How brands are using NFTs today

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Non-fungible tokens (NFTs) are going mainstream in 2022. Established companies as well as emerging start-ups will want to invest in NFTs as they look to further expand the digital side of its business by tapping into emerging technologies such as nonfungible tokens, or NFTs. The tokens are essentially digital deeds that verify the authenticity of the items they represent as unique.

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Nowadays, you can even show off your favourite NFT as your Twitter profile picture, with Facebook and Instagram soon to follow. Virtually displaying your membership through a virtual ‘badge’ shows you're part of a community (such as Bored Ape) and have made money through crypto. Driven in part by a FOMO reminiscent of the 1990s dotcom anxiety of bricks-and-mortar companies, mass-market players and luxury brands alike are launching NFT collections at a dizzying pace.

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But are NFTs just a passing fad? While the current hype cycle might be fuelled by crypto-millions and Discord-obsessed Gen-Z users, NFTs could be the killer component of Web3 and its gateway into traditional commerce. The interesting thing about NFTs is the blockchain technology they run on. This reveals their broader promise as a vehicle by which brands can bypass the platform-centric marketing world of Web2 (relying on social media websites such as Facebook, Instagram, TikTok, YouTube) and rather reclaim ownership of their digital consumer relationships.

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Furthermore, NFTs aren't just valuable economically. They're also revolutionary when it comes to branding. Projects such as CryptoPunks, Bored Ape Yacht Club (BAYC), Koala Intelligence Agency, Art Blocks, CyberKongz and many more are changing brand-building approaches. The days of physical brand building, which has helped companies such as Nike, Gucci, etc., create their followings, is being replaced by a digital metaverse with a cult following.

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NFTs as the foundation for a complex digital-consumer connection

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At the end of 2019, Nike coined the term “CryptoKicks”. It wasn’t a PR stunt – the firm filed a detailed document with the US patent office that outlined its plans for “cryptographically secured digital assets”. Nike wants to build a community through NFTs. There exists an opportunity to engage and influence users in the digital realm via collectable objects so that they may be more engaged with a brand in the physical world.

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Purchasing a pair of the Nike shoes will now upload a digital version of the product into your ‘virtual locker’. Given the subculture that exists around collecting, trading and reselling sneakers, incorporating a digital seal of authenticity to the physical counterpart of the token takes this to the next level, further boosting consumer engagement.

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For brands, the use cases are endless. You can create a community token around anything. If you're a sports fan, you could buy a token, and that gives you certain rights within that community – free tickets to games or events. As the team does better or worse, those tokens will be worth more or be worth less.

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Nike’s Acquisition of RTFKT

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In December 2021, Nike acquired Rtfkt (pronounced artefact), a start-up launched in 2020 that specialises in creating NFTs of sneakers and other collectibles. Rtfkt, which was valued at $33.3 million after a funding round in May, has collectively sold NFTs for millions of dollars in just minutes. The company has manufactured physical products through so-called “forging events,” where owners of the studio’s NFTs can request to have their virtual sneakers made into real ones. Nike could also release real-world exclusives with NFTs, and the tokens could be traded via digital marketplaces such as OpenSea.

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"This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture," CEO John Donahoe said in a statement. While Nike declined to reveal specifics about its newly minted relationship and what it means for the future of both brands, it's safe to say that the deal foreshadows Nike's expansion into the metaverse, likely via NFTs and other digital drops.

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Nike has also launched a virtual play place on Roblox Corp.’s free online game platform where users can dress their avatars in Nike gear.

Other companies following suit

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These moves speak to Nike’s ambitions at a time when a range of fashion and other consumer-goods companies are racing to claim footholds in virtual worlds where people are expected to learn, work, shop and be entertained. Dolce & Gabbana, Jimmy Choo and Adidas AG have launched NFTs. Balenciaga worked with “Fortnite” maker Epic Games Inc., and Gucci worked with Roblox to create immersive digital worlds. Adidas launched its “Into the Metaverse” NFT collection in December and made around $23 million.

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The road to an NFT Future

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Nike has long dominated the scarcity model in the physical world by selling limited quantities of exclusive items and hyping their uniqueness. There is a lot of area for Nike to conquer in the digital realm as well. It’s hard to say how far off a world in which digital clothing is a key part of our identities comes to pass. In any case, with investors, chipmakers, artists, fashion brands, and seemingly everyone else gearing up for the metaverse, it does seem imminent and emerging brands should take up this opportunity at the earliest.

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For more expert advice on how you can build brand awareness on a bootstrap budget, check out: How to create content like a content CMO