Over the past year, non-fungible tokens (NFTs) have emerged as a promising new way for fashion brands to engage shoppers and build member communities, letting them interact in deeper and more meaningful ways than just having an email address .
Brands can engage customers who hold NFTs—whether they’re buying or purchasing the physical item—by rewarding them with free items or exclusive access to gated products or experiences using crypto wallets that contain their digital tokens as unique identifiers Product upon request for free. NFTs associated with real-world goods can also be used to authenticate products and act as a gateway for related services such as repairs.
NFT is part of the world of web3, an emerging Internet based on blockchain technology. Backers of Web3 say they offer a path forward for trendy digital marketers grappling with the challenges of reaching new audiences, including stricter data privacy rules, rising customer acquisition costs and the rapid pace of social media. content loops and more.
NFT technology is still young, so web3 user experience can be clunky, and NFT buyers, who are currently in the minority in the broader market, tend to judge tokens by whether they can be flipped for profit. It remains to be seen how useful NFTs will be in introducing brands or their products to unconnected audiences—a top priority for digital marketers—and even if brands can build communities, it may need careful nurturing to thrive.
But some argue that the days of buying attention online for cheap are over, and it’s time for brands to start building an approach that fits this new reality.
“Marketers are going to have to learn this new playbook, where attention is earned, not bought,” said Brian Trunzo, head of metaverse at Polygon Blockchain. “In web3, there is a purer way By incentivizing customers to talk to customers – giving them digital assets and benefits through NFTs.”
Build a community with NFTs
Adidas was an early leader in embracing NFTs in the fashion industry, partnering with influential web3 brands Bored Ape Yacht Club, Gmoney and Punks Comic to release 30,000 “Into the Metaverse” tokens in December 2021. Each token was worth 0.2 ETH (ether), or roughly $800 at the time. For the German sportswear brand, however, revenue generation is not the focus.
“It’s about launching a new community, a new membership model,” says Erika Wykes-Sneyd, co-founder of adidas’ web3 studio. (Adidas also shares revenue from NFT sales with partners in the project.)
The brand offers its NFT holders exclusive physical products, such as tracksuits and beanies, and recently allowed them to vote on the colors of upcoming releases (orange and bright pink were chosen). Most of the community activity takes place on a server on the chat platform Discord, which is dedicated to the project and has about 60,000 members. Wykes-Sneyd stated that they plan to engage NFT holders more as collaborators and co-creators in the coming months, rather than just customers.
Adidas’ relationship with this community differs from the usual brand-shopper dynamic, largely because of the financial investment of members.
“At this point, these are the real stakeholders,” Wykes-Sneyd said. “They support us, try to support the success of this project, and they want to see it succeed. If they don’t, they will let us know by selling and showing us the reserve price drops.” Lowest cost on the market.)
So far, in her view, the project has been a success, and the price of the Adidas NFT on the secondary market shows that customers are still interested. As of October 2022, they’re selling for about $700 on the OpenSea marketplace, less than their original dollar equivalent cost, but fairly stable given the year’s market turmoil that saw cryptocurrencies and NFTs plummet in value . However, Wykes-Sneyd emphasized that Adidas is focused on the long-term goals of its programs and associated communities, not the volatility of the market.
Prada also uses NFTs to create deeper relationships with customers, though it distributes them differently. The Italian brand is allowing shoppers to claim them for free with physical purchases from its limited-edition Timecapsule collection, which is released briefly online each month. All NFT-related drops have been sold out so far.
NFT holders gather on the Prada Discord server, with approximately 5,600 members. In September 2022, a Timecapsule NFT owner won a trip to Milan, which included an invitation to Prada’s Spring/Summer 2023 show, a visit to the Prada Foundation (the company’s contemporary art and cultural institution), and other benefits. Later this year, NFT holders can take part in the next “Prada Extends” event in Miami, an event celebrating local culture and music.
Lorenzo Bertelli, Prada Group Marketing Director and Head of Corporate Social Responsibility, wrote in an email that NFTs bring Prada “closer” to its community base.
“Web3 presents a unique opportunity to enrich our existing client relationships and engage with new and diverse communities,” Bertelli wrote. “We envision our NFT program to become an increasingly important component of our client relationship and community engagement strategy.”
Members of the crypto community are often the largest audience involved in these NFT projects, but they are not the only audience. According to Bertelli, Prada’s NFT holders include “long-time cherished Prada fans, curious newcomers, and web3-native players.”
As for Adidas, it made sure to attract some established customers, setting aside 8,000 NFTs in an initial sale on its Confirmed app, and it released hyped products to its most engaged fans. Many of them are new to the crypto world, Wykes-Sneyd said.
Great Web3 Expectations
Managing a community and its expectations is not easy. Bertelli said that Prada has made “considerable efforts” to expand its capabilities in web3 and plans to continue investing to support more NFT and community engagement projects.
Other NFT projects have faced backlash after failing to meet expectations. RTFKT, a virtual fashion and NFT maker, publicly apologized to members of its community when its much-hyped product drops encountered technical glitches that left customers waiting hours trying to claim them. When adidas NFT holders did not regularly update their expectations, they became restless and complained directly to adidas in Discord.
“We have a full-time management team of seven people running the community,” Wykes-Sneyd said. “It’s unfiltered for us, front-row access to what people are feeling and thinking, whether it’s good, bad or indifferent.”
Brands can, of course, use NFTs without building a clear membership base. They can think of them as a way to provide incentives and rewards to holders’ crypto wallets to occasionally grab their attention and build loyalty.
However, one challenge for all NFT creators is ensuring that customers have a reason to care about their NFTs in the first place. Pierre-Nicolas Hurstel, co-founder and CEO of Arianee, an NFT platform for luxury and fashion brands, believes that, ideally, the tokens themselves should have some raison d’être.
“The utility of an NFT should be native. It’s proof of something, so the question is: Do you have a good reason to distribute proof of something to someone? Proof of attendance, participation, ownership,” Hurstel said.
Part of the goal of the Prada project is to offer a perspective that only it can provide. Just like the physical products and brand identities they offer, brands need to set themselves apart and give consumers a reason to want to associate themselves with them. As Polygon’s Trunzo puts it, “The closer a brand is to a commodity, the harder it is to use web3 tools to grab the attention of potential customers and then keep them as fans.”
But if brands can entice shoppers to want their NFTs, it arguably lays the groundwork for a deeper relationship than just collecting emails at checkout or shoppers following a brand on Instagram. Hurstel describes NFTs as “zero-party data,” as distinct from third-party data collected and sold by other platforms, or first-party data collected by brands themselves. Hurstel noted that it represents a relationship that customers intentionally opt into, which also helps rule out data privacy concerns.
He and others in web3 imagine that at some point in the future, when customers’ crypto wallets become their public face, the NFTs they collect from purchases and events they attend will be how brands identify their interests. However, it will take time and wider adoption of crypto wallets to get to this point.
“This conversation around blockchain, addressing identity and giving consumers control over their identities [where] They can opt-in, which sounds ideal,” said Trevor Testwuide, co-founder and CEO of digital marketing analytics platform Measured. “
Brands such as Adidas and Prada saw enough potential to get started right away.
This article first appeared on The State of Fashion in 2023an in-depth report on the global fashion industry, jointly published by BoF and McKinsey & Company.