Non-fungible tokens (NFTs) have registered tremendous growth in the past year, and their importance is expected to increase with the expected development of Web3. From a brand perspective, NFTs can be seen as representations of the brand components, such as the product, the logo, or the image. I argue that NFTs have immense potential to become standalone brand assets. I illustrate how this can be achieved by relating the brand’s NFT strategies to the marketing funnel stages. Brands can turn into an NFT their physical products such as shoes, shirts, or art to attract brand awareness, generate cross-selling opportunities, and spark stronger perceived ownership of certain brand elements. Importantly, NFTs can allow brands to form a highly engaging brand community that can support the brand, blend online and offline product ownership, and potentially create a bond between the brand and consumers. These exciting possibilities generate a rich research agenda I present in this paper.
Non-fungible tokens (NFTs) have registered a whopping 17 billion USD in sales in 2021 and are on their way to beating these figures in 2022 (EY, 2022; McKinsey, 2022). Peres, Schreier, Schweidel, and Sorescu (2022) editorial defines NFTs as ‘‘cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.” From a brand perspective, NFTs can be seen as representations of the brand components, such as the product design, the logo, or the image. For instance, a branded NFT can be a digital twin of a physical product, a graphical representation of a brand’s logo in the digital environment, or a ticket to a concert (AdAge, 2022). However, I argue that NFTs have much more potential as they can become standalone brand assets and thus largely contribute to the overall brand equity. I propose that this can be achieved by affecting consumers in the pre-purchase, purchase, and post-purchase stages of the marketing funnel in two ways.
First, NFTs can become standalone brand components (e.g., new products) that can play an important role along the whole marketing funnel. Launching a branded NFT can raise brand awareness and attract previously unreachable audiences (e.g., Gen-Z). For instance, Anheuser-Busch has successfully launched several NFT collections accompanying the launch with events (music, concerts) and giveaways from tech companies (AdAge, 2022). Consumers can also be persuaded by the NFTs to buy the brand’s physical products, thus creating cross-selling opportunities. A prominent example is digital fashion brands like Nike and Adidas, which have sold many physical shoes as NFTs and vice-versa (McKinsey, 2022). Finally, brands can build loyalty by creating stronger perceived ownership of certain brand elements, such as the brand logo or design.
Second, NFTs can form a brand community that can support the brand. As webpages revolutionized commerce and social media have created a two-way communication channel with consumers, NFTs can become the catalyst for the third wave of commerce through the power of online brand communities (Schau, Muñiz, & Arnould, 2009). Discord, Telegram, and Reddit are highly engaging, decentralized, and anonymous social media platforms where users spend an increasing amount of time (Influencer Marketing Hub, 2022). Brands can use platforms to create customer engagement in NFT communities through organic messages or creative content that can increase brand awareness. For example, Time Magazine uses Discord to engage users with daily games and challenges (Ewen, 2021). Brands can also utilize the community aspects of NFTs for blending the NFT ownership with offline use cases, increasing purchase intentions for the brand’s products. This can be done by rewarding NFT holders with access to exclusive merchandise (e.g., The Hundreds’ and Adam Bomb Squad), premium service (e.g., priority in seating in concerts), or even private parties (e.g., Bored Ape Yacht Club yacht party) (AdAge, 2022; Kaczynski & Kominers, 2021). Finally, brands create a bond with consumers by designing authentic and creative storylines around the brand’s identity.
Overall, this article aims to contribute by proposing that NFTs can become standalone brand assets. In this respect, I discuss how NFTs can create value for brands by (1) being standalone brand components and (2) forming and harnessing the power of NFT brand communities. Specifically, I illustrate how these two avenues can be connected with the marketing funnel stages. Finally, I generate several exciting research directions to spark innovative ideas (see Schreier, Peres, Schweidel, & Sorescu, 2021).
2. The marketing funnel stages
The marketing funnel is a term used to describe the sequential customer decision-making that occurs in several stages (Wiesel, Pauwels, & Arts, 2011). The idea is that consumers must first find out about a brand before developing purchase intentions, followed by a purchase decision and potential post-purchase deliberations (Hoban & Bucklin, 2015). While the marketing funnel is also sometimes referred to as the purchase funnel, it thus more broadly represents the entire process of the evolution of customer-brand relationships (and not only before the purchase). Thus, the marketing funnel is generally accepted to be composed of three stages: pre-purchase (e.g., brand awareness), purchase (e.g., purchase intent, purchase), and post-purchase (e.g., customer satisfaction, loyalty) (De Bruyn & Lilien, 2008; Rogers, 1995; Schweidel, 2022). Brands then design tailor-made marketing strategies appropriate for each marketing funnel stage (Wiesel et al., 2011).
3. How can brands leverage NFTs in the stages of the marketing funnel
Building upon the idea that NFTs can be standalone brand components and leverage the power of brand communities, I next illustrate how brands can use NFTs to impact consumers along the marketing funnel (see Fig. 1).
3.1. Pre-purchase stage
The foundation of all brands and marketing efforts is the creation of pre-purchase attitudes. Ideally, consumers will be able to recognize and remember the brand in the purchase stage (De Bruyn & Lilien, 2008). To do so, brands must focus their NFT efforts on creating brand awareness through exposure to their elements.
3.1.1. NFTs as standalone brand components in the pre-purchase stage
Brands can utilize the NFT product launch as a catalyst to generate brand awareness for several reasons (Gelper, Peres, & Eliashberg, 2018). First, the NFT launch can expose the brand to previously unreachable audiences. The NFT hype cycle is fueled by cryptocurrency enthusiasts, Gen-Z Discord users, and a more technologically oriented crowd (Howarth, 2022). For example, an effective brand strategy can be launching an NFT in collaboration with an established NFT collection which can expose the brand to new audiences. Typically, the NFT market is organized in collections containing a set number of items (e.g., 10.000) under the same theme or umbrella (Nadini, 2021). Prominent cases of reputable NFT collections include the Bored Ape Yacht Club (BAYC), with each NFT presenting different variations of a ‘‘bored ape” with features that determine their rarity. Another example is World of Women, a collection of women portraits that has the aim of raising important issues around diversity and inclusion. These reputable collections have entry prices of tens of thousands of dollars on OpenSea (the largest marketplace for NFTs) (NonFungible, 2022). Recent cases of brand collaborations include the partnership between Adidas and Sandbox, the acquisition of the digital fashion brand RTKFT by Nike, and the development of Samsung’s smart TV compatible with NFT in collaboration with Nifty Gateways (AdAge, 2022). These collaborations have helped both sides as brands have reached new audiences while the NFT collections gained hype and legitimacy.
Second, NFTs product launches enable brands to become more creative in their marketing efforts because they demand more personalized marketing strategies for specific audiences. For instance, Anheuser-Busch has launched several collections across its Bud Light, Budweiser, and Stella Artois brands, which featured real-life events (music, concerts) and giveaways from tech companies (AdAge, 2022). NFT holders were then given a chance to vote on Bud Light NEXT merchandise and gain access to partner events. Similarly, brands can combine physical product launches with an NFT collection launch to ease the more traditional consumer segments into the NFTs. Consumer brands such as Campbell’s, Gap, Pizza Hut, and Samsung have recently executed this approach, generating consumer buzz and excitement (AdAge, 2022).