Will launching NFT’s lure
Gen Z to your brand?
A recent Saturday Night Live skit spoke the question on everyone’s mind, when Pete Davidson asked in the form of a rap: “What the **** is an NFT?!” While the segment was intended to be humorous, it did reflect the lively cultural conversation surrounding this latest blockchain buzzword, which ranges from excitement, to skepticism, to confusion. Everyone has an opinion on NFTs, it seems, even those who don’t know exactly what they are.
A lack of understanding has certainly not scared investors away from the NFT market, however. Short for “Non-Fungible Token,” NFTs raked in over $1.5 billion in the first three months of 2021, including a piece by the digital artist Beeple that sold at Christie’s for a whopping $69 million. Although the market has experienced a massive downturn in the last month, there is still plenty of interest from brands, collectors, and investors. As the initial shockwaves of NFT-mania seem to be subsiding, now is the perfect time to answer some basic, crucial questions about these blockchain-based commodities – including which audiences have the most interest in them, and how brands can leverage that information to their benefit.
No, Really: What is an NFT?
Despite what some gatekeepers and crypto-junkies might have you believe, you don’t need a PhD in order to understand NFTs. Similar to bitcoin, NFTs exist as a single unit on a blockchain, typically generated by expanding a non-trivial amount of computing power (or by paying a certain amount, either in cryptocurrency or plain old dollars and cents.) This translates into a digital asset that is unique and non-replicable. It is this uniqueness that gives the NFT its value; whoever owns it owns the only version that will ever exist.
When it comes to technical details, that is all you really need to understand. What’s more important to know is that because NFTs are so one-of-a-kind, investors are willing to spend millions of dollars on them. For some this may be a speculative investment, with the assumption that the NFT will appreciate significantly in value. Others may buy the asset simply for the experience of owning something wholly unique. NFTs can take on many forms, from a tweet to a video to a GIF. The most popular ones, however, seem to be unique works of visual art, similar in concept to the original version of a painting.
Who is Buying Them?
NFTs can be difficult to wrap one’s head around, but they basically behave like any other commodity. Some people believe they have a certain value, and are willing to spend money – potentially huge amounts – on buying them. And like other commodities, there are some audiences who are more interested in NFTs, and some who could care less. Research from Knit and other insights providers helps to shed a light on who is who among these audiences.
10% of all US adults collect NFTs, according to Morning Consult, including 15% of men and 4% of women. Generationally, it seems that Millennials are the most interested by far in NFTs, with 23% collecting them. No other generation cracks 10%, with the younger (and theoretically more tech-savvy) Zoomers only collecting at a rate of 4%. Interestingly, this breakdown broadly correlates with which generations collect physical items as well. Men are also more likely to be collectors than women, and Millennials are once again the generation with the most collecting-mania. Interestingly, physical collectors are also more likely to be interested in NFTs, with over half reporting to be at least “somewhat interested” in collecting them.
For Knit, the statistics about Gen-Z are the most interesting. Why are the youngest American consumers, who grew up with their smartphones and have an intimate connection with digital technology, collecting even less NFTs than the older Millennials and Gen-Xers? We surveyed over 420 Gen-Z consumers between 18 and 24 to get to the bottom of their NFT-hesitance. Some of the insights we learned include:
Gen Zer’s who are interested – Reasons why:
Gen Zer’s who are not interested – Reasons why:
- Although only 4% of Zoomers currently collect NFTs, 29.7% are either “somewhat interested” or “greatly interested” in them.
- The reasons for this interest was nearly evenly split, but with one interesting leader standing out at 41.2%: “I’d like to own a moment that’s special to me.”
- Among those uninterested in NFTs, over 57% said that the reason was because “I don’t understand NFTs,” leaving a huge opportunity through growth and education.
Additional quotes from our survey participants show some of the other reasons why Gen-Z might not want to invest in NFTs. Many complained about the lack of a physical element to the purchase, saying “I don’t like everything going digital,” or “if I buy something like memorabilia I want to be able to hold it and show people.” These remarks show that, contrary to popular wisdom, Gen-Z does not always jump aboard every digital bandwagon.
What are Brands to do?
As with any new digital trend, marketers are eager to explore how they might leverage the buzz and popularity surrounding NFTs. While it is unlikely that established brands are going to build out a major part of their business in the volatile NFT market, there are plenty of ways they can use the technology to drum up some quick publicity and even revenues. An NFT is fairly easy to make, and a diverse selection of brands have already thrown their hat in the ring, including…
Pringles collaborated with Ukrainian digital artist Vasya Kolotusha to release 50 limited-edition “CryptoCrisps,” which consist of a “shiny golden image of a Pringles can.”
Taco Bell made headlines at the height of the craze by selling taco-themed images and GIFs. The 25 limited edition NFTs sold out in less than an hour, and all proceeds went to the brand’s “Live Mas” charity.
We covered off on the Golden State Warriors NFT collection in our most recent Gen Z Sports Webinar. Their added element of gamification to their collection is an interesting touch worth checking out.
And finally, in the most buzzed about example among our Gen-Z audience, the NBA’s Top Shot promotion allows fans to buy video highlights in the form of NFTs, similar to traditional trading cards.
As you can see, some brands are using NFTs as one-time brand boosts, while others – notably the NBA – see the potential for long term value in adding NFTs to their product lineup. In other industries, the connection to NFTs makes more practical business sense: trading card companies like Panini America and Topps have begun to insert redemption codes to digital cards in packs of physical trading cards, as well as releasing sets of NFT-only products. What is clear is that there are plenty of different ways for brands to hop on board the NFT-train, although only certain niche industries will likely see long lasting value in the technology.
NFTs are a very young idea, and the jury seems to still be out on whether they are here to stay. Critics have called them a flagrant example of a speculation bubble, pointing to the ongoing market crash as validation. Defenders, meanwhile, argue that they are no more worthless than other commodities regularly traded on financial markets, and that they may even provide a new revenue stream for independent artists. Ultimately, it is up to individual brands to decide whether the NFT craze is one they want to jump on board, or sit out. But the next time a coworker at the water cooler, or an elderly relative at Thanksgiving asks you “What the **** is an NFT?!” you will be able to confidently give them an answer.
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