When Tiffany & Co. released 250 “NFTiffs” earlier this month, they quickly exhausted, even at 30 ETH each – or around $51,000 at the time. Only available to NFT CryptoPunks holders, they entitled buyers to personalized pendants of their punks.
A week later, the auction of an NFT version of Jason Wu’s 2009 inaugural prom dress for Michelle Obama, created in partnership with virtual fashion brand DressX, ended without receiving the minimum bid of 8.5 ETH. The buyer also reportedly received two tickets to Wu’s upcoming show at New York Fashion Week. (The dress sold out almost two weeks later for 6 ETHaccording to DressX, who said via a rep that offers came in afterwards and Wu’s team took a while to accept one.)
Since fashion brands from all walks of life, from Adidas and Diesel to Givenchy and Prada, began releasing NFT collections, some have achieved outstanding successes, such as selling nearly $6 million in nine NFT by Dolce & Gabbana last October. Others fell flat or missed expectations. Several NFTs from Rebecca Minkoff’s second collection, titled “Dunamis”, remain unsold months after listing.
It’s hard to measure the success of these projects because each tends to release a different number of NFTs at different price points and with different goals, like short-term sales versus long-term brand building. Some resonate clearly, others may generate money but quickly fade from memory, and others may not sell at all.
But the best NFT projects have a few things in common, like creativity, appeal to a clear audience, and value beyond price. While brands could have gotten away with selling just about any NFT during last year’s frenzy, today their quality and usefulness matter more as prices and volumes of trading NFTs are dropping and their novelty has long faded.
Despite the slowdown, more and more brands continue to hit the market. Lacoste introduced NFTs in June, Puma just revealed his own project and NYFW announced a new NFT partnership with a number of designers.
While brand recognition plays an undeniable role in connecting, experts say there’s a lot more involved in a successful NFT fashion collection. (Among the most popular NFT fashion collections is the Adam Bomb Squad, created by niche streetwear brand The Hundreds).
“I don’t think web3 is just for big brands with established audiences,” said Brian Trunzo, metaverse manager at Polygon Studios, the consulting arm of the Polygon blockchain.
Collectible NFTs are over
One variety of NFT that struggles to maintain interest is virtual renderings of clothing primarily intended as collectibles.
“Collecting for collecting’s sake…I think those days are more or less numbered,” Trunzo said.
He described this model as “NFT 1.0”. While they were selling quite well back in the days when speculators were swiping up everything they could in hopes of flipping it for a profit, the crypto downturn has knocked many of these buyers out of the market.
Now, brands need to ensure their NFTs offer more utility and value, such as the ability to claim an exclusive physical item or use it within the brand’s broader ecosystem of products and experiences. RTFKT, for example, is releasing virtual goods to be worn by the CloneX avatars it created with artist Takashi Murakami or exchanged for a physical version. Brands like The Hundreds and Adidas use NFTs as a form of loyalty program. 9dcc, Gmoney’s new figure NFT fashion line, has integrated NFTs into the business model.
The value must match the price
Of course, this added value must also justify the price attached. Even admission to an event like a fashion show may not be enough if shoppers feel it’s not worth it. Before the pandemic, an offshoot of the organization that runs NYFW was selling show tickets to the public that exceeded $1,500 — about a tenth of the minimum bid for DressX and Jason Wu’s NFT that included tickets to the show from Wu.
“Everyone asks, ‘Why am I getting this NFT, how is its value increasing, and how can I get more out of it than I paid for?’ That’s right,” said Juergen Alker, head of Highsnobiety’s NFT studio, which recently released its own small NFT collection, called “Not In Paris,” and advises brand partners on web3 projects. (Members from Highsnobiety’s Discord have generally responded well to his NFT project.)
The NFT itself literally doesn’t have to generate financial profit and may not even be the main attraction. A common way for fashion companies to give value to their NFTs is to let holders claim physical goods, such as tracksuits and other items that Adidas has given to its “Into the Metaverse” NFT holders or action figures. in ceramic accompanying Gucci’s NFTs with collection maker Superplastic. In the case of Tiffany’s NFTiffs, the token was a tool for CryptoPunk owners to purchase a unique item made with Tiffany’s materials and craftsmanship that they would not otherwise have had access to.
Even the promise of future rewards may suffice, as long as customers believe what they will receive over time will be worth the initial price of the NFT.
Reach the right audience
Because the NFT market is still a niche market, fashion brands have often had better results tapping into the crypto community. Non-web3 audiences also face barriers to purchase due to the steps typically required, including obtaining a crypto wallet, obtaining cryptocurrency, and going through what can be a process of complex strike to claim them.
“Without the web3 community, we would probably only have sold 10% or 20% of the NFTs,” Alker said of Highsnobiety’s NFT collection. “I think all brands have the same problem.”
One of the ways brands have won over these shoppers is with a perfected playbook: collaborations. Adidas has partnered with Bored Ape Yacht Club and Gmoney on its NFTs. Gucci has teamed up with 10KTF, known for making one-of-a-kind digital accessories, and now Puma is following suit. Nike went further and acquired RTFKT.
Trunzo said it can be a great short-term strategy for fashion brands to create their first connections with web3 customers, although they need to show that they are genuinely interested in learning and being part of the space.
However, brands must not forget their core “web2” audience. Alker pointed out that bringing loyal customers to a space full of shoppers interested in making a profit, rather than the brand itself, can help build a stronger foundation. Although it might be difficult to include them due to Web3’s laborious user experience, Trunzo gave the example of MAC Cosmetics’ NFTs with Keith Haring, which allowed shoppers to transact with a credit card. , then receive an email allowing them to claim their NFT.
“If you just drop an NFT and have no story or fantasy, it won’t do much better than a boring collection that you drop with no story,” Alker said.
Gucci and RTFKT managed to tease the launches in a way that left customers wanting to know more. Gucci’s 10KTF collaboration centered on creative director Alessandro Michele visiting an artisan called Wagmi-san in the fictional town of New Tokyo. RTFKT asked fans to solve puzzles for weeks to reveal what was inside a mysterious cube called MNLTH. (It was the brand’s first digital sneakers with Nike.)
“The best projects are those that take an existing brand somewhere new but recognizable,” said Ian McMilan, director of growth at Mojito, a technology platform that specializes in helping brands like Sotheby’s launch web3 projects. . “Show me something new about you that still looks like you.”
McMilan added that brands get results with a thoughtful marketing plan that includes what he calls “crescendo moments.” A short-term campaign might have two or three, such as revealing the additional benefits NFT will bring, while brands using NFTs as long-term loyalty programs might want about five per year. He cautioned, however, that brands should be careful about over-promising and under-delivering, otherwise they risk disappointing customers.
Don’t do it just for the hype
Perhaps the worst path fashion brands can take is to release NFT collections that look like a cash grab. In fact, one of the biggest challenges for brands is what happens after the initial sale. If they have positioned NFT as the key to entering a community, then they need to keep that community alive and engaged.
“You constantly need to inject energy into this community by creating new value, and so you need a constant drip of content, new NFT drops, new utility,” McMilan said.
Trunzo highlighted Adidas as a brand that has done a good job, even if it stumbles along the way. In his opinion, he has devised a step-by-step plan and is executing it regularly, regularly offering rewards without fixating on the short-term incentives that other brands can get caught up in, such as the value of his NFTs in the marketplace. resale.
This does not mean that the only successful projects are open-ended. McMilan said more brands should think about how they can use NFTs for a single defined campaign, like Tiffany did. The goal is to have a clear objective and communicate it to the intended audience.
“If you think NFTs are a marketing tool, then it’s going to fail,” Alker said. “If you believe that NFTs and web3 will be part of your future business model, then you can be successful.”