NFTs and the luxury market
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Taking a deeper look at NFTs and the luxury market
The popularity and noise surrounding NFTs (aka non fungible tokens) has escalated over the past few months, with so many brands and clients attempting to deepen their understanding surrounding NFTs and also Web 3 in general.
However, although general understanding has increased over the course of the year so far, there is still a misconception of what NFTs are and whether they are simply a fad, mostly consisting of cartoon images.
In a recent episode of ‘The NFT Catcher’ podcast, Gary Vee estimated that in 5 years, 77% of adult Americans will own an NFT, however he also predicted that the name “NFT” may not be the term used. Our SEO & Digital PR Account Director, Joe Hale recently attended a webinar hosted by Ear To The Ground, and the term “digital assets” was discussed as a much clearer phrase to describe what an NFT is, potentially with less negative connotations.
The following will explain the different types and potential use cases of NFTs, and how brands can utilise them as part of their marketing strategies.
Exclusive Membership & Rewards
An NFT can provide exclusive membership to a club or group, with exclusivity being a key consideration and appeal for luxury buyers, especially in attracting and retaining high-net-worth individuals or luxury consumers.
How does this differ from an existing membership programme? The key differentiator being that NFT owners own the asset and can therefore buy and sell as they wish, whereas existing membership programmes that require payment usually result in the membership being revoked once the user decides to stop paying. Owning that asset, as well as scarcity of the membership, then in turn creates more demand.
There are certain benefits that are hard to surpass with a ‘normal’ membership, particularly online perks such as discounts, early access, exclusivity with products & services. Equally this also translates offline to exclusive in-real-life events, which can be hard to replicate online.
As NFTs run on the blockchain, their data can’t be altered or can’t be affected by any hacks like a website can. This then provides a very secure way to provide authentication of goods. For example, luxury watches could come with an NFT that provides all information on the watch, including brand, model, cost, date of purchase etc. When sold, all this information can be simply transferred to the new owner.
At present, valuable luxury items such as watches, handbags or cars for example are often supported by paper documentation or certification of authenticity, but what happens if this is lost?
The luxury pre-owned space continues to grow, with companies such as StockX also forming, that rely on being able to authenticate goods before selling on to the buyer. NFTs provide a huge opportunity for all these details to be sent and stored via the blockchain, proving authenticity and ownership, which can’t be lost or damaged like physical authentication.
Proof of Ownership
Buyers of luxury goods may purchase certain items to signify wealth or status in their day to day lives, whether that is through driving a supercar, wearing an expensive watch or purchasing an exclusive handbag.
Through NFTs, and having a virtual wallet, these goods can be displayed through the blockchain, again showcasing status and wealth but through an online medium instead.
For example, watch collectors will be able to showcase their watch collection through their wallet, detailing information on each watch shown within the blockchain.
Arguably, people’s online presence is becoming just as important as their offline presence, therefore the ability to showcase wealth and status may be something that luxury buyers become increasingly interested in and something they look for within the purchasing process.
NFTs may not be the correct route for every brand right now, however there is a clear opportunity for brands, especially luxury brands, to enter this space and cater for an ever-growing audience, taking their brand into the Web3 space whilst having real-life perks for their audience.
We’re here to help..
If you have any questions about NFTs, Web3 or how your brand could enter this space, please get in touch via our contact form. We’d love to start supporting you on this journey!