Despite the challenges and fluctuations of the web3 field, it’s hard for entrepreneurs to ignore the lure of NFT projects. NFT growth may be inconsistent, but it’s still compelling: over USD 37 billion was traded to NFT marketplaces in the first six months of 2022 (compared with USD 40 billion over the full period of 2021) and the number of active NFT buyers and sellers continues to grow (source: Chainalysis, May 2022).
Yet while these figures depict a field of opportunity, they also reveal the intense competition between projects vying for buyer attention.
”NFT growth may be inconsistent, but it’s still compelling.
Unfortunately, there is no fail-safe formula for launching a viral NFT project, but there are some key elements to setting yourself up for maximum success and cutting through the noise.
NFT projects that have achieved sustainable growth tend to overlap in crucial factors such as a compelling mission statement, community, utility, and team.
In this article, we share:
- How new brands can craft a strong mission statement that drives community building and interaction;
- How established brands can integrate NFT technology into their online customer acquisition strategies; and
- The role utilities play in creating sustainable long-term value for community members.
1. For new NFT businesses, a strong mission statement drives community buy-in and long-term value
If you’re launching an NFT project as a new business model, it’s important to start with a compelling mission statement that will resonate with your community.
Understanding how your community mission statement supports your business model is crucial to setting yourself up for success.
”Community building in web3 is very different to community building in web2: brands can’t get away with broadcasting and one-way conversations anymore.
Beware of vanity figures: simply having a large social media following is not enough to generate success at minting or beyond. Unlike web2, web3 projects won’t survive on audiences alone. Founders should consider the appropriate community-building mechanisms to create a strong fan base that buys-in to the community mission statement.
Communities that last beyond the hype are those that are invested in shared value. And while purpose-driven mission statements can be powerful, some of the most successful NFT projects to date focus on the perceived value of belonging to the community itself.
Build a strong NFT community by integrating the business vision into the community model
First, you need to understand who you’re targeting and what value you are providing to them. Your community mission statement is not the same as your business mission statement, but the former should reinforce and strengthen your business model. Identify how to integrate the business vision and community mission in the day-to-day business of the organisation: the mission statement should build on the value you are creating for your community members.
Determine the mechanisms that facilitate the desired community interactions across each stage of membership
Your next step is to determine the mechanisms that will facilitate the community interactions you want. Unfortunately for most brands, mission statements tend to be forgotten save for half-hearted marketing campaigns.
To really ignite your NFT community, you need to determine your community model and what interaction looks like at each stage of the community, from recruitment to advocacy. You’ll also need a solid content strategy to support and guide community development.
2. Existing businesses should ensure that NFT projects are coherent with a brand’s overall strategy and value proposition
NFT projects offer new and exciting ways to engage, reward, and involve your customers. As an established brand, you can tap into the characteristics that create desirability in NFTs (uniqueness; rarity; utilities) to overcome many of the marketing challenges posed by web2, such as diminished ROI from ads, disengaged communities, ineffective loyalty programmes, lack of trust in consumer data handling, and lack of access to consumer data held by third-party platforms.
NFT projects empower brands with creative ways to engage their target audiences and remain top-of-mind
Brands can combine NFT collections with games, giveaways, prizes, and more to enhance and animate their storytelling. Rather than sell their NFTs to customers, some luxury brands have leveraged NFTs as unique symbols of recognition for customers who engage in their initiatives. This is a great way of leveraging web3 technology that focuses on authenticity and brand-building.
For example, Louis Vuitton rewarded consumers who participated in a campaign that aimed to educate its audiences on the brand’s history. Participants who reached a certain milestone in the game would be eligible for a raffle.
NFT projects are also a new way to launch multichannel campaigns while leveraging the reach of influencers. Hugo Boss, for example, generated 3.1 million user-generated videos and accumulated more than 7.5 billion views, with a Tiktok challenge where audiences could win five unique NFT jackets and their physical twin.
”A good starting point is to audit your online customer acquisition tactics and identify where NFTs can support reach and engagement. Integrating NFT launches with initiatives across different channels can effectively amplify existing marketing efforts.
NFT projects provide opportunities for customers to get involved in giving back to the community
Campaigns that promote a cause require a thoughtful narrative to ensure that they don’t feel like a gimmick or PR stunt. An NFT connection that invites consumers to give back should be meaningful and aligned with your existing business values.
For example, Mac Cosmetics leveraged its NFT collection to support America’s National Youth HIV/Aids Awareness Day in collaboration with long-term partner, the Keith Haring Foundation. Mac Cosmetics allocated the entire purchase price of sales to the fund, as well as ensured longevity of the initiative by allocating 2.5% of the purchase price from secondary sales to the foundation. The initiative was coherent with the company’s previous initiatives, building on an initiative first launched in 1994 by its founders in support of the AIDs crisis.
C. NFT projects enhance loyalty programmes and create renewed excitement around rewards and incentive schemes
”One of the key challenges brand face in web2 is reward fatigue. Customers are bombarded with point schemes from a multitude of brands, with programmes that typically lack real clarity or motivation.
Clinique achieved both in a campaign which rewarded free products for a decade and an NFT to competition winners, announced by celebrities. The strength of the initiative lay in how the beauty brand incorporated the NFT giveaway into its marketing campaigns, in a way that was connected with the brand.
NFTs are an ideal mechanism to refresh interest around a brand’s loyalty system. If your brand is struggling to upsell existing customers or to recruit new members into your loyalty programme, an NFT collection launch can be an effective tactic.
Brands should address these challenges whilst ensuring that NFTs relate back to their key products or value offering. Crowdsourcing with NFTs is a great way to engage your most loyal fans, while limited edition products help keep the focus on your unique selling points as opposed to the NFT itself.
As consumers are exposed to an ever-increasing number of NFT collections, the most successful will be those that focus on how brand building enables them to create a lasting emotional connection with their audiences.
3. While new trends are bound to emerge with time, a strong focus on NFT utilities can ensure long-term value creation beyond the hype of the minting stage
Art is important, but it’s also subjective and should not form the entirety of the value proposition if your aim is to build a community-based NFT project. Current trends favour 10k or 8,888 PFP projects, where the minting process includes a fun element of luck and surprise. As the market evolves and consumers (and brands) become more sophisticated, new trends will emerge.
”It is likely that as more and more established brands weave web3 technology into their business model and marketing strategies, NFTs will become a mechanism to reward customers and incentivise audiences.
What does this mean for new brands launching NFT projects? Outside of the digital art community, brands should consider how to strengthen the value of their NFT collection with offline and/or digital utilities. NFT utilities help sustain higher floor prices, value of community membership, and liquidity. You want your community members to agonise over whether to sell or hold – torn between wanting to be a part of your community and the opportunity to exit at a profit.
You do not need to lay out a complete list of future utilities at mint, but an attractive roadmap with drops, surprises and regular updates can go far in keeping members’ interest high. Broadly speaking, your core utilities should support your primary business vision – but the nature of web3 also invites unexpected collaborations and gamification to delight your audiences.
Are you interested in exploring opportunities in web3 but don’t know where to start?
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