NFTs and tokenization will do for brands what the internet did for communication and media. Traditional media channels and big gatekeepers are still in the market, but now anyone can create their own media and communication channel. It’s my view that NFTs will have a similar impact on how companies and consumers interact.
This new dynamic will revolve around community, which can simply be defined as a group of customers, prospects, fans, partners, suppliers, or some combination of each.
Successful NFT projects like Bored Ape Yacht Club, Cools Cats, and World of Women only managed to become giants in the space because they knew how to build a strong community around their business. This will be an increasingly necessary imperative going forward.
The first step is to understand that all of your stakeholders are part of your community. This includes your investors, customers, partners, and your audience in general. While building powerful networks is not a new competitive advantage in the business world - that's how Microsoft dominated the personal computer market, and how Apple dominated the smartphone market - NFTs offer a superior technology in terms of co-creation.
Precisely because of this technological superiority, networks and communities become even more important.
Today, the analysis of a company's holdings is usually based on tangible and intangible assets. Tangibles, for example, include cash, stock, land, buildings, and machinery. Intangibles, on the other hand, include intellectual property, reputation, and brand.
Within this spectrum, we should see community gaining more and more space as an asset to be taken into account in the valuation, acquisition, and analysis of a company.
The community-as-asset-class trend will also increase as companies themselves test and discover new business models that are tied to their communities. This will change structures around pricing, marketing, intellectual property, and product development.
Converting costs to revenue
Community is also a way of turning costs into revenue. This was a strategy mastered by Amazon under the management of Jeff Bezos. Think about it: some of Amazon's main businesses were, at some point, costs.
The company had high costs in selling books. Bezos created Kindle Direct Publishing and turned some of those costs into a business. He did the same with Amazon Web Services, which quickly became an industry leader, and Fulfillment by Amazon, which turned logistics costs into a new revenue line.
With communities, we can see something similar. Although it is not possible to say that communities eliminate marketing costs, they certainly reduce some of these costs. An engaged community forms a powerful team of advocates for your brand, something every business attempts, but few achieve. Communities can also reduce costs in different areas, for example support and product development. In other words, having an engaged community is a way to turn marketing costs into a business.
It is still difficult for us to try to unravel all the benefits that NFTs and tokenization will bring. What’s clear, however, is that there will be a paradigm shift in the relationship between brands and consumers.
I believe this shift will add even more value to communities, which will go from being a nice-to-have to a whole new asset class that businesses and analysts will take more seriously. It will be a trend that all of us should embrace.