NFTs beat path to metaverse for SMEs
Smaller enterprises can look to virtual assets in order to set themselves up in the virtual world, webinar attendees learn.
04 January 2023
At a webinar entitled “Exploring the Metaverse: How SMEs Can Get Started”, organised recently by Hong Kong Trade Development Council (HKTDC) Research, industry experts explained business models and applications that small and medium-sized enterprises (SMEs) can use to access the metaverse through non‑fungible tokens (NFTs). Louis Chan, Principal Economist (Global Research) of the HKTDC, said SMEs with limited resources should draw up comprehensive plans for metaverse development, and learn how to use products such as NFTs for brand‑building, and ensure good management of the metaverse community.
NFT utility value
Simeon Woo, Economist (Global Research) of HKTDC, told the webinar that many companies use NFTs to enter the metaverse. NFTs are virtual assets based on blockchain technology, like other cryptocurrencies. “The most significant difference between NFTs and other cryptocurrencies lies in their lack of fungibility. Each NFT represents a unique thing, such as an image, a short video, or a piece of music. NFTs are not interchangeable, nor can they be subdivided like other cryptocurrencies.”
NFTs are marked by five major characteristics, namely uniqueness or scarcity, authenticity or ownership, immutability (they cannot be changed), interoperability (they can be traded) and transparency (their history can be tracked). NFTs can be given ongoing value “where the NFT project creator periodically provides the NFT holder with perks such as the right to use an avatar and access shopping discounts, so that the NFT value is extended, not just for one‑off spending. Another function of an NFT is its “whitelisting” which allows the project creator to grant priority to specific customers to buy NFTs through a smart contract. This allows eligible buyers to have priority to mint NFTs at lower prices, and brand members can also have early access to the NFT, both of which are regarded as rewards to loyal brand clients.”
Marketing strategy integration
Mr Woo said current NFT applications mainly cover digital art, games, fashion and luxury goods, as well as sports projects. One NFT use is a membership system, where benefits are provided to members. In some cases, NFT holders may contribute to project design or enjoy a share of the profits, making them a part of the corporate operation rather than merely consumers, establishing stronger links between NFT holders and the brand.
Innovative technology is driving the economy and encouraging people to expand their online spending. In Mr Woo’s view, SMEs should look to integrate their online and offline operations as a move towards the digital economy. “NFTs are involved in many business models which mix the physical and virtual, so that brands may introduce physical products when launching NFT projects, or encourage consumers to purchase physical products that come with NFT gifts. These strategies can provide holistic shopping experiences to consumers.”
Web3 era self-marketing
As the metaverse, cryptocurrencies, artificial intelligence and blockchain technology mature, the concept of Web3 has become the talk of the market. Yet it is difficult for SMEs with limited resources to join the trend. GoGoChart Group, a Hong Kong start‑up, seized the opportunity and set up a subsidiary named Titans Block in 2021 to provide corporate consultancy services and marketing solutions in such fields as the metaverse and NFT minting.
As explained by Carbee Kwok, Senior Project Consultant of Titans Block: “In the Web2 age, the approach to corporate marketing was very traditional. When a product or service was launched, the marketing plan relied on direct advertising using mainstream publicity platforms. In the age of Web3 companies can no longer rely on direct advertising alone. We provide a complete service to our clients, with marketing strategies as the starting point. We use Web3 technology to customise the most viable business models for them in order to increase the brand value.”
Ms Kwok said GoGoChart was founded seven years ago and had established good working relationships with a number of tech leaders and corporations including Google, Apple, Twitter and Cyberport. “Through our services, clients of Titans Block can learn how to advertise on platforms like Google and Twitter to increase their brand exposure in Web3.”
She advised SMEs to study Google Trends for insights into consumer preferences and market tendencies. The keywords logged by internet search engines reveal what people are searching for in different countries and regions at a particular time. Businesses can analyse these keywords and assess the popularity of different searches over time.
As Ms Kwok pointed out, the popularity of the metaverse has encouraged businesses to engage in cross‑sector collaborations with Web3 enterprises to build or to enhance brand value. For example, Adidas has partnered with blockchain platform The Sandbox, and the multinational computer software brand Adobe has teamed up with the fabless semiconductor company NVIDIA on Web3 projects aimed at enhancing the value of the brands. Ms Kwok said: “We find that many non‑tech brands are developing online operations. They are also prepared to work with different enterprises to access the metaverse. I believe that the metaverse is becoming more mature. In the near future, the public will come across different forms of advertising in the virtual world and in social media, and companies will even produce personalised ads.”
Major brands with sizable fanbases always have an advantage when they embark on metaverse marketing. “In launching NFT projects, major brands will find it easier to bring their real‑world consumer groups over to the metaverse. They only need to change the spending habits of their supporters and induce them to migrate to Web3 and buy their NFTs. But to SMEs with limited funding and technological strengths, the launch of NFTs will help them enter the metaverse.”
According to Ms Kwok, Titans Block provides SMEs with consultancy services and marketing solutions in the fields of the metaverse, NFT minting and target market identification. “We conduct analysis with reference to the overall market conditions. For example, we identify suitable target consumer groups in western countries, Southeast Asia and Asia for the SMEs. It should be noted that the Web3 age is no longer based on companies or social media, but is individual‑oriented. We therefore suggest that SMEs should study their markets through Twitter because more and more industry leaders are setting up Twitter Spaces to share their personal views on hot topics in their industry, and SMEs can find leads from these tweets.”
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