“Every brand will have an NFT strategy” – Interview with EEA Board Member and Palm Co-Founder Dan Heyman
Dan Heyman is a blockchain industry veteran with experience building and leading organizations through the design, development, and implementation of enterprise-grade blockchain protocols. Prior to co-founding Palm, Dan was the Co-Founder of PegaSys, which is now ConsenSys’ Protocol Engineering division. During his 3+ years at PegaSys, Dan built out a team that worked across Ethereum 1.0, Ethereum 2.0 and Enterprise Ethereum blockchain protocols, the last of which serves as the foundation for the Palm blockchain. Dan is a Member of the Board of Directors of the Enterprise Ethereum Alliance.
We work with enterprises to think through NFTs as a value driver. For example, what happens if you can connect with the customer’s wallet? What extra value can you start getting in the customer lifecycle and what value does the customer get for giving you information as a customer of yours?
Say you are a big organization like Disney and someone calls the hotline to complain about a Disney+ problem, but they are also a large holder of Disney NFTs. The hotline staff wouldn’t necessarily know that. But if there was a connection into their wallet, they would, and the company would be able to better target its services. We want people to start thinking about the lifetime value of a wallet and an NFT.
This works for brand loyalty. For example if a customer has a bad experience on an airline, they could get an NFT, and that could be more interesting for them than some random gift card. Or for retailers, instead of giving out cheap plastic toys as a promotion, it could be some virtual representation of something – and that could be a better channel for brand loyalty, and a more sustainable one.
Other interesting things are happening with airdrops. When we first airdropped over 500,000 NFTs for DC Comics, the vast majority of the recipients agreed to receive marketing newsletters from DC. Those rates are typically more like 5% for most promotions.
NFTs are not just limited to luxury brands and entertainment franchises. There are also used in loyalty programs of all kinds. Starbucks has rolled out its NFT-based loyalty program. We’re hearing a number of travel companies are also entering the space. Post Covid, nobody knows what travel will be like, and airlines can’t tell now how many people will be in their tiers anymore. You could run a program in parallel where you have a certain tier and that is tied to an NFT, and you then know exactly how many people are in this tier. Then you can better judge how much value you can give to these people.
NFTs could also make loyalty programs more interoperable. Maybe you can use one from one airline to get one-time perks on another for a specific trip. All parties would get something out of that.
There are some interesting players in the market enabling businesses to react quicker to what is going on, projects like Salesforce NFT Cloud or numerous startups. This is important because the question now is “how do I decide to communicate with wallets?” and “how do I use the information a wallet confers to effectively target my offering?”. It is very much like the early days of email, when companies started getting lots of email addresses and had no idea what to do with them. They had to figure that out.
This is the experience aspect of NFTs. And what people are learning is they can for example give velvet rope experiences, translate that to a digital experience. Gucci, for example, flew NFT holders out to the House of Gucci, showed them around, gave them an experience that maybe they only did for Elton John before.
So this is a model coming up: You sell an NFT with an associated experience. Or you give them a free NFT so that they can buy an exclusive product or experience. But you have to figure out how you work with that so that it feels authentic to the fans.
There are a number of challenges.
One is the changing internal discussion.
In the last four months we have spent a lot more time with people that are in the industry who have been appointed as a Head of Web3, Metaverse, NFTs in a large consumer-facing company, and who lead a small team. There are probably 500 of such teams in the world, and generally they consist of 1-3 people.
Typically, they got their job last May, and probably thought it was the best job going. Then crypto winter and FTX hit and now what they do with their time is much different than it was at the start.
Originally they were talking to vendors about POCs. The last quarter of last year they found themselves doing a lot of FAQs around FTX, and getting a lot of questions from the business about what is going on with NFTs and with crypto in general, or starting every conversation with leadership by having to talk about more sensational projects, like Trump’s NFTs.
And they are having to answer a lot of newbie questions, for example lawyers asking to review smart contracts. This is understandable. There is still a lot of education that has to be done in our space.
The other challenge is defining the right strategy moving forward.
Almost all major companies have done some POCs. They did something on OpenSea or Coinbase NFT, or their own collection, and now they are figuring out: What did I learn? Are my consumers ready? Did I give enough value? Or did my providers just do the project and now it is stagnant. Unfortunately, that is the case more times than not. They engaged an NFT firm on a revenue share model, and now there is not enough revenue to pay them so the NFT firm loses interest.
The other thing that has inhibited them is the deficit of Web3 experience in the job market. They have headcount approval but can’t fill it. They need expertise on analytics, on Web3 marketing, and related fields, but don’t need a full headcount on any of these. And generalists in Web3 are rare. These types can pick and choose where they go.
When it comes to deploying code, most companies aren’t there yet. Ask Accenture to build you a CRM and they can do it right away. Ask them to build you a secondary marketplace for NFTs, they don’t have those teams to deploy. The tech is there, but not a lot of people have the deployment chops yet.
It’s really that you have to combine the best of both the old and the new worlds, have a foot in each camp.
For example, we encourage brands not to think about this as something totally different. Don’t think of it purely as Web3. This is another avenue for fan engagement, something you already know.
On the other hand, you need to work with Web3 experts too. There is no shortage of brands that have entered the space in inauthentic ways and they have been appropriately criticized for it. Enterprises need to use the technology thoughtfully in a way that enhances their core business.
It’s this combining of the best of both worlds that we are trying to achieve with our business these days. We work a lot more with traditional marketing agencies. These people are now fielding a lot more serious Web3 conversations, so want to be their vetted delivery partners. They know more about customers than we ever will, and we know the tech and the space.
At the end of the day, NFTs present a novel opportunity to engage customers via true digital ownership. This could be for loyalty, collectibles, games and other use cases we probably haven’t conceived yet. But just like every brand and IP has an email marketing strategy and a social media strategy, so too will every brand and IP have an NFT strategy in the coming years.