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Forget cash grabs – NFTs should be a loss-leader for brands

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When it comes to NFTs, brands need to take a long-term view, and put communities over profit.

OPINION
Michael McClure
Marketing Operations Manager, Blokhaus.io

If you’re a marketing professional, you’ve probably been pitched an NFT project at some point in the past couple of years (even if only as a joke). Maybe you’ve been assured that NFTs are basically just free money, and with astronomical NFT sale prices grabbing the headlines, and projects like Nike’s RTFKT and Budweiser’s Budverse raking in cash, that’s an understandable perception.

But what if the biggest brands in the world – Louis Vuitton, the NBA, Nickelodeon, even Disney – are missing the big picture? All those brands entered the Web3 space early, but I suggest that they haven’t figured out the endgame.

Costco’s food court, The Sony PlayStation 5, and Gillette razors. You know them all as successful products, and they are, but perhaps not in the way you think. In fact, these products are all loss leaders for their parent companies. A PS5 costs Sony $450 to produce. When you add in packaging, shipping, and bulk store discounts, the $500 price tag doesn’t add up. Sony doesn’t care, because it makes its profit from games and accessories. The console is just the gateway to those sales. I suggest that brands should look at NFTs in a similar way - instead of focusing on short-term opportunities for monetization, take the long view and treat NFTs as a loss-leader.

What is it worth to your brand for a consumer to wear your merchandise twice a month, use your branded image as a profile picture on social media, or make a post on Instagram?

Every brand wants to have customers that are as passionate and loyal as Star Wars fans. Really engaged fans wear branded merchandise, cosplay as characters at conventions, write fan fiction, and much more. You might not want your customers creating a burlesque show featuring your company mascot, but that’s the kind of passion you want to inspire. This is where Web3 creates an opportunity.

What is it worth to your brand for a consumer to wear your merchandise twice a month, use your branded image as a profile picture on social media, or make a post on Instagram? With 4.6 billion people on social media, over half the world’s population can be reached by social media influencers. In case you’re not up to date on influencer prices, a ‘nano-influencer’ (1k-10k followers) charges ~$100 to post on Instagram. The average NFT project has 10,000 unique pieces. This means if you launch a project following the traditional NFT model and half your collectors make a single social post, you’ve benefited from $500,000’s-worth of free organic marketing.

You might be thinking, “I guess we could try that to save some money on social posts.” That’s a start, but the community that your NFT project will create is a lot more valuable than that. Assume that as a result of your NFT project you have 10,000 fans actively engaging with your brand (and hopefully in a Discord server). Attention spans in the Web3 space are short. Dump money into this community. Give them free exclusive merch, host events, and provide early access to product releases. And remember – the goal is not to make money off these services. Your NFT project is a loss leader.

At this point, the Bored Ape Yacht Club is about far more than just the images of the Apes themselves, it’s a brand entity, known for all kinds of things, like celebrity endorsements, throwing massive parties, and distinctive merchandise

If you get it right, this community will be vocal: They’ll be actively sharing their new merch, enjoying sneak peeks of your upcoming products, and building their online personas around your branded NFTs. As you build and nurture this community, and people recognize the value of owning a piece in your collection, the value of these NFTs will increase. This means many things, one being that your company will start receiving royalties from secondary sales. RTFK, Nike’s main NFT collection, has seen 250k eth (~$420 million) in secondary sales volume. Through its 5% royalty, Nike has made 12400 eth (~$20 million). Many companies would see this number and have internal conversations about where to allocate it, but not you: You’re going to put all that money right back into benefitting your NFT holders. Remember, we’re treating NFTs as loss-leaders.

How many times have you heard about “those dumb cartoon monkey pictures” over the last year? That’s Bored Ape Yacht Club (BAYC). At this point, BAYC is about far more than just the images of the Apes themselves, it’s a brand entity, known for all kinds of things, like celebrity endorsements, throwing massive parties, and distinctive merchandise. BAYC is a great example of a brand that focuses on its community, and your brand should follow the same principles. By creating a project that provides value to your NFT holders, instead of extracting value from them, you will be able to build an experience that people want to be part of.

Once your NFT project is being talked about for the value that it brings to the community of holders, the goodwill that is generated will spill over to your main brand – and that’s something you can’t put a price on. Ten years from now (or less), every major brand will have a line item in their marketing budget for Web3. This is the time for brands like yours to make moves, before the space gets too noisy, and before giants like Nintendo, Gucci and the NFL get more deeply involved.



Blokhaus is a marketing and communications agency with a focus on Web3 and emerging tech. Since we were founded in 2021, Blokhaus has supported numerous high-profile projects and activations around the globe, working in partnership with some of the biggest brands in the world. To learn more about our work, check out our Case Studies. To get in touch, visit our Contact Us page.