Brands Experiment With NFTs as Market Takes Off
McDonald’s, Clinique, and Other Brands Launch NFT Promos
Major brands from McDonald’s (MCD) to American Eagle (AEO) are dabbling in NFTs, hoping to create buzz which will drive business their way. These companies are attempting to capitalize on demand for non-fungible tokens, which has soared in recent months. In the third quarter alone, there was $10.67 billion in trading volume for NFTs—a 704% increase from the second quarter.
The strong demand has piqued the interest of companies across industries. For example, McDonald’s is giving away 10 McRib NFTs, while American Eagle is selling 120 NFTs for $1 each. State Farm Automobile Insurance launched an augmented reality game which sends players looking for NFTs on college campuses. Yum! Brands’ (YUM) Pizza Hut and Taco Bell, along with Campbell Soup (CPB) and Clinique (EL), also launched NFT promotions this year.
Looking at the Long Term
Brands are currently focused on using NFTs to launch promotions, but a handful are taking a longer view, experimenting with NFTs in a variety of ways. R/GA, a digital advertising firm owned by Interpublic Group of Companies (IPG), is one example. It is helping brands develop virtual stores which will exist in metaverse platforms. One of these stores is for Vollebak, a UK clothing brand. Users will be able to buy and wear digital merchandise from the digital store. All the clothing will have a NFT attached to it.
Meanwhile, the cosmetics company, Clinique, is also tying NFTs to its products. In one NFT sweepstake launched by the company, winners get access to a selection of free Clinique products for ten years.
Challenges With NFTs
Despite all the interest in NFTs, there are reasons for companies to be cautious as they get into the NFT game. Authenticating NFTs requires a lot of energy, as does selling them. NFTs are purchased with cryptocurrency which also consumes a high amount of energy. The environmental impact of using NFTs could hurt brands’ efforts to curb their emissions.
Then there’s the potential for NFTs to be just a fad. Sure they are generating a lot of buzz right now, but it is not clear how many consumers will want to own a digital replica of a pair of jeans or a McRib NFT in the future. The NFT market is exploding and brands are taking notice. It will be interesting to see how these brands’ experiments impact the NFT industry.
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