From Benefit Exchange to Brand as a Service: A paradigmatic discussion of the new scenario of NFT and brand integration

22-08-14 10:56
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From Benefit Exchange to Brand as a Service: A Paradigmatic Approach to the New Scenario of NFT-Brand Integration
Author of the original article:LiamWang, co-founder of Amadeus


This paper mainly wants to discuss the new scenario application of NFT combined with brand. There are two reasons for this. First, since last year, there has been a lot of talk about the new NFTS, especially with the bear market, which has led to more expectations and thinking about what else NFTS can be used for. Secondly, when our team at Amadeus was serving NFT project owners and creators, many brand owners approached me to give some suggestions and solutions on the marketing application of NFT. In short, brands are aware of the potential of NFTS as a new form of marketing, but lack understanding and systematic thinking about how and why they can be done.


In order to answer the question of what NFTS can do for brands, I will frame it in the following way: First, we need to go back to the beginning and discuss a topic that seems to have an easy answer: what is a brand? Secondly, we need to base ourselves on the present and discuss what is wrong with today's brands; Next, we'll talk more about the value of NFTS. I'll list some of the most common uses of NFTS today and explore the possibilities for others. In the fourth part, we will discuss the path worth exploring when combining NFT and brand.


Now, let's get down to business.


Brand: Value-connected sensors


The most essential relationship between seller and consumer is transaction: the seller provides corresponding goods or services, and the buyer needs to pay for the goods or services enjoyed.In a mature market economy environment, the seller's natural motivation is to expand the scale of customers and promote customers to continue to buy again. Therefore, the core task for the seller is to find the way or means to achieve this natural motivation.


Branding is one way to do that. Marketing practitioners are not unfamiliar with the word brand. There are many explanations and discussions on brand in traditional marketing theories, among which the most classic theory is positioning, that is, in addition to meeting the real needs of customers, it is necessary to establish the relationship between brand mental reinforcement and customers.


In the real practice of brand marketing, we see that almost all sellers are building their own brand mentality, the difference lies in the choice of path and entry point. Brand can be a strong functional embodiment, such as "anti-dandruff with Head and Shoulders"; Or it can be an expression of values, as in the classic Adidas slogan, "Anything is possible." There may also be an emphasis on identity, such as L 'Oreal's "You deserve it."


In my opinion,A brand is a value-connected sensor, whether it is the embodiment of the strong functionality, the expression of values, identity stressed or other, sellers are sent via the sensor information to consumers, this information may be functional, or emotional, is more likely to be combination (a combination of function and emotion), when consumers give corresponding feedback after receiving such information. Relying on the brand as a sensor of value connection, sellers and consumers form the basis of interaction. When a consumer is faced with multiple sellers who can provide the same product or service, whether the brand attribute becomes an important trigger factor for him/her to make a purchase decision. Over time, the consumers' cognition of the seller and the brand becomes one -- the seller is the brand, which becomes a powerful fulcrum to expand the scale of customers and promote customers to continue to buy again.



Crisis: The failure of old experience, the rise of skepticism, the loss of brand-name


By building brands, enhancing users' minds, expanding customers' scale and promoting customers' continuous repurchase, this path has been well verified in the traditional FMCG era represented by Procter & Gamble and Unilever, and has become an effective experience for many brands to become accustomed to later. But over the past decade or so, that lesson has become less of a universal formula,From recruitment to retention to transformation to promotion to re-purchase, brand effectiveness is declining, and it is increasingly faced with the prominent problems of "one high and four low" : high recruitment cost, low user retention/loyalty, low conversion, low activity and low re-purchase.



The failure of old experience does not happen suddenly, but is traceable:


First of all, the "scattered" state and lack of attention of consumers make it more difficult for brands to accurately find target customers.The rise of the Internet has enriched the media channels for people to obtain information. In the past, the main sources for people to receive information were television, radio, outdoor billboards, etc., while today, mobile phones, computers and social media are increasingly becoming the main media for people to receive and transmit information. The diversification of media channels brings information convenience to people, but it is not a good thing for brands: unlike TV, radio and outdoor billboards, which can easily cover a large number of consumers, the emergence of mobile phones, computers and social media leads to the transition of consumers from the past "cluster" state to the "scattered" state. It is increasingly difficult for brands to accurately locate target customers.


At the same time, the lack of attention caused by information explosion also brings severe challenges to brands.In order to build the brand mind of consumers, the first step is to make consumers notice the brand and willing to spend time to understand it. Unfortunately, in the era of information explosion, people are not only quick to obtain information, but also in the information "feeding" makes the attention span increasingly short. As we can see, today, the duration of a short video is only tens of seconds or a minute, and a long video starts to be watched at 1.5 times or 2 times speed. Brands are no longer as easy as in the past to generate goodwill and recognition from users.


Secondly, traditional Internet marketing methods make consumers more "changeable", which also raises the threshold of brand customer acquisition, retention and re-purchase.In the past 10 years, Internet companies' massive money-burning marketing methods have not only rapidly acquired users, but also gradually cultivated users' awareness of subsidies. As a result, mass users have become accustomed to using price as the basis for decision-making instead of relying on brand influence when making consumption decisions. At the same time, along with the awareness of subsidies, more and more consumers begin to become "smart", they become immune to brand advertising, no longer blindly attracted. The bigger challenge is that as the word user experience has been given prominence in marketing, consumers have begun to use user experience as a "weapon" and in turn have demanded more from brands, which explains why terms like "customization" and "user insights" have been so emphasized by brands over the past few years.


Third, the decline in consumption power brought by the economic cycle also makes the brand weak in the effect of attracting new products and repurchasing.In the past five or six years, the most talked about is consumption upgrade, but in the past year or two, people increasingly talk about "consumption downgrade". Consumers begin to have a plan for the refinement of money bags, on-demand consumption replaces luxury consumption and becomes the common choice of mass consumption. Brands invest more and more in attracting new customers and user loyalty, but the revenue is getting lower and lower.


The failure of the old experience makes brands question whether the resources invested in building brand power are still useful. With the rise of skepticism, some new changes have taken place in the actual marketing methods of brands: compared with the past brand marketing as a separate marketing module, now the brand increasingly emphasizes the integration of products and effects; At the same time, combined with the ability of Internet big data, more brands have become obsessed with precision marketing and emphasize the input-output ratio of ROI. Third, whether it is live broadcasting, advertising, private domain or others, the focus is on price rather than brand, and the benefit point becomes more simple and direct. Fourth, with the disappearance of traffic dividends, brands focus on the continuous operation of existing customers rather than the acquisition of incremental customers.


Brand marketers are disoriented by all of these new changes, and the word I hear most in my conversations with some of them is "hard" : budget cuts, low ROI for advertising/marketing events, and bosses focusing more on actual output are all internal obstacles to their efforts. Brands are still important, but not as important as they used to be. As one of them put it to me, "Brands need to find a new narrative, not only to win the hearts and minds of consumers, but also to win internal approval." Now, it seems, brand practitioners are looking to NFTS as a game-breaking solution to brand narrative challenges.


NFT: The combination of asset value and individual expression value


When we talk about NFTS, it's important to go back to the roots and figure out what NFTS are. NFT, English full name non-fungible token, Chinese translation is mostly "non-homogeneous token", there is also a translation is "non-homogeneous token". In contrast to crypto assets such as Bitcoin, NFTS are inseparable and unique. A bitcoin that you own is the same as a bitcoin that everyone else owns, but an NFT that you own must be different.


In today's market environment, there are four main NFT usage scenarios:


The first is art collection.Beeple's Everydays: The First 5000 Days NFT, for example, sold for $69 million at Christie's in March 2021, the third-highest auction price for a living artist after Jeff Koons and David Hockney.


The second is a game item in Gamefi.When you play Axie Infinity, you need to buy an NFT item as a premise for the game.


The third is social/identity tokens.When you buy the avatar of a boring ape or cryptopunks, you have your ticket into the game and your unique qualities.


The fourth value is the financial nature of NFTS.That is, investment/speculation through buying, selling, leasing, borrowing, installment, etc., in order to earn income or improve the liquidity of NFT assets. Buying and selling NFTS is easy to understand. After all, NFTS are crypto assets, so when you consider NFTS as assets, they have the nature of trading and buying. At the same time, since last year, we have seen a number of start-up projects, from fragmentation, leasing, borrowing to installment, aimed at addressing the illiquidity problem of NFTS.


With the exception of the third use scenario, there is a common premise behind the other three use values, which is to view NFTS as an asset. There is another value to be emphasized if we move beyond the asset perspective to the creator economy -- in the world of Web3, NFTS are the vanguard of individual self-expression.



How to understand this value? From Rare Pepes to Crypto Kitties and Crypto Punks to BAYC, Azuki, Doodles, Moonbirds and memes like Mfer and Goblintown, NFT project partners engage identifiers with their own narratives, forming a force through the community to express their values, emotions, preferences and positions to the outside world.


Whether we admit it or not, the world is becoming more chaos and tear, the rise of globalization, populist of backsliding, the gap between rich and poor widens, privacy infringement brought by the Internet giant monopoly, regional conflicts and war intensified, power fierce battles, the influence of the outbreak of the superposition of many factors, such as constant impact of the original social system and the global stability of the international order. In this turbulent change, some stable consensus foundations are impacted, and decentralization or anti-authority is gradually recognized by more and more people. Individuals' expression of their own voice and their motivation to form a certain influence through this expression become stronger.


In addition, the growth of the younger generation of Z has made self-expression even more important. Compared with their parents' generation, young people are more independent and dare to express their opinions and opinions. Today, on YouTube, Instagram, TikTok and other social platforms, we increasingly see young people expressing their personality, ideas and values through text, video, and music.


It may be argued that self-expression does not seem new, since it is already mainstream in the traditional creator economy. I agree with that. The difference is, I think,NFTS will make people more eager and able to express their rights than in the past. The reason is that NFT is an important part of Web3. The values advocated in Web3, such as decentralization, de-trust, privacy protection, right confirmation, return of income to creators, respect for individual expression, are also reflected in NFT and recognized by people. Whether you're wearing an NFT avatar or creating your own NFT (PFP, music, video, etc.), you realize that you have one of the most important identities of all -- you're an expressor who can make your voice heard in the world and win over your own users and fans.


Which makes me believe something else:Just as today everyone has the ability to shoot TikTok short videos and earn income from this way, the entire production and creation threshold of NFT in the future will be as low as that of TikTok short videos, which means everyone will have the opportunity to produce and create their own NFT. In other words, in the future, people can be both consumers and producers of NFTS.


NFT meets Brand: Brand as a Service


After finishing my views on the value of NFT, I still want to return to the core theme of this paper: what are the new scenarios of NFT and brand combination? As I mentioned above, the relationship between brands and consumers is a kind of interest exchange. Brands provide corresponding goods or services, and consumers pay for the goods or services they enjoy. Once the deal is done, the relationship will weaken, which is why every brand wants to continuously strengthen its brand to maintain or enhance its relationship with customers.However, in the era of Web3.0, the emergence of NFTS has the potential to fundamentally change the relationship between brands and consumers. Transaction completion is not the end of the relationship, but the beginning of the relationship, and this is the idea I would like to mention -- Brand as a Service.


How do you do that? A hypothetical example can be used to illustrate this.


【 Problems to be solved 】


A fashionable brand sells 10,000 T-shirts of a series with a unit price of 500 yuan. After the user buys them with 500 yuan, the user gets an NFT. How to increase the brand's sales and enhance user loyalty through NFT?


[Executable path]


Step 1: The fashionable brand NFT should become a CC0 project, that is, the copyright is given up, and consumers can make a second innovation on the NFT after buying the T-shirt of the brand and obtaining the NFT. It should be noted that CC0 only waives copyright, but not trademarks, patents and other unmentioned rights.


Step 2: While giving consumers the opportunity to create a second innovation, the brand can launch a second innovation project competition in the community and let the community vote. For example, the top three brands of the second innovation project can co-create creators to sell NFT and physical clothes, and the profits from selling NFT and physical clothes can be shared in a certain proportion.


Step 3: Each consumer will have a certain degree of contribution accumulated. The brand can grant additional rare attributes of different levels of NFT according to different degree of contribution (the weight can be a certain amount of consumption + activity of secondary innovation + sales of secondary innovation NFT and physical clothes, etc.). This NFT is programmable. Rarity will increase as the customer contribution increases. The rarer it is, the more valuable it is for collection and circulation.


Then again, there are a few things that might be required to make this hypothetical example work:


First of all, the NFT creation tool with low threshold allows every consumer to have the ability to create and create NFT as much as possible.


Secondly, the change of brand cognition. Brands need to move from a single interest relationship to a brand as a service.


Finally, the wider adoption of Web3 among consumer groups.


Today, we are also pleased to see that more and more brands are trying to connect users with NFTS. For example, Starbucks is about to launch a coffee-themed user loyalty program, Coca-Cola cooperates with Rich Minsi to launch Pride Colle Ction NFT, and Tiffany's limited edition NFT project "NFTiff".


But generally speaking, the combination of NFT and brand today is more reflected in the aspects of marketing gimmicks, low-cost attracting new products and new membership changes, and so on. In essence, it remains at the level of interest exchange.The brand as a service proposed by me hopes to discuss and redefine the relationship between brand and consumers from NFT or Web3, that is, consumers and brands are no longer corresponding subjects, and consumers can become designers of brands or have their own brands based on brands.Of course, this does not mean that every consumer will become a designer or have their own brand, just as we all have the ability to become We-media, but not necessarily everyone will become a TikTok host. But this is where Web3 makes the most sense. Not only does it allow us to see the value of decentralization, detrust, privacy protection, rights verification, etc., but it also gives the public the possibility to express their voice and be creative (the DAO is the best proof of this). It is an opportunity to be more inclusive and open to everyone.


Similarly, I have always believed that Web3 and Web2 cannot be two separate worlds, and that Web3 should be rooted in real life and solve real life problems. The new scenario of NFT and brand combination is a new topic to talk about, and it is also my focus area. I look forward to communicating with more brands and Web3 friends who are interested in it, and thinking and exploring the larger application scenario of NFT with you.


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