2021 NYR 20447 0001 001 beeple everydays the first 5000 days034733 .0 1 NFTs: A New Frontier in Marketing

NFTs: A New Frontier in Marketing

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  • We define an NFT as an ownable unique or limited quantity unit of data that is tradeable and stored on a decentralized, public blockchain along with its ownership history.
  • NFTs represent ownership of any information, including URLs, images, videos, 3D objects, social media posts or certificates that can be associated and stored on the blockchain together with the identifier of that unique good.
  • Once the NTF is created through a process called “minting,” each subsequent transaction is recorded on the blockchain, thus aggregating history over time.
  • Importantly, unlike other digital goods and cryptocurrencies such as Bitcoin, each NFT is distinguishable and typically unique.
  • We propose that NFTs offer a concrete entry point into what we call “crypto-marketing,” a nascent sub-discipline that includes any marketing practice that leverages distributed ledger (blockchain) technology for the purpose of designing, pricing, promoting and selling digital and non-digital goods.
  • NFTs raise questions in three main areas: digital ownership, uniqueness, and value; authenticity, status, and sharing; and decentralization of branding and distribution.
  • First, social media firms use the ability to authenticate ownership as a means of conferring status on users, presumably raising the value of interacting on their platform.
  • Second, NFT technology may affect what information consumers share with others. The potential to turn one’s own social media posts, reviews, comments, and blogs into tradable NFTs already exists.
  • Third, NFTs offer consumers new ways to exchange economic value. Classic explorations of “pain of payment effects” have documented consumers’ propensity to spend more in lower-pain modes, such as credit cards, than in more transparent, “painful” modes, such as cash.
  • NFTs’ decentralized nature calls into question our understanding of branding and product management as centralized processes. First, NFT marketing, product development, and personalization are crowdsourced. Second, NFTs transform the supply chain, as the decentralized ledger eliminates the need for intermediaries such as wholesalers, retailers, or sales agents.
  • Although crypto-marketing provides novel opportunities for marketing practice and research, it also poses distinct risks. First, crypto-marketing will need to inspire new forms of trust: decentralization may lead external regulators to struggle to police behaviors in the system. Secondly, blockchains (especially “proof-of-work” blockchains) can consume extraordinary amounts of energy and thus, generate environmental costs.
2021 NYR 20447 0001 001 beeple everydays the first 5000 days034733 .0 2 NFTs: A New Frontier in Marketing
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In conclusion, NFTs offer a new way to think about digital ownership, value, and authenticity. They also have the potential to disrupt traditional marketing practices around branding, product development, and distribution. However, NFTs also come with risks, including the need for new forms of trust and the potential for environmental harm.

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