Ever since its creation in 2014 and hype in early 2020, non-fungible tokens or NFTs have already grown massively and adopted by more and more people every year. Based on the latest NonFungible.com data, there are over 36 million NFTs in existence and more than 200,000 crypto wallets actively trading NFTs. As the NFT ecosystem grows, the space has also presented opportunities for substantial revenue streams for companies, especially the biggest brands that are among the pioneers of NFT offerings to the public.
Dune Analytics recently released a much talked-about case study that showed which major brands profited the most from their NFT projects. It reported that out of over $260 million revenues generated from NFTs of big brands, Nike topped the list, making a massive $184 million sales from NFTs. This was possible after Nike acquired NFT creative firm RTFKT in December 2021, amping up its Web3 strategy and offerings ever since.
Other NFT bestsellers in the report include Dolce & Gabbana, Tiffany, Gucci, and Adidas who all had millions of NFT sales. Write ups about the report pointed out how NFTs can be a major source of revenues for major companies, and how the NFT market has a bright future in populating future metaverses offering innovative and out of this world experiences.
Yes there are many different ways these large brands capitalized on the potential of NFTs, and they all employed different strategies suited for their values and organization. In this blog, we will discuss the ways big brands shaped and strategized their NFT projects to success.
Companies are business enterprises wanting to make profit, and this is common for companies interested to enter the Web3 and seize the opportunities it presents. An NFT venture will have costs such as the technology, building the whole infrastructure and project, minting and so on. As a business, they need to justify these costs on their books so they need to profit, or at least break even.
Most companies that have created their NFT projects have dollar signs in mind. Tiffany & Co. rolled out their CryptoPunk NFTs called NFTiff, focusing solely on primary sales. Crypto Punk holders can purchase NFTiff, and Tiffany designers will create a custom necklace based on the buyer’s Crypto Punk. These necklaces are made with 18-karat gold and at least 30 gemstones and diamonds. An NFTiff – comprising of a digital and physical Crypto Punk necklace – costs 30 ETH, or around $50,000.
Like Tiffany, Budweiser and Bud Light profited from primary sales of their NFT collections, and not from royalties. Budweiser launched collections featuring Dwayne Wade and the designs of their heritage cans through the years, while Bud Light celebrated artists and creators, and gives NFT holders exclusive voting rights on specific brand decisions moving forward.
These examples of successful primary sales-focused NFT projects show that there must be solid value, innovative features to capture your audience, and a sense of timelessness and evergreen value to make the digital asset valuable for specific audiences – like how rare gems are here on Earth.
When a company can capture what their audience value the most and goes beyond that, they can have strong NFT offerings that will attract their target audience and augment their revenue streams, possibly making NFTs and Web3 one of the major sources of their revenue streams. That is what Nike perfected when they acquired RTFKT. Whether it’s a sneaker NFT or CloneX, Nike and RTFKT have been launching numerous NFT collections that speak to their audience and set trends on fashion, art, futuristic NFT creations, and presenting other features different from other brands’ NFTs.
Forward-looking enterprises tend to explore better and innovative ways to reach out to their audience, uplift experiences and, in some cases, push forward admirable causes instead of only focusing on profits.
Among the top 10, Pepsi is the only one that gave away their NFT drop for free, targeted to engage their audience. Their Pepsi Mic Drop NFTs garnered a lot of interest from its followers, resulting in $11 million worth of sales from holders trading the NFTs in the secondary market.
Having the same engagement focus but not limited to it, The Time Magazine also adopted this approach through engaging the art community, highlighting and featuring their artistry through various covers and magazine issues that were turned into NFTs. Called TimePieces, artists’ creations give flare to Time’s covers and issues, making them iconic NFT pieces with valuable content.
Since this free NFT approach garners good engagement and take up from audiences – and possibly in the secondary market – it is up to the company if they will also have a pie share of secondary sales through royalties, or solely endeavor their project on growing community engagement. Unlike Pepsi that did not partake revenue from NFT resales, The Time Magazine still profited from primary sales and royalties from secondary sales.
Utility NFTs are those with additional utility, benefit or uses other than the inherent scarcity value of NFTs. Gone are the days when brands only launched NFT projects without other added benefits or uses.
As exhibited by brands like Dolce & Gabbana in their NFT projects, they increase the value and saleability of their NFTs by allowing buyers to have exclusive or early access to future events, memberships, metaverses, experiences, and many more benefits. In cases of Nike, Adidas and other fashion brands, they make wearable NFTs which can be worn by avatars for metaverses, leveling up the fashion game in virtual worlds, and also present an added physical world equivalent of their NFTs such as sneakers, hoodies, shirts etc. Like them, most consumer and luxury brands are inclined to launch utility NFTs that present a digital NFT experience paired with a physical version of NFT they bought. The more the benefit or utility, the more it increases the overall demand and saleability of the NFTs.
Whatever the utility or benefit they decide for their NFT projects, companies must wise up and factor in the pulse of their audience, weigh the options and study which strategy will speak best to their target market, as well which is suited for the organization’s values, needs and strategies.
Regardless of the kind of NFT or strategy they will adopt, businesses have the responsibility to educate the public that NFTs are not investments. Instead, they must communicate that NFTs be seen and bought for its utility, benefit and any other value it brings. This is why companies giving digital assets away “for free” help avoid the wrong notion that crypto and NFTs are investments or securities, which can further help in shaping the regulations for Web3, crypto and NFTs.
In the future, as we experience future improvements in Web3 technologies, wallets, and less friction in getting started in the world of Web3, we may see more companies doing free NFT drops, or offering affordably priced NFTs such as NFT tickets to concerts, or Taco Bell’s NFTs which are sold the same price as their tacos.
Gigster helps major companies set up their Web3 projects without hassle and trial and error, as well as educate their teams on all the things they need to know about Web3 that will aid in the success of their Web3 ventures whether NFTs, crypto, or other offerings. Got questions? Ask Gigster now for Web3 assistance.