTs, include:
- Minting Fees: To generate a certificate of authenticity
- Listing Fees: The auction listing fee
- Commission Fees: Depending on the platform and auction type used
- Transaction Fees: The amount you pay for getting the money out of escrow and transferring it into your digital wallet
Uncertain ROI
For example, working with the blockchain company, Dapper Labs, the NBA has set up its own marketplace called NBA Top Shot, where fans can buy and sell their favorite NBA highlight clips or “moments.” Sales peaked in February ($231.6 million) and March ($230.4 million) but have since dropped off sharply (an approximate 60% decline) despite being one of the industries (i.e., sports collectibles) most likely to develop a sustainable NFT revenue stream. With such high associated costs and low guarantees of return, marketers are hesitant to experiment in this space.
Legal challenges
Not only is the NBA Top Shot a pioneer in NFT minting and selling, but it is also the lucky recipients of the first NFT lawsuit. In short, the plaintiff accuses Dapper Labs of selling securities when also selling NFTs on its platform, causing a conflict of interest. With any new ventures involving emerging tech and money, there is sure to be conflict and risks most marketers can’t afford to take.
Environmental impact
Despite being a virtual asset, the process of minting, recording and selling/buying NFTs has real-world implications. Blockchain transactions consume an immense amount of electricity, which produces a fair amount of greenhouse gas emissions. In addition to the monetary costs, those seeking to play in the world of NFTs must also bear the burden of the carbon footprints they’re creating as well, which may conflict with a brand’s sustainability values.
What to expect with NFTs 2.0
The downsides must be addressed if NFTs are set to evolve and be part of digital and content marketing. Here are some things we expect to see in the near future:
- Going beyond the ledger: Bragging rights are more impressive when you have something to point to other than a line of data in a public ledger. Collectors will want a public forum to display their valuables and their stamp of ownership. Be on the lookout for the rise of the “NFT Museums.”
- Wearable NFTs: The idea of dressing your avatar in a one-of-kind, exclusive virtual outfit has appeal for those traversing the metaverse. In contrast to the NFT Museum, which serves as a centralized destination to showcase your valuables, the opportunity will arise for avatars to showboat on the go!
- Going green: Various organizations are already attempting to tackle the environmental barrier by exploring alternative protocols such as off-chain minting transactions or proof-of-stake versus proof-of-work validation to reduce energy consumption.
- On and offline integrations: Pairing a tangible good along with a virtual asset gives incremental value to the whole experience. Imagine being able to wear an exclusive pair of sneakers autographed by Pharrell in the real world and also having your virtual self wear them in your favorite games.
- M.I.S.S.: Until we make it stupid simple to buy, sell and collect NFTs, this market will remain exclusive to only the most technologically comfortable. This evolution is sure to coincide with cryptocurrency as it becomes more ubiquitous.
