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It started with Beeple.
In March of this year, the artist known as Beeple was the first to create an NFT to be sold at a major auction house. The piece, a collage of 5,000 images that took 13 years to make, sold at Christie’s for a whopping $69 million. This ignited a flurry in the NFT market that has attracted the likes of mainstream brands looking to connect with younger consumers.
Here, Ad Age has compiled what advertisers should know about NFTs when it comes to branding and revenue opportunities, as well as some of the hurdles in creating these non-fungible tokens.
WTF are NFTs?
A quick primer: An NFT is a digital certificate of authenticity. It’s similar to taking a painting to an appraiser or a contract to a notary public, only it’s online. Any digital item, a JPEG, GIF, PNG, PDF, or anything that lives online, can be turned into a NFT.
Turning something into an NFT, for example, a Taco Bell taco, is known as “minting” or “tokenization” that typically uses the Ethereum blockchain as the underlying technology. Ethereum is a cryptocurrency like Bitcoin, and the blockchain is the digital ledger that records all activity around Ethereum like ownership and transactions.
More of an auditory learner? This “Saturday Night Live” rap has you covered.
How brands are using NFTs
As their popularity has grown, NFTs have been used by marketers in a couple ways, both to drive publicity and generate revenue.
Carl’s Jr and Hardees, for example, auctioned an NFT — artwork that nods to its own risqué past — with the proceeds going to a nonprofit. Pizza Hut dropped an NFT pixelated pizza slice as a way to promote four new pizzas.
Other brands are experimenting with NFTs as a form of revenue.
Fox’s newest show “Krapopolis” by Dan Harmon will have it’s own dedicated NFT marketplace where fans will be able to buy NFTs of characters, backgrounds, and gifs. E.l.f Cosmetics also rolled out nine makeup-based NFTs that sold for $5 to $9, comparable to what the real products would cost in stores.
While $5 doesn’t seem like a lot, the real revenue generation comes in resale. When an NFT is resold, the original creator gets a cut of the sale automatically.
That Pizza Hut NFT? It originally sold for .0001 Ethereum, or about 18 cents, but was quickly put back on the market for 5 Ethereum, or $8,824.07. Pizza Hut will get 1% of all future resales of its NFT.
NFTs have also been used to promote rebrands, and as a way for “classic” brands to work with new artists. Campbell’s Soup revamped its label to a cleaner, more modern look, commemorating the change with 100 NFTs with the help of artist Sophia Chang, who’s worked with Nike, Apple, and Puma.
DKNY brought together old and new mediums with its recent logo rebrand. The logo was inspired by an old DKNY mural in NYC, but was auctioned as a video NFT.
Both brands donated all of their auction proceeds to nonprofits.