Marketers: we need to talk about NFTs.
For those unaware, non-fungible tokens (NFTs) involve purchasing a digital asset and retaining ownership. Let me break that down even further.
Non-fungible just means unique or one-of-a-kind. If you owned the Mona Lisa, you retain ownership of a non-fungible Leonardo da Vinci piece. In this case, non-fungible tokens operate exclusively online.
So, instead of hanging an iconic work of art in your living room, you would simply own a virtual one. Not as exciting, but such is the nature of NFTs.
In the past few months, NFTs have exploded in popularity. Twitter added an NFT profile picture option for users. Reddit just did the same thing. Communities have propped up to unify NFT owners.
Of course, brands – in their ever-lasting desire to seem cool and hip – have immediately latched onto NFTs. The NFL created an NFT marketplace. Adidas released NFTs earlier this month, welcoming us to the “metaverse”.
We are less than a month into 2022. And I am already tired.
NFTs represent a laughably easy way for brands to project modernity and innovation. Take some preexisting content. Slap on a few edgy, holographic visuals. Sell it through a crypto website and… boom. You got yourself an NFT.
But the issues surrounding NFTs, including environmental destruction, make any benefits derived from selling them completely useless. And I implore brands and marketers to reconsider their sudden interest in NFTs.
1. NFTs make you look desperate to innovate
A typical senior leadership call in 2022 likely looks like this:
“So, I hear <insert marketing buzzword> is a super exciting space. How can we insert our brand into it?”
Any buzzword works perfectly. The metaverse, TikTok, and, of course, NFTs. Big brands tend to reek of this almost desperate need to prove their trendy nature.
For example, when Clubhouse first launched, tons of marketers wanted to strategize ways to insert their brand into the app. But, as we now know, the platform almost immediately died down. And brands who opted to impulsively invest time in the app got burned.
In that same vein, marketers forcing brand NFTs feels like an attempt to fit in. Do we, as consumers, really need an Adidas NFT? How many of us benefit from owning a commemorative, NFT NFL ticket? Do we really need to own Jack Dorsey’s first tweet?
2. NFTs contribute to environmental destruction
To buy or sell NFTs, users usually have to go through marketplaces that use the cryptocurrency Ethereum. You don’t need to understand the technical aspects of cryptocurrency. Rather, understand that transacting with Ethereum requires literal energy. In fact, these marketplaces refer to this energy fee as “gas”.
Because of Ethereum’s size, the cryptocurrency currently uses the same amount of electricity as Libya. For some context, the country has nearly 7 million people.
While Ethereum has stated they plan on becoming more energy efficient, they still contribute greatly to climate change. And at the end of the day, for what? While cars certainly cause pollution, at least they serve a functional purpose for everyday people. Ethereum lacks accessibility and ultimately benefits very few people.
So, how does this play into brands jumping into the NFT game?
Firstly, many brands have made commitments to stop climate change. Yet selling NFTs and fostering the growth of this destructive industry undermines any environmental efforts.
Sure, other brands, including the NBA, use alternatives to Ethereum in their NFT transactions. But companies seldom emphasize the problematic nature of NFTs and cryptocurrencies in general. In other words, brands have done nothing to advocate against more harmful NFT transactions.
Why are big brands doing this? Because they want money and view NFTs as a means to project coolness.
3. NFTs harm brand reputation among Gen Z
The explosive rise of the metaverse and NFTs triggered big brands to innovate. Companies desperately want to appear hip to Gen Z. And NFTs seem to represent a way to achieve relatability with the youth of today.
But the data suggests millennial men actually make up the majority of NFT buyers – not Gen Z.
Additionally, we can better see how Gen Z views NFTs primarily through Twitter – in which over 4 in 10 users come from the 18 to 29 age group.
A quick search on Twitter suggests Gen Z vehemently rejects NFTs – with one tweet garnering more than 220,000 likes.
🤏🧠: NFTs are bad because of the environmental impact— eevee (@eevee) January 20, 2022
🌌🧠: NFTs are bad because they glorify possession and consumption of nothing, exclusivity without meaning, receipts over creation, resale over appreciation. they devalue art and funnel money to those who already have it
Twitter users also express concerns over how NFT impacts the art industry itself.
After all, NFTs seem to empower artists to sell their art digitally. But one of the originators of NFTs argues these transactions have reduced the intrinsic value of digital art. NFT buyers have become more concerned with purchasing repurposed ape cartoon characters rather than supporting truly starving artists.
Moreover, the entry of big brands into the NFT sphere reduces the ability for artists to sell their work virtually. Suddenly, purchasing an NFT featuring a popular cartoon character or celebrity outweighs the value of digital work from smaller artists. The industry fosters creative burnout and pushes out actual artists.
And any good marketer recognizes that Gen Z cares about social responsibility – a lot. So, when you contribute to an industry that destroys the environment and punishes small artists, your reputation immediately takes a hit.
From a marketing perspective, do brand NFTs sincerely foster consumer relationships, meaningfully improve bottom lines, and increase awareness? In the short-term, perhaps. But getting added to Gen Z’s shitlist while destroying the environment will not get you far.
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