NFTs Are Making Waves in Luxury Brands’ Marketing Strategy
Luxury brands seek to present fashion in every form possible such and NFTs represent a new way of conceptualising fashion’s role.
Some luxury brands are releasing exclusive editions of digital wearables and “digital twins” as non-fungible tokens (NFTs) collectables to open up new revenue streams, build brand loyalty or raise money to give back to society. Others use them to boost their branding, tell a story or reach new audiences. While NFTs started to gain traction in 2021, it only became popular in 2022 and a key player in the trillion-dollar marketing industry. Marketers are increasingly creating distinctive brand experiences and awareness to encourage more interaction within the popular market of NFTs.
Luxury Brand’s Digital Twin To Promote Community Building
In the fashion industry, counterfeits are a big problem around the globe. Luxury labels lost US$98 billion worth of sales to counterfeits in 2021 alone. These losses could potentially damage any luxury brand’s profit growth and reputation. This is one reason companies are looking towards technology, specifically NFTs to decrease losses and retain consumers. Another significant reason is the popularity of the NFT market, which luxury brands could potentially tap on to improve their marketing efforts.
Although being competitors, luxury brand conglomerate Louis Vuitton Moët Hennessy(LVMH) joined forces with Prada Group and Cartier in 2021 to establish the Aura Blockchain Consortium. This non-profit platform creates a “digital twin” for designer products. A “digital twin” is essentially a virtual model designed to accurately reflect a physical object utilised as NFTs. The acquisition of the “digital twin” of the product could act as a membership to event invites and exclusive access to releases. Its main driving force is to build a community for consumers to align with the brand’s message. As these luxury fans want in on this special privilege, it generally increases the number of spenders on these luxury goods, overall growing the brands’ awareness in the market.
Apart from fashion, other industries are gradually beginning to use NFTs to sustain its steady growth in the specific markets. The latest addition to the Aura Consortium Blockchain is Mercedes-Benz. The German car manufacturer’s access to Aura Blockchain Consortium’s blockchain technology enables Mercedes‑Benz to explore new strategic dimensions of digital brand development such as creating NFTs for in-car digital art experiences. The in-car digital art experience is a significant next step for Mercedes-Benz UI/UX. Digital artworks could be displayed on the vehicle’s expansive interior screen, turning it into a personalised, immersive art space. As the market for NFTs is still finding its way to commercialisation, artworks enriched by light and sound may be another strategic step for the company. Therefore, luxury car brands are opening up to explore different approaches to NFTs including auto-related artwork and experiences luring art collectors as well as auto enthusiasts towards them.
Utilising NFTs for Rebranding And Revival
Not only are NFTs used as promotional material, but also for a different path of branding which companies take to rebrand or revive brand interests. According to reports from The Financial Times, Vertu’s UK manufacturing operation will be shutting down, leading to the loss of some 200 jobs. Vertu followers were disappointed in 2017 when the British luxury phone maker failed to free the company from bankruptcy. Offering to pay creditors US$2.4 million of the firm’s US$135 million debt left Vertu in shambles. Murat Hakan Uzan, a prominent businessman from Turkey, currently living in Paris will retain ownership of Vertu’s brand, technology, and design licences, intending to resurrect the company.
However, Vertu reemerges into the market together with NFTs to celebrate the brand’s 22nd anniversary. They collaborated with Binance to set in motion its new Vertu Constellation X Ulm luxury smartphone. One could land it through an exclusive sales process that revolved around NFTs.
Vertu provides about 10,000 smartphones available for sale via the purchase of an NFT on the oﬃcial Vertu Paris website and around 1,000 NFTs will be on sale on Binance’s platform. On purchasing the NFT, Vertu introduces buyers with two options. One is to turn their purchased NFT into the physical Vertu Constellation X ULM 2122 smartphone, or to hold the NFT and become part of the new Vertu 3.0 business club. Those who choose the latter will receive exclusive access to the Vertu 3.0 Business Club, which gives the NFT holders the opportunity to attend private events that bring together an assembly of business high flyers from the company’s 300,000 private buyer list.
It is similar to how Prada, LVMH and Cartier’s strategy in retaining consumers from their already huge customer base. This further draws consumers in as they could expand their social circle and business activities. Whatever path the consumers wish to take, each original NFT holder could stand a chance of receiving a string of prized assets amounting to approximately US$4.7 million.
Vertu’s business strategy with convertible NFTs could make or break the NFT and phone market. However, as it stands with the relevance and popularity of NFTs in today’s time, the brand is more likely to soar than dip.
Building Awareness For Future New Audiences
Luxury brands jumping into the world of NFT may be one of the most critical economic topics in the modern world. The metaverse is a growing marketplace for NFT of the future and companies have already started to venture into this virtual space, which is touted to have an immense potential in attracting and growing new consumer base.
Italian luxury fashion house, Gucci is one of the world’s most renowned fashion brands and on the other hand, Roblox is one of the most popular games and platforms. There is no doubt that a partnership between the two created something unique. That was what went down when Gucci created a virtual garden exhibition within Roblox. The exhibition spotlighted the reimagined shopping experience and digital wearables as NFTs. One of the assets is the digital iteration of the Dionysus Bag being sold for US$6 and eventually scored for almost a thousand times more. The fact that Gucci’s digital assets could only be bought within a limited time offered users an understanding of scarcity. It functions as a marketing tool to create the space for exclusiveness and awareness building. This also lures newer and younger audiences towards the brand, priming them in a way where they would look towards Gucci in the near future as a brand aspiration.
Another luxury fashion brand Burberry has also embraced the relevance of the NFT collaborating with the Roblox and Blankos Block Party. One could find prominent Burberry items such as the trench coat, boots, crop top, and shorts in the game.
One unique twist is that Burberry’s complete outfits and individual picks are available in the market both online and offline. This highlights the evolution that has made brands’ NFTs so relevant to attract new demographics of consumers.
Other than Gucci and Burberry adopting NFTs for leverage, Givenchy has also entered the digital fashion landscape with its new NFT collection in collaboration with graphic artist Chito. The series comprises 15 NFTs featuring eye-catching airbrushed characters and symbols, which were also utilised for Givenchy’s Spring 2022 pre-collection. The NFT movement has inspired Givenchy due to the tremendous drive to provide artists like Chito to broadcast their work and vision directly to a worldwide audience. NFTs also represent a brand new way of conceptualising fashion’s role, not just physically, but digitally as well, linking the gap between the two worlds.
Many luxury fashion brands seek to present fashion in every form possible, from runway shows to retail experiences, fashion presented as art, film and photography. The construct of luxury could be presented in various ways that extend beyond the boundaries of reality and is one of the ways to build connections with the audience using NFTs. After all, anything with the utilisation of NFTs seems to be working out so far.
For more business reads, click here.