The NFT space is heating up, and brands across the retail realm are eager to show their innovation in the quickly blossoming category. Just look at the Super Bowl’s roster of advertisers for a small sampling of the diverse brands diving head-first into the metaverse.
As demand on the brand side increases, so does demand on the creator side. That’s why firms like Panoramic Ventures are focusing on investing in companies that support the acceleration of the NFT and blockchain market. For example, in late 2021, its portfolio company, GigLabs, raised a $4.5 million seed round.
Panoramic Ventures’ portfolio companies like GigLabs have helped companies such as CNN, Turner Sports, Motorsports and University of Miami launch their own NFTs. Panoramic Ventures also prioritizes taking a “wider view” of the investment landscape by focusing on diverse founders. Women and minority founders receive less than 3% of capital investment and the web3 world has its own diversity challenges — hence the popularity of the term “crypto bro.” That is why Panoramic Ventures is tapping into its brand heritage to bring this quickly evolving market to the next level. Specifically, the company is focusing on supporting the growth of new tech and solutions that will help retail brands innovate through new NFT and web3 use cases across loyalty programs, immersive commerce and community co-creation and ownership.
The first iteration of the internet was built on open protocols (TCP, IP, HTTPs), but Web2.0 has been dominated by closed ecosystems like Apple and Google, explained Paraj Mathur, Senior Associate on the Panoramic Ventures investment team in an interview with Retail TouchPoints. As a result, these tech giants have relied on developing advertising models that monetize, and leverage, consumer data. “Because of this centralization, a few companies have been able to capture outsized value, despite the fact that their users are the ones creating the value,” he noted. “In addition, centralized platforms can unilaterally make decisions to maximize profits and stifle competition, regardless of whether it’s in the best interest of their users.
“Web3 is creating a new internet paradigm around community-based ownership and decision making,” Mathur added. “Users are on the frontlines, making decisions directly about the future of the platforms they participate in, and directly capture the value they create by using and spending time on a platform. At Panoramic Ventures, we are heavily investing in web3 because we believe that community-led and owned decentralized technology will revolutionize existing business models and companies, and create new ones.”
Making Community-Led Commerce a Reality
Panoramic Ventures is of the mindset that all industries, from financial and legal services to software, and of course, media, music and art, can benefit from web3. Mathur argues that opening creative opportunities and ownership to a broader community will help “spur innovation” within the economy. Brands and retailers in particular are bullish on NFTs, and when done well (like with e.l.f. cosmetics or Gucci), they have the power to drive exclusivity and loyalty to a brand.
“More brands are finding creative ways to immerse their community into digital experiences through NFTs,” said Tami McQueen, VP of Marketing for Panoramic Ventures in an interview with Retail TouchPoints. Although she acknowledges that a lack of benchmark data will force brands to undergo many iterations to develop a sound strategy, she believes that “brands are and will continue to focus on recurring royalties as the primary driver of revenue and success.”
Although royalties are the easiest ways for brands to measure and quantify success, opportunities certainly exist beyond them. For example, companies can use NFTs to build brand awareness and to tap social media amplification, viewership and sentiment analysis to measure impact, according to McQueen. But which use cases will have the most significant impact on retail specifically? Mathur spotlighted three key areas of opportunity:
- Loyalty programs: “There is a big opportunity for brands to tie in real-world benefits, such as discounts, special edition items and custom items, with digital asset ownership,” Mathur noted. For example, Mattel launched an NFT collection that allowed consumers to redeem certain NFTs for special-edition Hot Wheels cars. He noted that a brand like Starbucks can apply a similar concept if consumers could own an NFT of their favorite menu item. Giving a consumer the power to own their favorite latte gives “bragging rights” and has extra value if paired with tangible benefits such as an ongoing discount on that drink.
- Immersive commerce: “As virtual worlds have a renaissance, NFTs enable brands to create and sell digital inventory that can be used in digital worlds like Sandbox and Decentraland,” Mathur said. Luxury brands like Gucci and Louis Vuitton are making a big splash in this space, but as consumers of all ages spend more time in open virtual worlds like Fortnite, Roblox and Rec Room, brands will need to harness “digital brand activations” that will reach consumers effectively.
- Community creation and ownership: Brands can leverage NFTs to enable their community to create and own a piece of the brand together, Mathur explained. He pointed to Angel City, which successfully harnessed its community to create the logo for the NWSL club. Early patrons were then able to buy a digital piece of the logo, which also doubled as a season ticket. He went on to apply this concept to retail: “Shoe brands can create NFTs that community members can mix and match to create new shoe designs. If the design is chosen by the community, the brand can manufacture and sell it, with NFT holders getting a revenue share on the new design. Web3 is unlocking this form of community participation at scale.”