From benefit exchange to brand as service: a paradigm discussion on the new scenario of NFT and brand combination

Published on 1 Months ago   450 views   0 Comments  
Author: Liam Wang, co founder of Amadeus

This article mainly wants to discuss the new scenario application of NFT and brand combination. There are two reasons: first, since last year, there have been endless discussions on the new scenarios of NFT, especially the arrival of the bear market, which makes people have more expectations and Thoughts on what NFT can be used for; Second, in the process of our Amadeus team serving NFT project parties and creators, many brand parties came to me, hoping to give some suggestions and solutions on the marketing application of NFT. In a word, brands have noticed the possibility of NFT as a new marketing method, but lack of understanding and systematic thinking on how and why to do it.

In order to more specifically answer the question of what NFT can do for brands, I will follow the following thinking framework: first, we need to go back to the origin and discuss a topic that seems easy to get an answer, that is, what is a brand; Secondly, we need to base ourselves on the present and discuss what problems the brand has encountered today; Next, we will talk about the value of NFT. I will list the common use values of NFT and explore the possibility of other values; In the fourth part, we will discuss the path worth exploring for the combination of NFT and brand.

Now, let's get to the point.

Brand: value connected sensor

The most essential relationship between the seller and the consumer is transaction: the seller provides the corresponding goods or services, and the buyer needs to pay for the goods or services enjoyed. In a mature market economy environment, the natural motivation of sellers is to expand the scale of customers and promote customers' continuous re purchase. Therefore, for sellers, their core task is to find ways or means to realize this natural motivation.

Brand building is one of the ways. Marketing practitioners are not unfamiliar with the word brand. There are many explanations and discussions on brand in traditional marketing theories. One of the most classic theories is positioning, that is, in addition to meeting the real needs of customers, it is also necessary to establish the brand mind and strengthen the relationship between customers.

In the actual brand marketing practice, we can see that almost all sellers are building their own brand minds. The difference lies in the choice of paths and entry points. The brand can be a manifestation of strong functionality, such as "use Haifei silk to remove dandruff"; It can also be an expression of values, as the adidas classic advertising slogan "everything is possible" says; There may also be an emphasis on identity, such as L'Oreal's "you deserve it.".

In my opinion, a brand is a sensor of value connection. Whether it is a strong functional expression, expression of values, identity emphasis or other, the seller sends information to the consumer through this sensor. This information may be functional, emotional, and more likely to be combined (combination of function and emotion). When the consumer receives such information, he will give corresponding feedback. Relying on the brand as the sensor of value connection, the interaction between sellers and consumers forms the foundation. When a consumer faces multiple sellers who can provide the same products or services, whether he / she has brand attribute becomes an important trigger factor for him / her to make a purchase decision. Over time, consumers' perceptions of the seller and the brand become one - the seller is the brand, which has become a powerful fulcrum for expanding the scale of customers and promoting customers to continue to buy.

Crisis: the failure of old experience, the rise of skepticism, and the loss of branding

This path has been well verified in the era of traditional FMCG represented by Procter & Gamble and Unilever, and has become an effective experience for many brands to develop. However, from the past 10 years to the present, this experience has gradually ceased to be a universal magic weapon. From innovation to retention to transformation to promotion to re purchase, the brand effectiveness has declined, and it is increasingly facing the prominent problems of "one high and four low": high cost of innovation, low retention / loyalty of users, low transformation, low activity and low Re purchase.

The failure of old experience does not happen suddenly, but there are traces to follow:

First of all, the "scattered" state and lack of attention of consumers make it more difficult for brands to accurately find target customers. The rise of the Internet has enriched the media channels for people to obtain information. In the past, the main sources for people to receive information were television, radio, outdoor billboards, etc. today, mobile phones, computers and social media are increasingly becoming the main media for people to receive and transmit information. The diversification of media channels has brought convenience to people's information, but it is not a good thing for brands: unlike TV, radio and outdoor billboards, which can easily cover a large number of consumers, the emergence of mobile phones, computers and social media has led to the transition of consumers from the previous "cluster" state to the "scattered" state. It is increasingly difficult for brands to accurately target customers.

At the same time, the lack of attention caused by the information explosion has also brought severe challenges to the brand. If you want to build a consumer's brand mind, you first need to let consumers notice the brand and be willing to take time to understand it. Unfortunately, in the age of the information explosion, while people are getting information quickly, they are also "feeding" information, making their attention increasingly short-lived. As we can see, the duration of a short video today is only a few seconds or a minute, and a long video starts to be viewed at 1.5 times or 2 times the speed. The brand is no longer as easy as it used to be in the past to make users feel good and identify.

Second, the traditional marketing methods of the Internet make consumers more "changeable", which also raises the threshold of brand acquisition, retention and re purchase. In the past 10 years, the large-scale money burning marketing method of Internet companies has not only rapidly acquired users, but also gradually cultivated users' awareness of subsidies, leading to mass users' habit of taking price as the basis for decision-making rather than relying on brand influence factors when making consumption decisions. At the same time, with the awakening of subsidy awareness, more and more consumers began to become "smart". They became immune to brand advertising and were no longer blindly attracted. The bigger problem is that since the word user experience has been given a prominent position by marketing, consumers have also begun to regard user experience as a "sharp tool", and put forward more requirements on the brand. This also explains why words such as "customization" and "user insight" have been constantly emphasized by the brand in the past few years.

Third, the decline of consumption power brought by the economic cycle also makes the brand weak in pulling new and re purchasing. In the past five or six years, people have talked most about consumption upgrading, but in the past year or two, more and more people have mentioned "consumption degradation.". Consumers have begun to have a refined plan for money bags. Consumption on demand has replaced luxury consumption as a common choice for mass consumption. The brand has invested more and more in innovation and user loyalty, but the income is getting lower and lower.

The failure of the old experience can not help but make the brand doubt: is it still useful to invest a lot of resources to build brand power? With the rise of skepticism, some new changes have taken place in the actual marketing mode of the brand: compared with the brand marketing as a separate marketing module in the past, the brand now emphasizes the integration of quality and efficiency; At the same time, in combination with the ability of Internet big data, more brands have become obsessed with precision marketing, emphasizing the input-output ratio of ROI; Third, whether it is live broadcast, advertising, private domain or others, the focus is on price rather than brand, and the interest point becomes more simple and direct; Fourth, with the disappearance of the flow bonus, the brand focuses on the continuous operation of existing customers rather than the acquisition of incremental customers.

All these new changes make brand marketing practitioners feel lost. In my communication with some practitioners, the most frequently heard word is "difficult": the budget is cut, the ROI of advertising / marketing events is low, and the boss pays more attention to the actual output. All these factors have become the internal resistance they face when they exercise their fists. Brand is still very important, but it is not as important as before. As one of the practitioners told me, "a brand needs to find a new narrative support, not only to win the hearts of consumers, but also to win internal recognition." Now it seems that brand practitioners have turned their eyes to NFT, hoping that NFT will become a breakthrough point to solve the brand narrative problem.

NFT: combination of asset value and individual expression value

When we talk about NFT, we should go back to the source and find out what NFT is. NFT, the full name of which is non-homogeneous token in English, is mostly translated into "non homogenous token" in Chinese, and another translation is "non homogenous token". Compared with crypto assets such as bitcoin, NFT is inseparable and unique. The bitcoin you own is the same as the bitcoin owned by others, but the NFT you own must be different from others.

From today's market environment, NFT mainly has four major use scenarios:

The first is art collection. For example, beeple's NFT work "every day: the first 5000 days" was sold at Christie's auction house in March 2021 at a price of $69 million, which is the third highest auction price of living artists after Jeff quince and David Hockney.

The second is the game props in gamefi. When you play axie infinity, you need to buy NFT props as the premise of the game.

The third is social / identity card. When you buy the avatar of boring apes or cryptopunks, you will have a ticket to enter this circle and show your different characteristics from others.

The fourth value is the financial attribute of NFT. I.e. investment / speculation through buying, selling, leasing, borrowing, installment payment, etc. to earn income or improve the liquidity of NFT assets. Buying and selling NFT is easy to understand. After all, NFT is an encrypted asset. When NFT is characterized as an asset, it has the characteristics of trading and buying. At the same time, since last year, we have seen the emergence of many entrepreneurial projects aimed at solving the problem of insufficient liquidity of NFT from the perspectives of fragmentation, lease, loan and installment payment.

In addition to the third use scenario, there is a common premise behind the other three use values, that is, NFT is regarded as an asset. If we skip the attribute of assets and look at it from the economic perspective of creators, there is another value worth emphasizing - in the world of Web3, NFT has sounded the vanguard horn of individual self-expression.

How to understand this value? From rare Pepes to crypto kitties, crypto punks, to representatives of bayc, azuki, doodles, moonbirds, MFER, Goblin town and other memes, NFT project parties attract the participants with their own narratives, and form a force through the community to express their values, emotions, preferences and positions to the outside world.

Whether we admit it or not, the world is becoming increasingly chaotic and torn apart. The retrogression of globalization, the rise of populism, the widening gap between the rich and the poor, the invasion of privacy brought about by the monopoly of Internet giants, the intensification of regional conflicts and wars, the fierce struggle among big countries, the impact of the epidemic and many other factors have continuously impacted the stability of the original international order and the global social system. In this turbulent change, some stable consensus bases have been impacted, decentralization or anti authoritarianism has been gradually recognized by more and more people, and the individual's expression of self voice and the motivation to form some influence through this expression have become stronger.

In addition, the growth of the generation Z young group also makes self-expression more important. Compared with their parents, young people are more independent and dare to express their views and opinions. Today, on social platforms such as youtube, instagram and tiktok, we see more and more young people express their personality, ideas and values through text, video and music.

Some people may say that self-expression does not seem new, because in the traditional creator economy, self-expression has become a mainstream. I agree with this statement. The difference is that I think NFT will make people more eager and able to express their rights than in the past. The reason is that NFT is an important part of Web3. The values advocated in Web3, such as decentralization, distrust, privacy protection, confirmation of rights, return of benefits to creators, and respect for individual expression, will also be reflected in NFT and recognized by people. Whether you hang an NFT avatar or create your own NFT (PFP, music, video, etc.), you will realize that you have the most important identity - you are an expression, you can make your voice heard in the world and win your own users and fans.

This also makes me believe in another thing: just as everyone is able to shoot tiktok short videos and earn profits by this way today, the threshold of NFT production and creation will be as low as that of tiktok short videos in the future, which means that everyone has the opportunity to produce and create their own NFT. In other words, in the future, people can be consumers and producers of NFT.

Combination of NFT and brand: brand as service

After finishing my views on the value of NFT, I still want to return to the core theme of this article: what are the new scenarios and applications of NFT and brand combination? As I mentioned above, the relationship between brands and consumers is an exchange of interests. Brands provide corresponding goods or services, and consumers pay for the goods or services they enjoy. Once the transaction is concluded, the relationship between them will be weakened, which is also the reason why every brand hopes to continuously strengthen its brand strength to maintain or enhance its relationship with consumers. However, in the era of Web3.0, the emergence of NFT may fundamentally change the relationship between brands and consumers. The conclusion of a transaction is not the end of the relationship, but the beginning of the relationship. This is an idea I want to put forward - brand as a service.

How to do it? You can take a virtual example to discuss it.

[problems to be solved]

A fashion brand sells 10000 T-shirts of a series with a unit price of 500 yuan, and the user gets an NFT after spending 500 yuan. How can the brand increase sales and enhance user loyalty through NFT?

[executable path]

Step 1: the trendy brand NFT should become a cc0 project, that is, to give up the copyright. After purchasing the brand T-shirt and obtaining the NFT, consumers can make a second innovation on the NFT. There is one point that needs to be explained. Cc0 declares that it only gives up the copyright, but does not give up the trademark right, patent right and other rights not mentioned.

Step 2: while giving consumers the opportunity of second innovation, the brand can launch a second innovation project competition in the community and let the community vote. For example, the top three brands of second innovation projects can sell NFT and physical clothes together with the creators, and the income from selling NFT and physical clothes can be shared in a certain proportion.

Step 3: each consumer will have a certain degree of contribution accumulation. The brand side can grant additional NFT of different levels of rare attributes according to different degrees of contribution (the weight can be a certain amount of consumption + second innovation activity + second innovation NFT and sales of physical clothes, etc.) and the NFT is programmable. According to the increase of consumer contribution, the rare attributes will also be improved. The rarer it is, the more valuable it is for collection and circulation.

On the other hand, in order to realize the above virtual example, several preconditions may be required:

First of all, the low threshold NFT creation tool enables every consumer to have the ability to carry out NFT secondary innovation as much as possible.

Secondly, the change of brand side's cognition. The brand side needs to transition from the single interest relationship in the past to the recognition of brand as service.

Finally, Web3 is more widely used among consumers.

Today, we are also glad to see that more and more brands are trying to connect users with NFT. For example, Starbucks will soon launch a user loyalty program with coffee as the theme, Coca Cola and rich Minsi will jointly launch the pride collection NFT, and Tiffany will launch the limited edition NFT project "nftiff".

But in general, today's combination of NFT and brand is more reflected in marketing gimmicks, low-cost innovation and new membership changes. In essence, it still stays at the level of interest exchange. The brand as a service proposed by me hopes to explore and redefine the relationship between the brand and the consumer from NFT or Web3, that is, the consumer and the brand side are no longer the corresponding subjects. The consumer can become the designer of the brand side, and can also own his own brand on the basis of the brand side. Of course, this does not mean that every consumer will become a designer or have his own brand, just as we all have the ability to become we media, but not necessarily everyone will become a tiktok anchor. However, this is the most meaningful place of Web3. It not only allows us to see the values of decentralization, trust, privacy protection, and rights confirmation, but also gives the public more possibilities to express their voice and creativity (Dao is the best proof). This is a more inclusive and open opportunity for all.

Similarly, I always believe that Web3 and web2 cannot become two separate worlds. Web3 should be rooted in real life and solve the problems in real life. The new scenario of NFT and brand combination is a topic that is constantly discussed and new, and it is also my focus. I look forward to communicating with more brand parties and friends interested in Web3, and thinking and exploring the larger application scenario of NFT with you.

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