Meta announced that it would allow influencers to sell NFTs directly on Instagram. After a year of influencer and social media platform controversies, NFTs may offer brands an alternative route for “brand-safe” collaborations.
Influencers and Brands: Navigating Toward A “Third Option”
The creator economy is now one of the few bright spots in the world economy. Nicole Quinn, general partner at the global venture capital firm Lightspeed Venture Partners, stated recently, “In the same way we used to talk about technology eating the world, well, now it’s creators eating the world.”
According to The State of Influencer Marketing Benchmark Report, approximately 50 million people think of themselves as content creators. Of course, simply creating content does not lead to influence—more than 75 percent of brand marketers have or plan to dedicate a budget to finding content creators who will help them reach potential customers. When marketers bet on the right influencer, the results can be astounding: Li Jiaqi and Viya, two top influencers based in China, sold $3 billion worth of goods, according to the report. But brand and influencer partnership failures due to influencer scandal can be just as stunning. Adidas stands to lose $650 million after severing ties with controversial rapper Kanye West after public backlash over social media comments.
That co-mingling of brand identities and influencer personalities can be risky for marketers, especially when physical product lines are inextricable from an influencer’s personal brand.
NFTs may present an alternative for brands seeking to collaborate with influencers and vice versa. NFTs allow influencers to own their personal brands and lend that identity to companies with a high level of control. When a brand or an influencer is no longer right for each other, NFTs for sale can simply be decoupled from any brand relationship more easily than physical merchandise. The ability to sell NFTs directly from a social site would allow influencers to gauge their own marketability and earning power independently of an agency. It would also provide brands with a real-time view of an influencer’s ability to sell higher-end products. While top NFT creators can make millions from a single sale, influencers’ ability to deliver an audience that is willing to pay to engage with their personal brand may be more important to potential sponsors than the price their NFTs earn.
Can NFTs Deliver Value For Influencers And Brands?
That depends on marketers—NFTs are still thought of as a “niche” market, despite their increasing popularity. However, many marketers who have used NFTs have become advocates. According to Hubspot Research, 39 percent of brand marketers surveyed stated that NFT marketing delivered the highest ROI of any channel. Yet only 16 percent of marketers in that same survey plan to try NFT marketing for the first time in 2022. One reason for their reluctance may be concerns over greenhouse emissions generated by crypto mining—something that Ethereum is working on this year. The other issue may be a concern about how NFT and influencer collaborations can work and how NFT marketing fits into a broader strategy.
For now, some of the world’s largest brands are taking the lead on NFTs as a brand awareness strategy. From Ford to Walmart, big brands are wading into the metaverse. They are also reaping the benefits. The top three brands selling NFTs earned over $1 billion in NFT sales last year, per Cryptoslate.
- Nike: $93.10 million from the primary sale of its NFTs and $92.17 million from royalties and $1.29 billion on the secondary market.
- Dolce & Gabbana: $25.65 million, with $2.52 million coming from royalties.
- Gucci: $11.56 million in revenue from NFTs and $31 million in secondary volume.
According to a recent report, the total value of NFT transactions has surged by 328 percent since 2021. As marketers reevaluate their ties with influencers due to recent scandals, NFTs may provide a new opportunity to redefine the nature of influencer collaborations.