In the interest of full disclosure, it feels apposite to explain that this was originally going to be written around Sprite’s rather flat first ever global rebrand, which cost the CocaCola company a mere $4bn. And what a thoughtful and interesting piece it no doubt would have been, too. However, having then stumbled upon a newly-released, joint NFT collection between Dwayne Wade and Budweiser Zero, a deviation in course was necessary.*
As the latest shiny new thing, marketers have quickly become enamoured with NFTs. For many brands – including plenty who ought to know better – “we should do some NFTs” is swiftly replacing “we should be on TikTok” in the argot of the out-of-touch exec who speaks exclusively in corporatisms. The result of which: hackneyed, naff executions of a novel concept that further dispel the myth that NFTs are a democratizing tool supporting the betterment of prospects for young, up-and-coming artists previously unable to benefit from the opportunities afforded to others within the bubble of the mainstream art world.
Before we lay into them, we ought to be clear: there is nothing prima facie wrong with the idea behind NFTs, nor is there anything wrong with people making money from them. However, what we have seen in a short period of time is a very select group of individuals reaping the vast majority of profits – and, as alluded to already, typically these will not be the artists themselves, but the traders. Or, if you want to perpetuate the stereotype, the flip-flopped ‘Crypto Bro’ who embodies the Sigma grindset and has pictures of Elon Musk and Gary Vee pinned on his wall – because it probably is a he.
While it is an oversimplification to group all things Web3 together, it is also impossible to conceptually separate NFTs from related commodities, such as cryptocurrency and the Metaverse. With this in mind, it’s been a rough few weeks for the Crypto Bro. Having fallen below $30,000, the price of Bitcoin is now over 50% lower than its record high of nearly $69,000. Ethereum has also been nosediving, down more than 35% since the start of the year. But both of those dips pale in comparison to the true catastrophe of recent weeks, which saw the crash of stablecoin UST (which is meant to be pegged 1:1 in value to the USD) and its sister token LUNA, with UST currently trading at $0.063 and Luna having fallen from over $100 in April to $0.0001 at its lowest. Both have since rallied slightly, but are still basically worthless – costing investors around $43bn.
The fallout from this crash, which has been likened to the 2008 market crash, has potentially far-reaching implications for a lot of people – even beyond just the investors in UST and Luna. Shares in Coinbase, the United States’ largest crypto exchange, are down by more than 70%, currently priced at about $62 per share, and are trading at 80% below their all-time high price in November. Coinbase noted that in the event it declares bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings”. In other words, if Coinbase go belly-up, those with assets on the site will be left up El Crico de Mierda without a paddle.
This looming iceberg should also provide a teachable moment for the aforementioned barracuda-like marketers. While the novelty of NFTs makes them seem exciting, they are very much an untested commodity. Naturally, the risk of minting a few NFTs isn’t comparable to the risk of plunging one’s life savings into a declining digital currency. The main current issue, though, is that there is as yet little evidence of NFTs producing any real results for brands. Considering NFTs and all things Web3 are by their very nature somewhat baffling to most people, the explanation for this is very simple. As Mark Ritson puts it: “What the fuck has any of this go to do with marketing?”.
Just in the time it’s taken to write this, two new much talked-about NFTs have popped up. One features a tree growing out of Madonna’s vagina and the other is a Holy Bible NFT that permits you entry into the ‘Metachurch’. That really is bullshit squared for the latter, and I’m just not going to even touch the former. The point, though, is that these are just two quick examples of why NFTs have so many ‘regular’ people who haven’t yet been swept up by the Web3 circus rolling their eyes. Trust in brands is at an all-time low while costs of living are at an all-time high. Add to this the fact that advertisers are often seen as bullsh*t merchants and snake oil peddlers at the best of times, and it should be clear that the way to respond to this situation certainly is not to pursue less fungibility.
The earlier point that it is impossible to treat all NFTs with the same level of derision is often used as a defence by their proponents against the naysayers who accuse such ventures as universally being nonsense. And, at least in their premise, those people are right – saying “all NFTs are bullsh*t” is like saying “all social media is bullsh*t”. In both instances, the accusation of bullsh*t is being applied to concepts too broad for the criticism to have any real meaning. Yet this is actually another reason to be sceptical of the utility of NFTs, particularly from a marketing perspective. A new study from the Nansen blockchain analytics firm revealed that over two-thirds of NFT collections either make no money or end up netting less than they cost to create. For every Bored Ape Yacht Club and Cryptopunk, there are countless failed endeavours that will never see the light of day. Good luck explaining to your CMO why your new branded NFTs didn’t even cover the costs of minting.
The example above of Bored Ape Yacht Club, which has inarguably been one of the most historically fruitful NFTs and is likely the best-known, further demonstrates the volatility of the market. At the time of writing, Bored Ape has had a very slight resurgence, but is still down almost 50% compared to its highest price in July 2021. Unsurprisingly, this fall has occurred in tandem with the crypto crash. So while it may be seen by the inner circle as the mark of the unedified to be unable to conceptually separate NFTs from cryptocurrency from anything else Web3, perhaps it’s actually the safest way – because, make no mistake, as Crypto declines, so too do its various blockchain brethren.
With the least successful NFTs never getting off the ground and even the most successful being prone to dramatic price crashes, the case supporting that marketing manager’s underthought notion of “we should do some NFTs” would appear to be becoming weaker and weaker. But let’s suppose for a minute that things go swimmingly, and all of those concerns do not apply to your hypothetical NFTs. Even then, the associated security issues ought to at least give you some pause. Just ask Seth Green. The actor recently became a victim of an online phishing scam in which he lost several NFTs, including a Bored Ape he intended to use as the star of a new live-action series (which in itself is wild). While “kidnapping” a JPEG sounds absurd to the point of slightly humorous, it certainly wouldn’t be funny if it happened to you after having sunk a ton of money into said JPEG – especially if you have a client/boss to answer to. Plus, this isn’t an isolated incident: just today a story has broken about a 38-year-old father of 3 having $1.4m worth of NFTs stolen by hackers overnight.
The danger in the attitudes expressed above is that it raises alarm bells that one may have turned into one’s aging mother who was reluctantly clinging onto a Blackberry until 2013 because learning how to use a new device wasn’t worth the faff and iPhones will probably become less popular at some point anyway. Yet there is a difference between being a Luddite and a realist. There have been far too few examples (if any) of NFT-based marketing yielding tangible results. Plus, big brands sticking their predominantly unwelcome noses into a world that they (understandably) do not really understand reeks of the type of opportunistic bandwagoning that consumers find off-putting. The danger, then, of a brand venturing into the world of NFTs is that very few of their consumers understand that world, and those that do will resent them for showing up where they are not wanted.
“Stick to what you know” isn’t a terribly rock’n’roll piece of advice, so we’ll steer clear of that particular apothegm. However, for those marketers still looking to dabble with NFTs and its associated dark arts, before doing so, perhaps just first ask yourself: ‘who is this really for?’.
*To expose my own ignorance: at the time of writing this, I wasn’t aware that Dwayne Wade is a founding partner of Bud Zero, which makes the collaboration a great deal less clunky – but the NFTs are still pants.