The Intellectual Leap: How NFTs Are Shaping New Brand Experiences

Speaker 1: 0:00

Welcome to Marketing Meets Web 3, a podcast that helps marketers navigate the news trends, opportunities and insights surrounding Web 3. Today's conversation is for information purposes only and does not constitute legal or investment advice.

Speaker 2: 0:23

Hello Nick, how are you doing?

Speaker 3: 0:25

Hi Alberto, I'm doing well. How are you? We're almost at the end of 2023. Can you believe that?

Speaker 2: 0:31

Oh, yes, yes, I was feeling very good at the beginning of the year.

Speaker 2: 0:35

I can tell you I'm feeling very good now at the end of it, so hopefully, I felt this good in the middle as well. But, yeah, we have actually a couple of news today to assess how the industry has been filling over the year, and we're going to start, maybe, with the number and the type of patents that have been issued or created or applied for in the realm of NFTs, because we have seen, in 2023, a number of patent applications growing, skyrocketing, even to levels not seen, well, ever, because NFTs, as you know, are not that old. So, yeah, this is totally eclipsing previous numbers. We are going here from a study published recently in a newsletter that I know you know dematerialized, and in this newsletter, this person is showing numbers about these patents and showing that brands filled 14 times more patents in 2023 than in 2020. Seven times more than in 2021 and almost doubled the number in 2022. So, yeah, a lot of patents being filled from companies in regards or regarding NFTs. What do you think about this? Do you have your own patent already?

Speaker 3: 2:06

I'm working on it, so before we talk about that. So just wanted to touch on where this data came from. So shout out to Mark over at Dematerialized. He runs a great newsletter for anybody in the web three space. So if you're looking for additional content, definitely check that out. We'll link to it in the show notes. But this data was collected from international filings through the World Intellectual Property Organization and there's a spreadsheet actually linked within the article where you can go and you can see all of the different patent filings yourself.

Speaker 3: 2:39

But to your point, I think patents you have to take with a little bit of a grain of salt. Obviously, in the United States at least, patent law is pretty loose up until the point when patents are enforced, and that's generally when a patent is really tested. But proactive patent filing happens all the time. Patent trolls they come in, they'll see an industry and they start filing all kinds of ridiculous patents for all kinds of ideas, everything under the sun, in the hopes that at some point an innovator or startup comes along. They create technology and now you have a potential infringement case on your hands, which is the unfortunate side of patents. But patents are also wonderful things that protect intellectual property creators and help industries move forward in a way that is commercially viable.

Speaker 3: 3:27

So with that sort of caveat of the way they jumped into an analysis of that data set so looking through over 3,200 patent filings, massive data set, to really try to pull out some thematic trends and I think there were three main areas that were kind of called out as potential areas of innovation for NFTs the first being Fidgetles, which we've talked about Fidgetles a bunch on the show. The second being Web3 commerce. So when we think about things like token gated e-commerce or e-commerce that is connected to NFT communities, it starts to unlock new ways to interact and transact with fans and with customers. That is a lot more collaborative and lends to much more of a partnership with customers, whether that's via co-creation or doing things like token gating, access to different types of experiences connected to that e-commerce moment. And then the third big area that he called out is Web3 gaming, which of course we I think we all know this is gonna be a huge area of innovation.

Speaker 3: 4:33

In fact, this morning I actually claimed my second in-game NFT from Amazon Prime Gaming. They have a game out there called Mojo Melee and they dropped their second skin, which is an NFT and I claimed that this morning. So you know these areas of innovation. They're starting to come to life and I think this early indicator of you know so many patents and this explosion in the number of patent filings is really, really positive for the space. I'm very bullish that this is headed in the right direction and that people are starting to really branch out, innovate and imagine the potential of this tech.

Speaker 2: 5:08

Yeah, well, I have my own caveat, which is that I don't believe patents are a good thing, I don't believe this commercial property is a good idea and actually I mean you could say I've been a bit or slightly vindicated by the growth in these open source projects. Some of them are the basis for what we're talking about here. But just having said that, it's good to see, or it's a good proxy, these patent filings. It's a good proxy into what is happening. And, yeah, to your point, there's I mean, there's a lot of work going behind the reviewing 3,200 patents well, more than 3,200. And looking at the trends but, yes, it is, but looking at them. This is the work that we did not do. We just read the document from materialized, decentralized, sorry, and yes. So basically, what you can see in there is that Fidgettals is a thing and, within Fidgettals, what I like about this summary is that it also goes company by company, telling you what each of them is doing, because, of course, these patents are filled by companies. So you can see, okay, which company filled what right and if you go through the document, you can see what Mercedes-Benz filed for, what Ferrari filed for, what Nike, adidas and, yes, most of them went in the direction of Fidgettals stuff, and in here you can also see a lot of examples.

Speaker 2: 6:40

I think you covered a few, but there's lotteries as well.

Speaker 2: 6:42

There's physical twins, which we have covered here in the past.

Speaker 2: 6:46

When you get this first as you got this skin in this game that you're playing in your times when you're not working, I hope and then now you have this other skin Well, you could potentially write with this physical twin, then get that skin in the physical as well as in the digital.

Speaker 2: 7:06

I don't know what you would do with that, but anyways, that's one of the things that they're playing with, and we've covered some of the companies doing this in the past, but there's also some information or some documentation as to what is happening under the radar. This is coming also from this document, which is covering some of the work that some of the brands are doing but that they haven't yet publicly announced, and in here they uncovered some secret projects from Dell, from Dropbox, from Western Digital, even and this may be a very, very cool comeback to cover at some point from Nokia, which is looking into some patterns using Web3 that could maybe help the struggling company to come back to its prominence that they had back in the day. So what do you think about these companies still doing this massive amount of work Because it takes some work to do this in this year where we've seen what that maybe some companies are putting in the NFTs and Web3 on post?

Speaker 3: 8:21

Yeah, I think, like I mentioned earlier, I think this is half fiction and half excitement. A lot of these companies to your point about the downsides of the patent system and, for the record, it's not all good. I think patents play a role. I don't think that patents should be completely destroyed, but certainly much like our copyright system in the United States, has some major re-pamping to be truly useful to business and to the economy. In terms of the signals here from these companies that are going into these patents and spending time and resources creating them.

Speaker 3: 8:56

Somebody still has to think about a patent, whether or not it's something that they're planning or intend to build or it's more of a defensive filing or proactive filing.

Speaker 3: 9:08

Somebody has to sit in a room and think about what could we do with these NFTs and just in terms of the critical mass that we're getting to, with enough people thinking about Web 3 and digital assets, and how do we turn these digital assets into things that can unlock value in the world. That's very bullish and I'm confident that that's going to lead to more use cases, particularly in this next cycle. We've seen an increase in crypto prices. The sentiment is changing. A lot of the bad actors from the last year were starting to see some resolution to those things like FTX, and so I think people are able to take a step back again and say you know what? It's not the technology that's bad here. We have bad actors in every sector. Let's take another look at this technology and rethink how we can apply this to our business, to our marketing, to add more value to our businesses and our customers.

Speaker 2: 10:01

Yeah, a lot of meetings and a lot of thinking that will for sure happen in the next months or year, for sure in 2024. And what better to help the creative juices to flow and to come up with very interesting, incredible, creative ideas to use NFTs, digital collectibles and Web 3 to help your brand than beer? Basically, a lot of beer in this meeting. I mean this is not really a good idea, I guess, but it was the best intro I could create for the next piece in the news today, which is talking about Swamp Water Brand, which is, of course, bringing the beer Hopefully not to meetings where a lot of thinking has to be happening, but they are for sure bringing the beer.

Speaker 2: 10:52

This is a company that got started in the NFT world, in the NFT arena it's coming actually from. It's created by a company that initially they launched an NFT series, or maybe more than one. I don't know, maybe you can correct me there, but the point is that after well starting with this NFT somewhat similar to another story that we've covered recently of a company starting with NFTs and then pivoting but not getting too far away from the NFTs and the Web 3 world this company is well helping other communities and other companies to enjoy their own branded beer. So they're creating beer for these companies. That comes in the branding of the company. Basically, you can use your like. For instance, we could be creating a marketing mid-sweat 3 beer, right? Bring it over to these podcast sessions. Maybe this is just one idea. I don't know if it's good, but it's one idea that I just float over that. So what do you think?

Speaker 3: 12:01

Yeah, this one caught my attention. This link popped up in a group that I'm a part of and I think what's interesting here is that this is, I think, an early indicator of a trend that's happening as a result of Web 3 community building. So within Web 3 communities, which are generally you know, the genesis of those communities is generally an NFT, a lot of these projects got started in the last NFT cycle. Around the hype cycle Everybody got excited. These projects were created and some of them raised a lot of money. You know people purchased those NFTs and that money went into a treasury and so we now have these communities that are sitting on resources, ie piles of money, probably smaller since over the last year, but for the communities that you know we're able to survive the bear market and still have some money left in their treasury and are still a community building.

Speaker 3: 12:57

This is an interesting evolution of community sourced product development. So community feedback, I think, has always been integral to good product development habits. You know I come from a product development background and so it's pretty normal to ask your community for feedback. I think what's different here about this situation is Swampwater is a company that has basically said and granted they came out of the roots of NFTs in community. But they're basically saying, hey, you know, our primary customer can actually be communities. So they're not thinking about going to a company who's going to make this beer and sell that beer to their community. They're going direct to communities and saying, hey, you want to make a beer, we're here for you.

Speaker 3: 13:42

And I think if you play that pattern out, you know over the next few years, you know what does product development look like five, 10 years from now, when you have providers of products and services manufacturing. That is basically looking at community first and saying, you know, hey brand, hey company, that's, that's cool. But what does your community want? Or they're not even directly interfacing with brands and companies anymore, they're going straight to communities and that becomes the new way to source ideas and development of new products. So this could be an interesting evolution in the whole NFT community narrative. It could also be an interesting evolution in the way that people think about bringing products to market and, as a service provider, as a manufacturer, being a part of the product development process.

Speaker 2: 14:34

We'll be right back after a word from our sponsor.

Speaker 1: 14:38

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Speaker 2: 15:12

Yeah, first time I was looking at this, I was thinking that what they were doing is they were going initially to, you know, to the owner, let's say, right of a community, like, imagine, we have our own marketing meets with the community, right? So I thought that what some water was doing here, swamp water was doing here, was they were coming to us and then creating something for our community. But, just as you say, well, this doesn't have to be the route every time, right, or maybe not even the default way to go about this, but they could go directly to the community. And I think you were talking about this and I was thinking, well, this that makes a lot more sense and it's also. It also highlights something that is very specific to how Web 3 helps with. Yeah, that helps deliver new experiences to communities, and in a way that we haven't seen before. Right, because you can completely skip talking to the owner, so to speak, right of the community, and and to find these people and directly offer something to them.

Speaker 2: 16:18

Because it's not like, like I'm thinking about this as if it was a newsletter, right, and you have a if I, if I have a newsletter of users and I have their emails, they are like my community, right, but using Web 3, those, those people in the list, they, they don't belong to me.

Speaker 2: 16:41

They belong to me in the sense that they have something a token, an NFT that showcases or that shows that they belong to this community. But then, because they don't belong to me, anybody else, like Stromwater, can talk to them directly, like, hey, you like this newsletter, so would you fancy a beer? And they don't have to talk to me, right, they can just see that, well, this community and we know that our community because they all have in common that they hold this pass, this token, pass this NFT, these little collectibles, however you want to call it, but they have this token in the blockchain. Basically, that shows that they belong to this community. And, yeah, they can be, so to speak, advertised too directly without having to go through the owner of, say, the community. And I think, yeah, I think that's very potent. It's funny that I got to this idea talking about Stromwater and beer and meetings with beer, but yeah, anyways, I got there and I think, yeah, we're gonna see a lot more of this, I think in 2024, right.

Speaker 3: 17:51

Well, to your point about the permissionless aspect of marketing here. So in the old world the brand owns that relationship or that gateway to the community and so the brand builds the community and the community represents the brand. And if you're making products for that brand, you have to go directly to your point, you have to go to the brand and there's this hierarchy and gatekeeping structure that you have to work with and get through to be able to reach those customers on the other side. And what you're talking about is a world where we say, maybe the brand is also a middleman in a way, and maybe the community, it doesn't represent the brand, maybe the community is the brand and in the future maybe we don't need that brand as this central gatekeeper and we can just have a direct relationship between the people that want things created and the people creating those things.

Speaker 3: 18:45

And so there's something I think pretty powerful to your point and there's a beautiful democracy in that. That I think really changes the landscape for brands. And you know, probably honestly, if I were a marketer looking at the situation might be getting a little nervous saying, well, where does this put us? How do we make sure that we can still build a brand in this kind of environment, and I think that's why it's so important for people looking at Web 3 as a new marketing channel to really tune into the community conversation and think about community first. It's a first class citizen. Put your community in the driver's seat so they can help you co-pilot the brand.

Speaker 2: 19:21

Yeah, yeah, allow me to expand this a little bit because so recently I've been having a very good experience using Substack. You know what Substack is? Probably it's this blog where you find different blogs. Yeah, this is it. So what I found interesting was the other day.

Speaker 2: 19:41

So I'm following, let's say, newsletter A and then, because I was following newsletter A, substack, which is like, let's say, the owner of all the newsletters and the communities, is telling me well, because you like newsletter A, you may like B and C, and B and C newsletters may be happy that Substack is doing this work for them. Right, and looking at people reading newsletter A and telling them since you like this, you may like B and C, but it's coming directly from Substack, which, of course, is incentivized to do this because they want you to be more involved in all the Substack environment, so to speak. But using Web 3, you don't need to go or you don't need to rely on Substack doing this advertising for you. If you are newsletter B, you can talk directly to the community of newsletter A and telling them you just read this from newsletter A. There's this thing I just wrote in here and, by the way, you can get this freebie for just coming here and taking a read.

Speaker 2: 20:42

Yeah, so I don't know, I was thinking about this and I was remembering that situation with Substack and I think, yeah, I think, well, this could make some marketers nervous but it will expand the opportunities massively. It doesn't have to be anything. It's a bad thing because, well, I think the incentive part is very important. I think newsletter B and C have much better incentives than a sub-stack in this case. I think their marketing and their creativity is going to be much more interesting than just relying on the owners, let's say, of all the newsletters sub-stack in this case.

Speaker 3: 21:21

I don't know, maybe I want to talk. That's it. That's key, I think getting away from a world where the innovation and the evolution of products and services is no longer tied to a small group of people with big ideas that may or may not be good. At the end of the day, we're talking about involving your customers as first-class citizens in your community who have a real say and a real impact in the way that you develop products and do business. Just to take this example into one more arena, you know that I'm a Taylor Swift fan.

Speaker 3: 21:59

If we look at the situation of Taylor Swift and her going direct to fan, we covered an article several episodes ago that talked about how Taylor is using Web 3 principles maybe not in a forward way, but very similar principles to take back direct to fan engagement. This is the same concept at play. This is saying how do we make sure that, as a fan, as a supporter of something, I don't have to go through a particular gatekeeper to have a relationship with another artist or another brand. I can do those things independently and at my own free will. Again, I think this is a great evolution. I hope that this plays out to a pattern in the product development space that starts to build a new foundation for what it means to create meaningful and lasting brands.

Speaker 2: 22:54

Yeah, well, I think it will, because it's a matter of incentives. It looks like it will be the case because, getting to our third piece of news today, maybe loyalty reward programs are not as working as well as they were working in the past. This is a study made on airline loyalty programs. Well, we both know airlines are probably not the most innovative sector out there. It's also a burden with a lot of bureaucracy and controls and stuff, but yeah, it's not the most innovative probably. This study was looking at the engagement of users and customers in these loyalty reward programs launched by these airlines. Specifically, they were talking about participation in frequent flyer programs that had decreased from 66% in 2019 to 52% in 2023. That's a big decrease in the space of barely four years. It shows already that the traditional reward programs are becoming somewhat ossified. Maybe they may be ripe for some innovation. That makes it more interesting In this case. We know where the innovation is coming from because we both read the study. But before we get there, what do you think about this?

Speaker 3: 24:30

Oh, I completely agree. I'm going to draw on my own personal experience here. This past year, my wife and I. We were talking on the way home from a trip last weekend and realized that between the two of us we've probably flown over 50,000 miles this year. We've done a lot of travel, meaning that we have spent a lot of money with airlines. Our domestic airline of choice is southwest because of the routes and generally easy to get on and get off. I know some people love them, some people hate them, but the point being that in terms of our spend of discretionary income, airlines got a large slice of it this year.

Speaker 3: 25:12

When I think about the opportunity for southwest to take their reward program and turn that into something more meaningful, more innovative, more fresh, to me it's a huge missed opportunity. I can say that from direct experience that even though I do get benefits from their rapid rewards program, it's not giving me the, I guess, the engaging and the exciting part of what it really could be. When we look at some of these programs that have been around for 20 years, 30 years, I completely agree it's probably time to update. I think it's promising that there are programs out there like the Etada Airways and the Thons of Uptrip. They're looking at different ways, I think, to start innovating in this space and starting to bring some more gamification and some more engagement to their reward systems. But it certainly has a long way to go.

Speaker 2: 26:07

Yeah, but yeah, I think these efforts from these airlines, they're going to be doubled, probably, or tripled, because if you look at so, one number here really caught my attention, which is the amount of loyalty points not unspent annually, and the figure is at $30 billion. $30 billion of, let's say, credits not spent by people who have these credits. I mean that, to me that's massive and I guess one of the reasons why this stays like this. Well, there are probably a lot of reasons, but when the majority of users understand that they are leaving this money on the table, they will be asking for something from the airlines to fix this right, because you cannot be unspending $30 billion every year and not getting any calls from users telling you hey, do something.

Speaker 2: 27:08

Because you have this money, you're giving it to me, but then you're not giving me really good opportunities to make use of it, right? So you have to improve your game here a little bit or some or some what? So that I can use these credits. And if you don't do it well, as I said at the beginning, there's not a lot of competition in the airline industry for a lot of reasons, but if you don't do it well, maybe I will go fly with another airline. Right, that does this better than you. If we haven't seen this innovation probably come before, it's because it's a small industry with well, it's a big industry with very few players. But even in this case, we're seeing some innovation happening and, yeah, it's becoming simple enough to improve these reward programs that they have to feel the pressure to do it.

Speaker 3: 28:02

Yeah, I mean there's certainly a gap here and I think it's worth digging into the psychology a little bit around the way that loyalty programs keep people loyal. With regard to the airline industry, the spoilers that you're talking about, these unspent points we have a situation where, as a consumer, if I'm not able to use my points within my airline program, sure I can switch airlines, that's fine, but maybe I actually enjoy flying with a particular airline. You know everybody has their preferences for boarding and the way that you know the service works and we, just we have our preferences. And if I feel like I'm not getting fair value from my loyalty points and maybe it's because I can't use them within the program or they're expiring or can't transfer them, you know to your point, all I can really do is switch. And unfortunately, because the airline industry is massive but also highly regulated, there aren't a lot of choices for consumers. And so we're kind of in this world where consumers I think for the most part unless you're, you know, the top 1% of travelers have kind of written off airline loyalty programs as gimmicky and a way to, you know, to scheme. Essentially, maybe there's some upfront bonus for joining, but then you know that you're locked into these points that aren't actually going to serve you well as a traveler, customer, and so you know the real gap. Here are the real opportunity and this is one area where I think Web 3 just shines so much is the idea that if a player, if an airline, could come in and really be innovative with their reward program and say you know what, we're shaking things up.

Speaker 3: 29:41

Web 3 empowers consumers to own their loyalty, which it does right when we tokenize things like loyalty points that can be directly owned by the consumer. So when we do that and we give that back to the customer and unlock new ways for them to go out and get value from the program, I mean, what do you think that's going to do to my mentality as a consumer? That doesn't. I think there's a concern that I'm going to walk out the door with those points and never come back, but in reality, I'm probably just going to go find something valuable, spend those points and then say you know what? Southwest did me a solid and this year not only did I fly the airline that I wanted to fly and I got my perks within that airline, but I use all of these extra points that I couldn't find a use for within their service and I went and I did something cool with it and you know what? That's going to make me more loyal to Southwest, at the end of the day, than less loyal.

Speaker 2: 30:31

Yeah, that's a good one and I, yeah, I hope, I really hope that well, this, this programs, evolve and, as I said before, this is becoming way easier and it will be even easier in 2024. I don't know if thanks to the amount of patents that have been filled in 2023, but certainly this, this, the usability that you ex and yeah, and the opportunities to use web three to improve your loyalty game, I think that becoming what is here for everybody, so, yeah, all of this will continue to improve in 2024. Hopefully, you will also get to fly a lot in 2024 and maybe even get to use those points. Thank you for being here, thank you for being here and, well, I'll see you soon to record again in the new year. See you in 2024.

Speaker 1: 31:28

Thanks for listening to Marketing Needs, web 3. If you enjoyed today's episode, please like and subscribe in your favorite podcast app.