NFT Playbook for the World's Top Brands
NFT Playbook for the World's Top Brands
Why are traditional brands so into NFTs and how are they entering this space?
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Dear subscribers,
Crypto winter is here but don’t tell that to the world’s top brands.
Over 60 brands have launched NFT projects this year. Just last week, Tiffany & Co raised $12M after selling 250 “NFTiffs” for 30 ETH ($50K) each.
Let’s dive into:
Why are brands so into NFTs?
Which brands have launched NFTs?
What’s the NFT playbook for brands?
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Why are brands so into NFTs?
Brands, like creators, want to skip the middleman to build a direct relationship with customers. Brands are using NFTs to:
Reach new audiences. e.g., Budweiser sponsored Zed Run, an NFT horse racing game, to reach a crypto-native audience.
Reward most loyal customers. e.g., Starbucks is launching NFTs for their 26M member loyalty program. Holders get digital rewards and special experiences.
Launch a new product and revenue stream. e.g., McDonald’s celebrated the 40th anniversary of the McRibs by giving people a chance to win McRib NFTs.
Which brands are launching NFTs?
I made a spreadsheet that lists over 60 brands that have launched NFTs this year based on AdAge data. Here are some observations:
The 3 most popular categories are:
Food & drink: e.g., Papa John’s, Pepsi, Buffalo Wild Wings
Movies & TV: e.g., Star Trek, Looney Tunes, Shark Week
Apparel: e.g., Gap, Pacsun, Urban Outfitters
Gaming is noticeably missing. Gamers are notoriously anti-NFT so publishers like EA and Activision Blizzard are cautious (Minecraft banned NFTs).
Some brands have launched multiple NFT collections. Paramount, for example, has collections for Star Trek, Top Gun, Rugrats, and other top IPs.
Not all launches have gone smoothly. Lacoste’s Discord server was hacked and Chevrolet’s NFT that came with a real Corvette failed to get a single bid. Pepsi’s NFTs had no utility and were ridiculed for this cringe exchange:
What’s the NFT playbook for brands?
So what’s the playbook for traditional brands looking to get into NFTs?
I think it comes down to five steps:
Identify the audience
Assemble the team
Deliver the utility
Build the community
Commit to the long-term
Let’s walk through these steps using Nike and Adidas NFTs as examples.
1. Identify the audience
Consider targeting NFT collectors in addition to your customers.
Nike and Adidas targeted the following user segments with their NFTs:
Streetwear collectors who want limited-run apparel drops. Both companies already sell special runs like Jordans and Yeezys through their SNKRS and CONFIRMED apps.
NFT collectors who are looking for the next big project to invest in.
"Looking at the worlds of NFTs and streetwear side-by-side, we saw that a lot of the behaviors in both of these places are actually similar...we can see that this idea of self-expression in a virtual world is a real thing." - Tareq, Adidas digital director (source)
2. Assemble the team
Look to partner with leading NFT projects and creators.
Nike acquired RTFKT (pronounced “Artifact”) in December 2021 to bring on talent that already had a proven track record for digital sneaker and NFT drops.
“Our plan is to invest in the RTFKT brand, grow their innovative and creative community and extend Nike’s digital footprint and capabilities.” - John Donahoe, Nike CEO (source)
Adidas partnered with Bored Ape Yacht Club (#1 NFT project), Gmoney (top NFT creator), and Punks Comics to launch their NFT collection. They bought a Bored Ape Indigo Herz and made it central to their marketing campaign.
3. Deliver the utility
Keep it mysterious - surprise and delight holders.
For NFT holders, the expectation of utility is often more interesting than the actual utility.
Let’s look at Nike (RTFKT)’s NFT drops as an example:
Clone X. RTFKT launched 10,000 profile-pic NFTs in November 2021 (a month before the Nike acquisition). Clone X is now the #7 NFT project in total trading volume. Clone X holders have received multiple airdrops since launch.
CryptoKicks. One of these airdrops was a Nike-branded NFT called “MNLTH.” For months, nobody knew what MNLTH was. One day, MNLTH holders were delighted to find out that they could burn their NFT to obtain three other NFTs: CryptoKicks (virtual sneakers), Skin Vial Evo (customize the look of your sneaker), and MNLTH2 (TBD).
Nike AR hoodie. Clone X and CryptoKicks holders were given priority access to an NFT hoodie that also came with a real-life hoodie. Owners could add AR effects like virtual wings to their real-life hoodies using QR codes.
Compared to Nike, Adidas has been lagging in delivering utility:
Adidas promised a limited-run hoodie for NFT holders that finally shipped many months after the initial NFT launch.
Adidas is teasing future Phases in its roadmap: “In Phase 2, we travel further Into the Metaverse with a mysterious airdrop.” “In Phase 3: You. In the Metaverse.” However, it’s unclear what these phases are.
4. Build the community
This is perhaps the hardest step as it requires daily effort.
RTFKT’s Discord server has 245K members. The team runs regular creator challenges where members are invited to design and sell NFTs (at 50% artist / RTFKT split).
Adidas’s Discord server has 57K members. Although the server is actively managed, most of the updates have been around when the hoodie will ship.
Ironically, when I joined either server, I immediately got DMs from scammers:
5. Commit to the long-term
Commit to a long-term relationship vs. a single launch.
Most NFT holders expect to build a long-term relationship with the brand. That means that the brand must build a community and provide utility over time.
Both Nike (RTFKT) and Adidas are committed to their NFT projects. RTFKT in particular is building an entire ecosystem around Clone X (virtual sneakers, hoodies, spaces, etc). This is reflected in the relative volume and price of both collections:
Let's recap the NFT playbook for brands:
Identify the audience
Consider targeting NFT collectors in addition to your customers.Assemble the team
Look to partner with leading NFT projects and creators.
Deliver the utility
Keep it mysterious - surprise and delight holders.
Build the community
Perhaps the hardest step as it requires daily effort.
Commit to the long-term
Commit to a long-term relationship vs. a single launch.
It’s encouraging that the world’s most well-known brands are embracing NFTs despite the crypto downturn. I hope that more consider the playbook above to build a long-term relationship with their customers.
As always, thanks for reading and leave your thoughts in the comments below.
Further reading: