Chapter 12: NFTs and Brand Marketing

On August 23, 2021, global payment processing company Visa announced the acquisition of CryptoPunk #7610 for $150,000. This acquisition marks a significant event as it is the first time a major company has ventured into NFTs. According to Visa's cryptocurrency chief Cuy Sheffield, there are three main reasons for this acquisition:

"We believe that NFTs will play an important role in the future of retail, social media, entertainment, and commerce. To help our clients and partners engage, we need to have firsthand knowledge of the infrastructure requirements for global brands to buy, store, and utilize NFTs.

We also want to show our support for creators, collectors, and artists, driving the future of NFT commerce. Helping buyers and sellers is our mission. Whether it's helping small and micro-business owners get online or making it easier for companies to make cross-border payments to their partners, we are excited to work with this growing community to make NFTs usable and accessible in various contexts.

Finally, we want to collect an NFT that symbolizes the wave and opportunity of this special cultural moment. We are a company stepping into the history of commerce and payments, but we are looking to the future. By purchasing CryptoPunk, we acted quickly. This is just the beginning of our work in this space."

While the official reasons have been clearly stated, there is a fourth fundamental reason that has not been explicitly mentioned—marketing. A quick glance at VisaNews's Twitter page reveals that posts about CryptoPunk receive far more attention than other posts.

After the announcement, news of the purchase quickly spread across cryptocurrency and business news websites. The $150,000 purchase immediately became a widespread marketing campaign, generating public relations value that far exceeded the cost of acquiring the asset itself.

Moreover, by acquiring the NFT, Visa still holds the asset on its balance sheet, and its value has approximately doubled since the acquisition. Importantly, acquiring NFTs can be flexibly utilized by individuals, as well as by companies and other institutions to build their own brands and promote themselves.

Based on our observations so far, companies have taken two approaches—one is to purchase existing NFTs, and the other is to develop their own brand through their own NFTs.

Buyer's Perspective

Visa's acquisition of CryptoPunk is clearly a buyer's approach. However, Visa is not the only one adopting this method. Another example is Budweiser, which purchased an NFT from Tom Sachs' Rocket Factory (TSRF) for $25,000 on August 24, 2021.

As the name suggests, TSRF is created by renowned contemporary artist Tom Sachs in New York. TSRF is a unique project because it involves collecting rocket parts to form a complete rocket. A rocket consists of three component NFTs: the nose cone, the body, and the tail fin. These three parts can be combined into a complete rocket NFT. Once the component NFTs are assembled and destroyed, a complete rocket NFT is minted. A maximum of 1,000 complete rockets can be minted.

Over the years, Sachs has closely collaborated with many established brands such as Chanel and Nike. In addition to using copyright laws that allow for the imitation of works (fair use principles), most of the rocket components feature pre-existing company logos.

Once the completed rocket is minted, the owner can choose to launch their rocket. If approved, the project will create a physical sculpture of the rocket and launch it. The physical rocket is then shipped to its owner in a custom display case, while the completed rocket NFT will be updated with metadata collected from the launch. A video documenting the launch will be linked to the completed rocket NFT.

Now, there is a key question. Shortly after Visa purchased CryptoPunk, Budweiser also purchased a Budweiser Rocket for $25,000 on August 24, 2021. Notably, Budweiser had previously purchased the ENS domain beer.eth for $95,000. There was no announcement or major publicity. Budweiser simply did two things: changed their Twitter profile picture to the NFT and posted three rocket emojis.

A spokesperson later confirmed the purchase, stating:

"Budweiser is taking its first step into the NFT universe. We are excited to support Tom Sachs and his Rocket Factory project and join this incredible community."

Like Visa, Budweiser's NFT acquisition sparked interest in the cryptocurrency community and garnered widespread attention on social media and other news platforms. Budweiser effectively reaffirmed Visa's approach to a new form of marketing.

Even smaller brands have taken steps. For example, AriZona Iced Tea is actively collaborating with the Bored Ape Yacht Club (BAYC) to develop new products after purchasing an Ape.

This iced tea company has even acquired other growing NFTs, such as the Pudgy Penguins and Cool Cats.

Purchasing NFTs automatically registers the brand into exclusive clubs. Notably, club members naturally become de facto brand ambassadors, as developing the community aligns with everyone's common interests. Instead of spending millions of dollars on a contract with Stephen Curry, consider purchasing a BAYC, as Curry owns one. The best part is that NFTs remain assets with (albeit speculative) value on the balance sheet, rather than immediate marketing expenses.

Creator's Approach

Unlike the buyer's approach, the creator's approach involves companies creating their own NFTs. However, since NFTs can be encoded and utilized in various ways, the possibilities for building a brand are endless.

Luxury giants like Burberry and Louis Vuitton have implemented this approach. In Burberry's case, they collaborated with Mythical Games to create an official NFT game character named Sharky B, which can be purchased in the multiplayer online game Blankos Block Party.

Burberry's rationale is that the company has been trying creative marketing strategies and identified gaming and the digital space as areas of strong consumer interest.

Louis Vuitton took it a step further by creating its own mobile app game, "Louis: The Game." The game follows the fashion brand's mascot Vivienne on a journey through Paris, featuring 30 NFTs for players to collect, 10 of which are designed by digital artist Beeple. The NFTs are collectible but not for sale.

While this is Louis Vuitton's first direct foray into NFTs, it is worth noting that its parent company LVMH is a founding member of the Aura Blockchain Consortium, aimed at combating counterfeiting in the luxury goods industry through blockchain technology.

Old-school brand Adam Bomb Squad is also experimenting with NFTs. Known for its street style and multiple collaborations with major companies like Disney and Pepsi, Adam Bomb Squad launched a series of 25,000 art-designed NFTs centered around the company's mascot.

Each NFT has historical significance and is based on real prints produced over the company's 18-year history (founded in 2003), some even being design drafts.

Unlike other traditional NFT projects, Adam Bomb Squad also aims to incorporate a revenue-sharing mechanism through its NFTs. The idea is that NFT design holders (for example, NFT #1 being printed on a T-shirt in the summer of 2022) will receive a portion of the sales as royalties.

The rise of the digital age has rendered many industries obsolete. The print media industry, while a powerful and still relevant giant, will never reclaim the market share it once held due to the advent of the internet.

Recognizing the necessity of adaptation and seeing the financial and market opportunities offered by the NFT space, a series of magazines ventured into NFTs in 2021. Iconic magazines like Time and Fortune auctioned NFTs based on their magazine covers, achieving widespread success.

Time designed its first NFT cover for the March 2021 issue, "Is Fiat Dead?" forming a three-part series of its famous cover designs. From the April 1966 "Is God Dead?" to the April 2017 "Is Truth Dead?" The series, consisting of three parts, raised $435,000 through the NFT marketplace SuperRare.

Fortune took a more adventurous approach in their NFT direction, hiring pppleasr, whom they viewed as "a graphic artist whose work defines the face of the 'decentralized finance' movement." The August/September 2021 cover featured avatars of many anonymous big shots from "Crypto Twitter."

They created 259 NFTs as part of the release, three of which were special. These special NFTs provided the individuals depicted on the cover with the opportunity to receive specially crafted artwork designed for them (determined by the addresses they listed). The catch is that these special NFTs would only materialize if the selected individuals won. If the winning address came from an unlisted address, the NFT would revert to its original form. Overall, the entire collection successfully raised 429 ETH (approximately $1.3 million), half of which was donated to charity.

Project Examples

Project Galaxy

Project Galaxy markets differently by offering NFTs as a service to help projects increase user engagement and retention. For example, the use of the protocol can be gamified, allowing users to earn NFTs by completing specific tasks.

Conclusion

NFTs are a status symbol that generates social influence. Savvy brands and marketers will recognize the power of NFTs and how they can engage with a broader audience, especially as their identities and expressions become increasingly prevalent in the digital space.

NFTs allow companies to reshape their marketing strategies. Traditionally, companies seeking celebrity and athlete endorsements are now considering NFTs as a viable alternative. Each NFT also carries a narrative and information that can be used for broader market appeal (e.g., charitable donations from sales). The public relations value comes from the initial media hype and subsequent community engagement.

At the same time, NFTs allow access to new markets in the digital space. We have seen how Burberry has collaborated with game developers—what is stopping Burberry from collaborating with other game developers to further enhance its brand visibility?

But beyond that, NFTs also bring new opportunities for brands to build closer relationships with communities. Brands can offer benefits to their NFT holders, much like membership passes. By sharing similar values and providing social utility to customers, brands can cultivate a more loyal consumer base.