BEYOND THE HYPE - DO CONSUMERS REALLY CARE ABOUT NFTs?

In this article, I take a step back from the current hype around NFTs to better understand and determine; (i) whether most consumers care and (ii) what opportunities there are for brands with this new technology. (All opinions and views are my own.)

To understand how hype plays a role in emerging technologies, the Gartner Hype Cycle models how the initial rise and fall occurs as high expectations often exceed experiences in the early phases of emerging technologies. To understand the present and future outlook, using this model can help better contextualise where we’re at and possibly heading - ultimately there is no certainty surrounding NFTs, which is both exciting and exactly why you shouldn’t believe all the hype.

Source: Wikipedia

Whilst NFTs are causing a stir in marketing and technology worlds the question we should be asking from a brand perspective is what’s the appetite from the people who really matter - consumers? So I’ve explored a range of recent consumer surveys and findings to try and gauge the appetite from outside the hype bubble to help brands make up their own minds about where they should stand.

A couple of key events certainly suggest NFTs are becoming more visible - from the Collins Word of the Year being NFT in 2021 to YouTube announcing it is exploring NFT features for creators. There are mixed views though on whether we are ushering in a new future or fuelling a bubble waiting to burst. 

Having been an early enthusiast, the thing that initially brought me down to earth was a casual conversation with my family (who live both outside of London, and the marketing and technology industry bubble) about how I’d recently created my own NFTs. This subsequently invoked the befuddled response - what on earth are you talking about James?! - and me trying to explain in simple terms, which when you start talking about blockchain, smart contracts and Ethereum you can soon lose most people.

The question that intrigued me then was do most real consumers actually know (or care) about NFTs? 

WHAT THE DATA TELLS US ABOUT CONSUMER APPETITE

So let's look at some recent surveys to try and gauge where mainstream consumers stand.

General awareness and appetite for NFTs is still very much concentrated in a minority; an online poll of over 28,000 people across 20 countries (Finder, Nov 2021) found from 90% of adults in Japan and 71% in the US, to 66% in Canada and 59% in Singapore say they don’t know what NFTs are. 

Of those in-the-know, appetite isn’t necessarily positive either; the Game Developers Conference annual survey found 70% of respondents said their gaming studio has no interest in NFTs at present - this for me was an interesting revelation as the likes of Axie Infinity are already applying NFTs effectively with in-game marketplaces.

To understand the current scale of NFT owners, OpenSeas reported 1MN global active user wallets in January 2022 (although a more conservative estimate from analytics site DappRadar suggests it is more like 500,000) highlighting the relatively small pool of prospective owners.

The leap to becoming a mainstream market has some way to go then - the prediction from Gartner suggest this may be as long as five years. Referring back to the Hype Cycle, NFTs are likely sliding into the trough of disillusionment - events like the recent OpenSeas phishing hack may discourage and dissuade positive opinions at present around NFTs (plus - my housemate showed me the other day the latest NFT launch from Paris Hilton, which was nearly enough to make me write off NFTs in an instant too!)

WHERE WE’RE AT AND WHERE WE’RE GOING

So what to make of all this? Awareness and appetite is concentrated in the hands of a few early adopters - for most people they are either unaware or don’t currently grasp the value of NFTs. Any scope for early opportunities really should be made based on an assessment of specific business position, category and market to determine consumer appetite.

At this early stage it will be a balancing act of risk vs reward. For first movers, there is high risk but high reward in this space. Market leaders may feel obliged to act. And fast followers can bide their time until the market settles and opportunities are more obvious.

What we’re seeing in this data is a snapshot in time that highlights the early stages of this emerging market. If more big players get involved this should accelerate things, like what we’ve seen in the last-12 months with several key moments fuelling search interest in NFTs. This trajectory is likely to continue as more people try to get their heads around what exactly they are.

A snapshot of key search moments for NFTs 

Source: Timeline created by Jellyfish using Google Trends, 2022

But at present the unregulated and highly speculative nature of NFTs leaves this market feeling like the wild west at present. Moves by the likes of Instagram who are reportedly working on NFT integration and Twitter announcing verified NFT profile pictures will help the pace of confidence and familiarity beyond early adopters and investors in the wider public domain.

For me personally, there seems to be a significant lack of genuine utility being created by a lot of NFT projects that are being launched - I may be missing something but I just don’t understand what value the likes of Melania Trump are creating with their NFT projects beyond cashing in on this current wave of hype. From a brand point of view, creating for the sake of creating is not the way to go as this does not drive real brand purpose in people’s lives.

IT’S ABOUT BELIEVING IN THE FUTURE POTENTIAL

Projects like Plant Dao however instil me with greater optimism around how this technology can be used for good. Plant Dao’s road map seeks to use NFTs in the metaverse to tackle the problem of deforestation in the real world. They will create a series of NFT trees, shrubbery and green spaces that can be minted and integrated into virtual worlds; funds from sales will go towards reforestation projects. 

Equally, Bacardi is leveraging NFTs to raise awareness of the under-representation of females within the music industry. The drinks brand has teamed up with a trio of female artists to create a series of ‘Caribbean-inspired’ NFT mixtapes that have been auctioned off. The project not only promotes interest and support for the female artists but it also creates a two-way relationship, as the buyers (or ‘fanvestors’) of these mixtapes will also benefit from royalties associated with the NFT that see greater returns the more the music is streamed. As Laila Mignoni, head of global marketing at Bacardi calls out “an NFT for the sake of an NFT doesn't really speak to us” - so NFTs from Barcardi’s point-of-view are a new way to engage and connect with audiences that have an underlying social mission that aligns with their brand purpose.

For me these are some great examples of how smart applications of NFT technology are being used for social good, creating utility and value beyond just memes and pixelated punks.

LET’S NOT BE TECHNOPHILES OR TECHNOPHOBES

For many brands the broad advice here is don’t just jump on the bandwagon - doing things for the sake of it is never going to lead to the creation of positive experiences or utility for consumers. Any assessment and decision-making should focus on listening to real people to understand what they really want and how new experiences and utility can be created through NFTs.

Equally, don’t let this new wave pass you by; as bewildering as this world may be, take an active interest to keep informed. As strategy leader, Eoan Pritchard wrote; “…in 2022 lets keep a pragmatic view on the new technology. Keeping a cool head. Let’s be neither technophiles nor technophobes, but adopt the position of an informed buyer.” (Ad News 2021) 

Put consumers at the heart of any decision making, the brand opportunity lies in building new experiences to engage and connect with a community. We’ve already seeing several broad applications for how NFTs are doing this:

• Providing exclusive access e.g. Matrix Avatar NFTs were launched as part of the build up to the release of Matrix 4
• Creating unique collectibles e.g. LiveNation has unveiled a series of collectible NFT ticket stubs for the upcoming Swedish Mafia tour
• Releasing limited editions e.g. Asics released a series of limited edition digital running shoes that give owners the opportunity to own one of these pieces, with the proceeds going towards supporting artists in residence
• For social good e.g. Change DAO and its Triple P NFTs seeks to drive real social impact through NFTs
• Bridging the real and digital e.g Dibbs enables people to buy a share through an NFT in a physical, collectible sports card

And this is not an exhaustive list - each week I hear of new and innovative ways people are putting NFTs to good use. Check out the regularly updated list of brand activations from Ad Age to get inspired.

An interesting social experiment that caught my eye is Damien Hirst’s project, ‘The Currency’. Hirst is offering ten-thousand NFT-linked pieces of artwork for sale. Once purchased, buyers have one year to decide whether they want to keep the NFT or exchange it for the real thing. Depending on the majority decision, only one medium will survive (the other will be destroyed.)

The outcome of this experiment may give us a hint whether people are really ready to embrace a virtual world of ownership, by which one they place more value on in the end. (‘If I had the choice I would want a real-life Hirst to hang on my wall but maybe I am missing the investment potential in an NFT…’)