Alongside the meteoric rise in cryptocurrencies over the past few years, there comes a new form of digital possession in the guise of non-fungible tokens (NFTs). Despite being nothing more than a virtual asset, NFTs have garnered much interest in mainstream media due to their inherent complexity and user popularity.
Naturally, businesses and celebrities have been quick to tap into this new phenomenon with their own takes on NFTs, just like they have with cryptocurrency.
With this in mind, we wonder: is there potential for NFTs in the beauty industry?
Join us as we question the validity of NFTs, while looking at brands that have already began to dabble in the subject.
What is an NFT?
NFT stands for ‘non-fungible token’. The name derives from an economic term used to describe something unique that can’t be replicated. As part of the Ethereum blockchain network, NFTs are digital assets that can be bought and traded in return for cryptocurrency.
In the beginning, NFTs were thought to be the next big thing for artists looking to sell unique copies of their work online. Since this time, NFTs have had upwards of hundreds of millions of pounds poured into them by both buyers and creators looking to get a piece of the action.
Due to their unique nature, NFTs create a sense of exclusivity wherein buyers can rest assured knowing they own something that no one else does. This scarcity has driven the value of NFTs tenfold, with some art collections being sold for upwards of $91.8m.
Although NFTs are primarily intended to be new and unique, some pieces of internet history have been turned into NFTs and sold at impressive markups. For instance, the ‘Charlie Bit My Finger’ video that went viral on YouTube in 2009 recently sold for £500,000 to an anonymous bidder after being converted to an NFT. As a result, the original YouTube video has been unpublished from the platform by request of the new owner, which at one point had amassed 878m views.
How are NFTs Created?
Given the technological roots of NFTs, the process of creating one these days is relatively straightforward.
Much like forging a coin and placing it into circulation, the creation of an NFT is called ‘minting’ and follows a four-step process:
- Choose a blockchain marketplace and gain access
- Upload a high-quality representation of your NFT and give it a name
- Pay the listing/gas fees
- Wait for your NFT to be created
What Makes an NFT Valuable?
Without getting too far into the specifics, there are four main factors that influence the value of an NFT:
- Potential value
- Perceived value
- Market values
- Underlying value
Having said this, the value of an NFT is ultimately determined by its rarity. Sure, some are decided upon aesthetics and predicted value by market watchers, but largely, the rarer the NFT; the higher its value.
The Brands Successfully Using NFTs
Unsurprisingly, a few beauty brands have already started jumping on the NFT bandwagon. Here are a few examples:
Luxury, refillable makeup brand Valdé Beauty is one of the first brands to hone in on the success of NFTs. In January of 2021, the brand launched its Divine collection of NFT artworks starting at $1,200. The NFTs feature deepfake-inspired digital characters donning outfits inspired by precious minerals.
Owners of these pieces are granted exclusive admission to upcoming Valdé events, perks and access to a:
“Thriving community supporting women beauty entrepreneurs and artists.” – Soraya Alcalá, Estilos Media
Global beauty brand Clinique has gone totally brand-centric for its first foray into the NFT hype.
Rather than selling for profit, Clinique has decided to give NFTs away to shoppers that have signed up to an awards scheme granting subscribers ten years of free beauty products. There are three NFTs available, all of which are based on Clinique’s most popular ranges of all time.
NARS Cosmetics has taken a similar route to Valdé beauty for its NFT, with a slight differentiation that makes these offerings feel more like a piece of art rather than a community-based movement.
NARS commissioned three artists (Nina Kraviz, Sara Shakeel, and Azéde Jean-Pierre) to create their own interpretation of an NFT based on the brand’s most successful product line. The first of these NFTs was offered for free in order to break down the barrier to entry for NARS fans, with the remaining two being sold for $50 and $500 respectively.
What Can Beauty Brands Learn From NFTs?
All three of the aforementioned brands have gone in different directions with their NFT efforts, each of which provides us with a few learnings to take forward:
They Build Communities
The first and perhaps most important factor about NFTs revolves around the sense of community that they create. The biggest example of this is the Bored Ape Yacht Club (BAYC). Hailed as the world’s most successful NFT collection, the BAYC comprises thousands of individually generated, unique designs of cartoon apes wearing different styles of clothing.
Owners of bored apes are granted access to an exclusive online community. Rather than explaining it ourselves, we find this excerpt taken from the BAYC website does it perfectly:
When you buy a Bored Ape, you’re not simply buying an avatar or a provably-rare piece of art. You are gaining membership access to a club whose benefits and offerings will increase over time. Your Bored Ape can serve as your digital identity, and open digital doors for you.boredapeyachtclub.com
Ring any bells? Community is a major factor for beauty brands, and we know this through the many theories formulated around tribal marketing practice. Could NFTs hold even more untapped potential in this regard?
They’re Still New
As the saying goes, if you’re not first, you’re last. NFTs are still fresh in everyone’s minds, with news articles coming out on the subject seemingly every day. The result of this being that many of us are still trying to comprehend the full potential of NFTs, something that is likely to continue for some time.
What this does mean is that there are no rules around NFTs yet. Creators are free to try whatever they wish to appeal to the minds (and wallets) of crypto-fans. Who’s to say the next big thing couldn’t be from a beauty brand?
They Encourage Brand Representation
Due to the high costs involved with NFTs, you can be sure that anyone who owns one is seriously devoted to the collection and/or artist behind them. Let’s face it; other than the satisfaction of ownership, NFTs contribute little value to an individual’s life. So, when someone decides to buy one, it’s a sign of brand affinity like no other.
In March of 2022, Twitter famously unveiled a new feature allowing its users to
brandish their NFTs on their profile pages. We see this as paving the way for NFT owners to express their devotion to brands in a very public way.
In a very selfish manner, NFTs are financially intertwined. For very little money, beauty brands can repurpose legacy product photography, shades of makeup and a smattering of other types of imagery in return for profit.
This money can then be used for seemingly anything. We see many socially-aware campaigns resulting from this through charitable donations, but also even more companies taking a similar route as Clinique through incentivised data collection.
Will NFTs Be Here to Stay?
At the moment, it’s hard to gauge the level of success that NFTs will have in the content marketing side of the beauty industry. One thing’s for certain: like any new frontier, a lot of trial and error will take place before we truly begin to realise the potential of such an exciting development.
Stay up to date with the very latest trends in the beauty industry right here at Foundation. If you want to learn more about tech and beauty, have a read through our latest whitepaper: The Future Face Of Beauty: The Technology Transforming Us