The Ownership Economy
We are heading to an ownership sort of economy.
This is an economy where people have some stake in the game. It is the cornerstone of the crypto-currency market. The ownership economy currently refers to blockchain-based ventures. These ventures make it easy for individuals to use cryptocurrency tokens to earn capital.
What has fuelled this economy?
Essentially, people’s dissatisfaction with wealth being in the hands of a few people and corporations. It is an anti- centralization economy.
An increasing wealth divide is proven to make the world an unhappier place. The happiest countries in the world like Denmark, or Norway have one thing in common, low wealth gaps.
A practical example of this is when employees own stocks in a company. There are companies that are entirely employee-owned like the John Lewis Partnership chain of department stores in the UK.
The British Employee Ownership Association performed research that shows employee-owned companies see an average 25.5% increase in operating profit year-on-year, thanks to a more engaged, talented, and committed workforce.
If companies can significantly increase their bottom line by sharing the wealth with their direct contributors (staff), imagine the compounded impact of expanding such wealth sharing to the long tail of digital networks’ users, who contribute value to the network.
For creators, and musicians who have relied on platforms like Instagram, YouTube, etc to distribute content and earn, this is a game-changer.
This decentralization and community ownership economy will change how companies do things in many ways, including marketing. In this article, we look at NFTs and their impact on marketing, including examples.
Commentary by Doreen Kainda
Partly Adapted from Hubspot
What are NFTs?
An NFT, or non-fungible token, is a digital asset with a unique signature that lives on a blockchain and can be anything from artwork and music to collectibles and videos. It holds a speculative value – determined by the community – and can be exchanged or traded without fear of duplication.
What makes NFTs so popular is that they represent the decentralization of power from the few to the many. This is particularly valuable for creators who have historically relied on third-party platforms like Spotify, YouTube, and Instagram to share their content and gain from it.
NFTs put the power back in the hands of the community by letting them decide what’s popular and incentivizing them to support what they like.
They're so popular in fact that Open Sea’s Alex Atallah, the cofounder of the largest NFT marketplace, recently shared on Twitter that there are more NFTs on the platform than there were internet pages in 2010.
How brands are using NFT’s
Lomit Patel, senior vice president of growth at Together Labs, recently shared on LinkedIn that he believes NFTs are doing today what social media did in 2010 – drastically improve their potential for brand awareness and audience reach.
Because it’s so new, it’s a way to build buzz around your brand.
Let’s look at one brand that’s already doing this: Norwegian Cruise Line.
To celebrate the launch of Norwegian Prima Class, a new class of vessels, the brand collaborated with an artist to create six NFT art pieces. Each piece has been put up for auction, with the first starting at $2,500 and the proceeds will be donated to Teach For America.
NFTs also allow brands to better incentivize their audience through exclusive content and shift the focus to community building.
Those who bought either a Budweiser Heritage Can NFT or Royalty Collection NFT reportedly enjoyed free beer, tours, giveaways, and performances at the event.
Having access to exclusive content is exactly the sort of incentive that marketers can leverage. They already do so through gated, premium offers, this is just another version of it.
Cons of using NFTs
The biggest drawback of minting and using NFTs is the environmental impact.
You may be thinking, "It’s a digital asset, how does that affect the environment?" Well, the creation of an NFT consumes a great deal of energy (electricity) – depending on how complex it is – and can emit devastating amounts of greenhouse gas emissions.
Another con of using NFTs is that there’s still so much we don’t know. Similar to cryptocurrency, it’s subject to a lot of volatility as any particular entity does not regulate it.
In addition, they don’t hold specific value, leaving you at risk to lose your entire investment.
Are NFTs worth your marketing investment?
NFTs can be a difficult sell to brands because they’re risky. It’s unclear what the future holds and it’s a bit too early to judge their impact on a large scale.
What we do know is that many of those who do use it have seen a lot of success.
In fact, 39% of those who use NFTs say they have the best ROI of any channel in their media mix, according to HubSpot Blog Research.
For many marketers, it’s still an undiscovered territory, with 16% surveyed saying they plan to use NFTs for the first time in 2022.
Check out the original adaptation here