NFTs: New study identifies opportunities and risks for companies
Professor Leif Brandes and PhD student Katharina Dölp have examined how global brands utilise non-fungible tokens (NFTs). Their findings: the right combination of factors can boost sales, but reputational risks must always be considered.
In recent years, a new concept has disrupted the digital marketing landscape: non-fungible tokens (NFTs). Unlike cryptocurrencies such as Bitcoin or Ethereum, which can be exchanged on a one-to-one basis, NFTs are unique digital assets that cannot be replaced by anything else. They are built on blockchain technology, the same foundation that supports cryptocurrencies. Between 2020 and 2023, a diverse range of global brands began selling NFTs as digital products - from car manufacturers like Renault and KIA to luxury brands such as Gucci and Balmain, as well as entertainment giants like Disney and Marvel.
The right mix is key
In a recent publication in the renowned International Journal of Research in Marketing, Professor of Marketing and Strategy Leif Brandes and his PhD student Katharina Dölp examine how global brands use NFTs to generate sales and which factors contribute to their financial success.
Drawing on a detailed market analysis of 671 NFT campaigns from over 200 companies, the authors not only highlight the different ways in which companies have sold NFTs and how their campaigns vary, but also use this data to identify potential success factors for revenue generation.
Their findings reveal that the most effective mix for NFT campaign success consists of established brand characteristics - such as brand strength and image - combined with NFT-specific factors, including partnerships with Web3/blockchain experts and the provision of utility (i.e. additional benefits for customers beyond the NFT itself).
Sales vs. reputation
In addition, the researchers conducted a behavioural science experiment with nearly 3,000 participants and demonstrated that merely announcing an NFT campaign can negatively impact consumer perceptions of a brand. This effect can be even more pronounced if the campaign is not carefully optimised, particularly for premium brands.
Ultimately, the study highlights that NFTs present a double-edged sword for companies. While many brands in the analysed campaigns successfully expanded their portfolios by introducing a new product category and generating sales, they may have also incurred at least short-term reputational damage due to their involvement in the often controversial crypto market.
Leif Brandes, Katharina Dölp
Non-Fungible Tokens (NFTs) as Digital Brand Extensions. Evidence on Financial Performance and Parent-Brand Spillovers
International Journal of Research in Marketing, 17 January 2025
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