NFTs revisited: how brands should proceed during the decline
In March, BLiX CEO Simon Pont told The Media Leader that “NFTs represent a potential that’s too big to ignore”. Indeed, media companies and brands had spent much of 2021 grabbing their pickaxes and shovels and partaking in the NFT and cryptocurrency gold rush.
Sports teams were inking multi-million dollar sponsorship deals, Bored Ape Yacht Club digital tokens were going for a half million dollars, and Matt Damon was starring in awkward Crypto.com commercials that were so overplayed that South Park had to lampoon them.
But since the publishing of our article, the NFT market has lost an estimated $500bn in value. Jack Dorsey’s famed first tweet, which sold for $2.9m in 2021, is currently struggling to receive three-figure bids on auction. And OpenSea, the largest NFT marketplace, is facing criticism that it has failed to prevent theft and fraud.
The once excitable are now sober. Ashley Cooksley, then North American managing director (now North American CEO) of social media ad agency The Social Element, said to The Media Leader in March: “We haven’t even begun to experience the full potential of NFTs yet. We’re eagerly watching the space as it applies to social media specifically. Because of the nature of what an NFT is and where it lives – in the virtual realm – the integrations into the social media space are quite exciting.” She spoke of NFTs as vehicles for brand engagement that, while potentially risky, were worth exploring.
Reaching her for contact today, she strikes a rightfully more cautious tone even if the underlying analysis has not changed.
“If investors are losing money and NFTs are on the decline, then spending the money that would be required to integrate NFTs into your marketing strategy sounds risky at this time. I’d continue to monitor and re-evaluate later this year.”
‘Watchdogs should enforce disclaimers’
The Washington Nationals inked a five-year $38.15m deal with ‘stablecoin’ crypto company Terra before it suddenly became as unstable as Francium. A scheduled tweet gone awry has caused a massive headache for the baseball team’s PR and uncertainty about how to honor its commitment to a sponsor it was paid upfront to promote. For Terra’s part, they have “rebooted” the asset in an attempt to restabilize the currency.
— Washington Nationals (@Nationals) May 10, 2022
NFT and crypto ads appealed to high risk-tolerant or otherwise ignorant investors that have since been “financially crippled” by the sudden crash in value of their assets. “All Those Celebrities Pushing Crypto Are Not So Vocal Now” reads a 17 May New York Times article.
“’Celebrity’ becomes dangerous and weaponized the minute it starts dispensing financial investment advice,” Pont tells The Media Leader today. “We all need to take a long, hard, sober look at influencers and the cult of celebrity, and when it comes to the crypto space, caveat emptor has never more fittingly applied. And it literally should be applied. The watchdogs should enforce disclaimers.”
For Pont, the downturn is neither surprising nor a death knell for the NFT market. But he reiterated his prior position that brands need to be taking long-term, strategic views.
“[Brands] should be evaluating, testing, learning. They shouldn’t be rushing in. Jump on the bandwagon and you’re likely going to get stuck at the railway crossing and slammed sideways by the hype train.”
An ‘in-development’ project
Vigilance is especially necessary due to the way NFTs are perceived, according to Cecylia Grendowicz, strategy director at Superunion Hong Kong.
“The accessible, visually appealing nature of NFTs, combined with their ubiquity and unchecked promotion by influencers and celebrities, makes them seem more like a fun collectible than an asset class. Like any form of investment, their value can go up or down, yet you rarely see the kinds of warnings you’re presented with when investing in stocks or currency,” she says.
“This has created a divide in audiences for NFTs, and it’s hard for brands to please them both. While some see them as limited-edition collectibles from brands or artists they like that may or may not increase in value, others see them as a legitimate form of investment, often influenced by celebrities pushing that same message. Right now, the NFT marketplace seems a bit of a Wild West where anything goes – but with consumers starting to get hurt, brands need to pay attention.”
Grendowicz advocates for brands to ask themselves which of the two NFT audiences they want to appeal to – whether the NFT they’re selling is in keeping with its brand, audience, and values, or whether they’re just chasing value – “another flash in the pan”.
Such advice is in keeping with Pont, who notes that most brands have yet to even begin assigning NFTs to their task list yet. “NFTs should be an ‘in-development’ project for brands right now”, he says.
Pont compares the recent downturn to the dot com bubble bursting in 2000, stating that just because speculators were brought back to reality it did not mean that the death of the internet was nigh.
“Companies and brands didn’t pull the plug on their ‘web build’ projects. ‘www’ didn’t become pejorative slang.”
He continues: “Are NFTs dead? In my opinion, absolutely not. Is the Metaverse over before it’s even begun? Again, no way. […] Right now it’s a bold move to launch a new NFT collection, even one born of the most legitimate and honourable intentions. But as little as 4 months from now? Or 6 months from now? The water could well be very different, much warmer and far more inviting.”