NFTs Are Making A Comeback In The Corporate World

Forbes

Maria Gracia Santillana Linares, a Forbes reporter, joins ‘Forbes Talks’ to discuss NFTs being rebranded and making a corporate comeback.  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Hi, everyone, I'm Rosemary Miller here with Maria Grazia Santillana-Lenores, a Forbes

00:09 reporter here to tell us about NFTs making a corporate comeback.

00:14 Thank you so much for joining me today, Maria.

00:16 Thank you for having me.

00:18 For sure.

00:19 So, Maria, could you elaborate on the shift in the NFT market from its peak in 2022 to

00:25 today?

00:26 Yeah, it's been, I think, certainly a very interesting two years.

00:30 January 2022 was when we saw like the all-time high volumes.

00:34 We saw, you know, a peak of $26.7 billion in sales over the entire year.

00:39 And it was just really the craze, right?

00:41 Like when you think of NFTs and you think the pictures of monkey faces selling for a

00:45 multi-million dollars and everyone from Jimmy Fallon to Paris Hilton kind of showcasing

00:50 that and spending that money.

00:52 And for what a lot of people was very confusing, right?

00:54 Like, why would you spend so much money on an image that I can just right click and save

00:57 on my desktop?

00:58 That, I think, embodies very much the ethos of that 2022.

01:03 Now, the crypto market as a whole is very different, right?

01:05 Like market volume has fallen, prices has fallen.

01:09 And it's also just became so very saturated.

01:12 There's a lot of profile picture collections, a lot of different just options for buyers

01:17 and demand went down.

01:18 And so, you know, what we've really seen in the last year, I would say 2023, was really

01:22 characterized by some of the lowest flows.

01:24 You know, we saw trade weekly trading volume fall from at its peak, 3.2 billion in a singular

01:30 week to 15 million.

01:31 The market's rebounded.

01:32 Yeah, go ahead.

01:33 No, I was going to say, the market's rebounded a little bit.

01:38 We're back to like 200 million trading volume a week, which is what it was January 2023.

01:42 But still, right, like that's a significant drop in terms of, you know, these assets exchanging

01:49 hands.

01:50 Well, I want to switch gears and talk about these major companies like Nike and how they're

01:55 not really calling NFTs, NFTs.

01:58 They're most so referring to them as digital collectibles.

02:01 How does this rebranding strategy influence consumer perception?

02:05 And why does Nike choose to avoid the term NFT?

02:08 Well, so it's interesting, right?

02:10 Because if you take that idea of what the hype of the crypto market or in the NFT boom

02:13 in 2022, a lot of people, I think, just like so we're confused and kind of very antagonistic,

02:18 right?

02:19 And when you think of NFTs, it just seems like a term for silly digital images that

02:23 are being used and bought by crypto bros and tech bros and the art bros that just have

02:26 a lot of like capital to spend on these things.

02:30 But I think they got so popular that corporations really started looking at this as a viable

02:34 plan.

02:35 And so what you see now is kind of this meshing of like, OK, for a variety of different reasons,

02:40 right?

02:41 Like cryptocurrency is very unstable.

02:42 It's an unstable market.

02:45 There's a lot of regulatory action happening in the United States about like what tokens

02:48 are considered securities or not.

02:50 So there's a lot of questions.

02:52 And so corporations really got into the game and saying, like, OK, what is the safest way

02:55 that we can do this?

02:57 And it turns out that it's by simply not calling them NFTs, right?

03:00 The end of the day, an NFT is just it's a non fungible token that's being put in a blockchain.

03:05 It can be anything, right?

03:06 Like we talk about real world assets, like real estate deeds all the way to art to I

03:12 don't know, like really like the term NFT just signifies like a receipt.

03:17 And so because they're so focused on either art or collectibles or just marketing, you

03:22 know, memorabilia, they found that it wasn't really needed to say NFT and the term NFT

03:27 actually alienated a lot of people that they could otherwise partake in this in this like

03:32 campaign if they were just called digital collectibles.

03:36 Wow.

03:37 So the term NFT, that's what's scaring everybody away.

03:41 Not not the actual use case of NFTs.

03:43 Right.

03:44 Because when you think about blockchain, right, like blockchain is a technology.

03:47 It's like the underlying system.

03:49 It's kind of like HTML code or whatever, right?

03:52 Like people when they hear these technical terms, I personally, you know, it's true.

03:56 Like you alienate yourself.

03:57 You're like, oh, that's something new.

03:59 That's something that you see all the headlines is extremely volatile.

04:03 So I don't want to get into it.

04:04 But if I'm a loyal fan of Nike, and I want to buy an image of a sneaker that I would

04:09 one day like to own or just think it's really cool, I want to be able to have it on my phone

04:13 at all times, like maybe I'll spend the money to get that if it's a digital collectible,

04:18 but not an NFT.

04:19 Well, speaking of Nike, could you talk about their approach with the Dunk Genesis collection?

04:25 I know they allowed credit card payments, and they made about seven million dollars

04:29 in sales, right?

04:30 Yeah.

04:31 So Nike is a very interesting, I think, case of how corporations are adapting NFTs because

04:36 they actually acquired an entire NFT studio that existed by itself.

04:40 It's a very smart way to tap into that like Web3 native community of people who just will

04:45 buy anything because it says NFT, right?

04:47 Like I would say, minority of the population and embedded them into their virtual studios

04:52 category.

04:53 So then what that allowed, it's called Artifact, right?

04:56 That allowed Artifact to do is, OK, maintain its core base of Artifact fans, now be introduced

05:02 to all of the space of Nike consumers and get all the Nike resources to produce the

05:06 actual sneakers.

05:08 So that's what they did kind of in this last drop.

05:11 They experimented with a model that kind of worked two ways.

05:14 You could buy an NFT, which would then give you the rights to claim the physical sneaker,

05:18 or you could buy the physical sneaker, period.

05:21 And when you receive the sneaker, I believe shipping date is between March and June of

05:25 this year.

05:26 There'll be a QR code that you can scan and that'll allow you to claim the NFT.

05:30 So that's kind of part of the accessibility, right?

05:32 And then the credit card part of that is buying NFTs is largely still done with cryptocurrency.

05:38 It's actually done with Ether, which is the coin of Ethereum, which has a high barrier

05:43 entry, right?

05:44 Like you have to create a crypto wallet, you have to buy Ether, and then you have to download

05:50 and install all the apps that will allow you to buy an NFT with that Ethereum.

05:55 Sometimes you'll have to fight with your bank in that process.

05:57 It's a little bit easier now, but it's certainly not like just for the curious, it's a commitment.

06:03 And so that really added in the level of accessibility and partnering with crypto startups that will

06:07 allow them to kind of make that transaction in just a regular like USD payment.

06:13 Right, because a lot of people really struggle to get cryptocurrency alone.

06:18 And now to, okay, I need to get the cryptocurrency to get the NFT, but I can't get step one.

06:23 I get it.

06:24 I get it.

06:25 Credit card payments do make things easier.

06:27 How are other major companies like Coca-Cola and MasterCard integrating NFTs into their

06:35 marketing?

06:36 Yeah, so it's really interesting.

06:37 So we kind of looked at the entire marketing spectrum, right, in the corporate campaigns.

06:41 So we'll start with physical branding.

06:43 What MasterCard did, and this was I think two years ago now, they partnered with a startup

06:47 that would allow you to put your NFT on your physical credit card.

06:51 And so you would be paying with your MasterCard and high credit card, or sorry, debit card,

06:56 and the image on the card would be your board date.

06:59 And so that kind of really goes into this idea of like, people buy these NFTs because

07:03 they're part of their identity.

07:05 They're part of their social capital.

07:06 They want to say they belong to a group.

07:08 So the same way that you'd, you know, the classic, like you're tapping in a very expensive

07:12 card and it's like your Amex platinum or your Amex black, and someone else pulls like a

07:17 pink discovery card, right?

07:18 You want to show your personality through these things.

07:21 So they really looked at that and was like, okay, we're not really going to change, reinvent

07:24 the wheel here.

07:25 We're just going to add to it.

07:27 Now we go into like Coca-Cola, which is kind of looking at more marketing as a whole.

07:32 And so what they did is they had an existing marketing campaign called the Masterpieces

07:35 Collection for last year.

07:37 Very cool.

07:38 You know, they kind of just integrated Coca-Cola bottles into like very famous artworks.

07:44 So what they said is to expand that kind of pool of consumers that they already have and

07:48 attract maybe a new loyalty base was release virtual images as NFTs of like the stills

07:55 that they had in the video.

07:56 And so it wasn't necessarily a separate campaign.

07:58 It was just kind of expanding what they already planned onto the blockchain.

08:02 And then the third kind of example that we also talk about is loyalty programs.

08:06 And so think of Starbucks and Lufthansa.

08:08 You know, you want to get those Starbucks stars so that you can get discounts or free

08:13 things.

08:14 And they said, okay, cool.

08:15 We love that.

08:16 Let's put it on blockchain.

08:17 What they did is really interesting because again, shying away from the term NFT is you

08:21 kind of just play games based on the blockchain and earn points, which can then get you into

08:26 a leaderboard and then you get rewarded for that.

08:28 I think their first kind of real example of that is that for the top 20 point scorers

08:33 as of January 1st of this year, they want a trip to Costa Rica.

08:38 So 20 people will be going to Costa Rica for free purely by just being like loyal members

08:43 of the Starbucks NFT program.

08:45 Wow.

08:46 Wow.

08:47 All of this is NFTs.

08:48 Okay.

08:49 Yeah.

08:50 This is definitely a big difference from when I had my hand in dabbling with NFTs.

08:56 Yeah, it's interesting because you'll talk to people and they're like, what's the utility?

09:01 And now we're really seeing these like different use cases.

09:04 And I think such a vast array of things.

09:06 I'm sure that there are more corporations that are doing other really cool things that

09:09 we haven't even talked about yet because they haven't reached a certain level of capacity

09:13 or just knowledge.

09:16 But it's very interesting to see how we've moved from this model of like it's purely

09:19 art and like look at all of the areas that this technology is now part of.

09:25 So do you think the term NFT is going to fizzle away in the near future?

09:30 Yeah, I think when you think about like, you know, the classic that we say, you're, I don't

09:38 know, putting something on that's just walking to Walmart, you know, your grandma who is

09:42 just walking down the street to like get her daily coffee.

09:45 I don't think we'll, if ever, maybe we'll go back to the point where like NFT is such

09:50 a big used word because again, it's going to get embedded into these other programs.

09:54 And what the data says is like these programs, again, that aren't using the term and who

09:59 are casting a wider net of users are really doing well.

10:03 I also think it's part of kind of what the industry will have to shift a little bit.

10:06 And I was talking to a couple analysts this week about from the beginning, this, you know,

10:12 and then as profile pictures are really seen as a tradable financial asset.

10:15 So we saw infrastructure get built over like, hey, I'm going to be able to trade my board

10:20 aid for CryptoPunk as quickly as possible.

10:23 And then a market also like appeared from that, right.

10:26 People who are trading pieces just to make marginal, like better, what's it called?

10:33 Yeah, just like marginal gains.

10:37 And so we started measuring like the growth or size of the industry is trading volume

10:40 because it was how much it was interchanged.

10:43 But now what we're seeing is like prices are falling down, but these big corporations are

10:47 coming up because instead of selling a piece for $10,000, they're selling it for 25 bucks.

10:53 And that's much more interesting.

10:54 And the total number of NFTs that are available is not so much a game of scarcity.

10:58 It's just accessibility.

10:59 Because again, like, you know, Paul Brody, the head of blockchain at EY, I think has

11:05 this really insightful quote of like, the future of NFTs may just be like a trophy case

11:09 or like a girl scout, if you will.

11:11 Right.

11:12 Like I get to say like, I did this, I did that.

11:14 And not so much like, let me trade you my certificate of participation here for your

11:21 access code there.

11:22 Right, right.

11:23 Well, this has been incredibly insightful.

11:25 And thank you so much for joining me here today, Maria.

11:29 For sure.

11:30 Thank you.

11:31 Thank you.

11:31 Bye.

11:32 Bye.

11:33 Bye.

11:38 [BLANK_AUDIO]

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