5 reasons why brands should create physical NFTs

We are living in a new age of digital art and collectables, one where creators and brands are finding new ways to share their talents and products with the audience. And today a crucial piece of this puzzle is the non fungible token (NFT), “one-of-a-kind” assets that can be bought and sold — pretty much like any other piece of property.

Not all NFTs are created equal. There. We said it. Sorry you traditionalists, we believe that what separates a highly valuable NFT from other regular NFTs is the utility. Making a NFT useful makes it a looooooot more valuable - and that’s where physical NFTs come into the picture.

Physical NFTs can also be called redeemable NFTs, digital twin NFTs and phygital NFTs. Along with the ease of transfer and proof of ownership, NFTs can help a brand grow its revenue and brand presence in several other ways.

Let’s see how.

1. Physical NFTs for secondary sales royalties

If you’re not familiar with NFTs, here’s how it works — NFTs are powered by smart contracts which handle the transferability and verify the ownership. Smart contracts are pieces of code that allow storing your NFT on the blockchain in a transparent and immutable manner. For a creator or a business — smart contracts come as a bonus.

Once your digital art or product is tokenized, you can claim a pre-decided percentage on every resale — which means that every time your NFT gets traded, you get a percentage out of it. Usually, this percentage lies in the range of 5–10%. This extent of fair execution of royalty distribution was not possible before the concept of NFTs. This allows a creator to monetise their art in so many ways.

Let’s understand Physical NFT royalties with an example: Suppose your business sells watches, in normal cases you only earn when someone buys a watch from you. If your buyer sells that watch again after wearing it for some time, you do not get anything out of it. But, if you make a physical NFT of the same watch — you earn every time that watch is resold. Blockchain ensures that the royalty system is not broken at any stage.

2. Physical NFTs for collabs with other brands

Credits: Bored Ape x Adidas

The world’s biggest brand are already on the NFT bandwagon, leveraging the tech to open up more revenue streams, build brand awareness, foster customer loyalty and even contribute to a good cause.

Collaboration with popular NFT collections is helping great brands to reach a newer audience and build better connections with their existing customers.

Collabs like Gucci x Superplastic, Adidas x Bored Ape, GAP x Frank Ape are leading the way by hopping on the trends, launching rare collectables and developing new wealth creation channels. Brands coming along with trending NFT collections is a great way to show the audience that their favorite brands are up to date with the latest trends.

And the special part is that you do not need to separate new tech to track growth from this marketing channel. Smart contracts take care of all the revenue collection from different parties in a secure way.

3. Physical NFTs for limited edition articles

Limited editions are by default, limited. A limited-edition marketing strategy focuses on developing a sense of urgency, exclusivity and something special among the audience.

Limited edition products can go sold out, real soon.

Collectors usually buy them to:

  • Sell the item at a higher price on the secondary market.
  • FOMO: the fear that the product to purchase can only be available once, and never again.
  • The urge to own something “special”.

Releasing your limited-time products as physical NFTs brings you the benefits of both. High resale value automatically increases your royalty value. Since the limited time products come with scarcity, it can get you more resales.

Just like StockX released Vault NFTs where customers can shop their limited edition sneakers in the form of NFTs. The digital sneakers will keep a track of ownership and all future transactions related to physical sneakers. Building digital twins of the special range sneakers will bring added benefits for both — the brand and the buyers.

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4. Physical NFTs for pre-sale

Did you know that NFTs can be used for crowdfunding?

Yes! You heard it right. And this has a lot of advantages.

For the brand, you sell an NFT of a product that is yet to develop, allowing you to gather the financial resources needed to develop the product.

For the NFT holders, they’ll have early access to your products or services. Plus, if it’s successful, people can trade the NFT on a secondary market. This is great news for a lot of indie bands or artists — their true fans will fund their upcoming work by buying NFTs with special content or access attached to them.

This is what Stoner Cats, a crowdfunded adult animated short series, is doing — a Stoner Cats NFT gets you access to watch exclusive content from the Stoner Cats animation team in perpetuity.

With NFTs, you don’t have any excuses to start creating.

5. Physical NFTs to reach a new audience

NFTs and crypto are being largely adopted by the younger generation. The millennials and Gen-Z, ones born between 1984 to 2005 are born in the era of the internet. Being extremely comfortable with apps and smartphones, this generation keeps a fresh approach to life and goes with a digital-first thought process. We know, we feel old too.

Leveraging NFTs can increase your chances as a business trying to sell to a younger audience or simply give you access to a wider set of audiences.

People in several countries like El-Salvador are now adapting to digital currency but still don’t have credit cards. Creating physical NFTs of products enables you to sell in a market where people have less fiat but more crypto.

Blockbar is a great example of how brands are leveraging this approach. Blockbar is the world’s premier NFT Marketplace for liquor brands. It is helping to merge the old school world of traditional wine and whisky with new-school world of NFTs, making it possible for premium liquor brands to reach a new audience who is into collectables and the latest tech.

Key takeaway

Binding NFTs with actual assets give them — the power of purpose.

A utility not only multiplies the value of an NFT but also helps businesses build up more revenue streams, reach a diverse audience and increase their brand presence.

Given the benefits NFTs and blockchain add to the physical assets, we believe that the concept won’t be limited to just popular brands. Emerging businesses and creators will surely adapt to the concept.