The high volatility in the global stock markets (due to the war in Ukraine, etc…) has resulted in a reduced appetite for risky assets, which has led to a crash in the cryptocurrencies’ market: the global market for cryptocurrencies has lost more than 2/3 of its value in the last 8 months. Consequently, the market for NFTs has suffered, too: both directly because of the reduced appetite for risky assets, and indirectly because NFTs tend to be bought with cryptocurrency.
Despite the downward trends, many analysts continue optimistic about NFTs. They argue that the crisis will lead to a shake-up of the market, and a focus on the valuable use cases of NFT, such as digital identity, real estate or healthcare records.
NFTs can also usher a new era in marketing. At least, that’s what Reto Hofstetter, Emanuel de Bellis, Leif Brandes, Melanie Clegg, Cait Lamberton, David Reibstein, Felicia Rohlfsen, Bernd Schmitt and John Z. Zhang argue in the paper “Crypto-Marketing: How Non-Fungible Tokens (NFTs) Challenge Traditional Marketing”, published in Marketing Letters.
Hofstetter and his team called this new era “crypto marketing”, which they define as marketing practices that leverage “blockchain technology for the purpose of designing, pricing, promoting, and selling digital and non-digital goods”. They argue that the public and immutable nature of NFTs will produce significant impacts at three levels, as summarised below.
|Digital Ownership, Uniqueness, and Value||NFT technology enables buyers to prove that they are the only legitimate owner of a digital good||May enhance psychological ownership of those goods and, hence, their value|
|Historic ownership of digital good is publicly stored in the blockchain||Enables payment of royalties to creator for transactions beyond original sale May create contagion effects (which may be positive or negative)|
|NFTs can be bought and sold on the blockchain||Initial “learning pains” may deter some customers Subsequently, reduced friction may encourage spending (and overspending)|
|Authenticity, Status, and Sharing||Authenticity of NFTs may be verified||Confers status to NFT owner (which could be individual platform user, but also brands)|
|Potential to turn digital content into tradeable NFTs||May inspire additional user creation and sharing of content|
|Decentralization of branding and distribution||NFTs are held in decentralised ledgers||May result in crowdsourced branding Likely to result in elimination of current intermediaries and emergence of new ones|
|System vulnerabilities such as outages and plagiarism||New markets in crypto certificates and authentication|
I am particularly interested in how studying consumers’ use of NFTs (e.g., what they buy) may provide insight into their perceptions and desires. What about you?