Brands tapping into non-fungible tokens (NFTs) for user engagement and to offer exclusive experiences to customers, especially millennials, haven’t taken off in India as was expected initially. The market has turned muted after the initial excitement among celebrities and a handful of brands.
While NFTs have the potential to revolutionize digital ownership and value exchange, their adoption by brands and companies in India has been slow. This is largely due to the lack of awareness of NFTs among the general public, as well as a significant supply and demand gap with fewer buyers compared to creators in India,” said Toshendra Sharma, founder, and chief executive of NFT firm Nftically, which launched Comearth, a metaverse platform with NFTs for brands.
Textile maker Mafatlal Industries, which opened a metaverse gallery and NFT store for fashion enthusiasts on Comearth last July, along with car maker MG Motor, travel platform MakeMyTrip, and smartphone maker Nothing are among companies that have used NFTs to drive engagement and create buzz around new products. But the tally of such brands has remained flat in the past year amid a downturn in the crypto market.
Meanwhile, in the overseas market, top brands such as Gucci, Nike, Adidas, Time Magazine, Budweiser, and McLaren have dabbled in NFTs. In fact, Adidas, Nike, and Gucci generated $137.5 million in combined sales of their NFT collections in just three months, according to a March 2022 report by DappRadar.
“Whenever a new concept enters the market, like NFT, it is actually nudging an idea set that does not exist in the mindset of consumers. For many brands, these are oblique thoughts and concepts,” said Harish Bijoor, a brand strategy specialist. He pointed out that NFTs are in the initial stages of their life cycles when only individuals and a few “maverick brands” adopt it for the PR value. “
The rest will wait and watch, and join when it matures,” said Bizoor, adding that markets such as the US are a lot more aware and mature in terms of adopting new technologies.
The crypto winter has weakened investor confidence in the broader cryptocurrency market and consequently, the NFT industry has been affected too,” said NFTically’s Sharma. He added that many buyers are skeptical about NFTs due to fear of scams and fraudulent projects.
A case in point is NFT rug pulls, where fake NFTs are launched and after a few rounds of investments the project is abandoned causing monetary loss to early investors. According to crypto exchange Zebpay, losses incurred on NFT crimes increased by 667% in 2022.
Kameshwaran Elangovan, COO and Co-founder of blockchain firm Guardianlink said that the domino effect of the crypto winter did impact NFTs, simply because a large part of NFT trading takes place in cryptos. However, Elangovan also reminded us that some brand NFTs performed well despite it.
To be sure, 39% of marketing professionals who used NFTs for brand engagement found it has the highest return on investment among all tools they used, according to a May report by software firm HubSpot.
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