When the creative minds behind iconic music festival Bonnarroo launched a new venture this summer, they turned to NFTs to create SuperF3st, a Web3-based, year-round party committee. It's bound together by blockchain technology, and a shared love of “music and art and culture, essentially creating this first of its kind music and arts festival,” said Tori Stevens, CEO of SuperNFT, a new branch of the festival organization SuperFly.

Artistically designed non-fungible tokens, while available for purchase, are not the point. The organizers hope to sell 3,000 “superpasses,” the holders of which will become the founders of the festival. They will make decisions about when and where the main event will be held next year, and which acts to highlight; creating stakeholders in the success. So far, SuperF3st counts 882 founders. Passes cost about $500 and can be bought by credit card or in Ethereum, the cryptocurrency of choice for many NFT programs.

SuperF3st worked with a startup NFT loyalty and rewards platform called Hang, which just raised $16 million, and is using NFT and blockchain technology to help brands run loyalty programs to develop new methods of working directly with fans. “It incentivizes people to stay engaged, and to be voting, and one of the goals is to reward people with greater utility,” Stevens said of SuperF3st’s reward-based structure.

In the festival space, a digital “founders” pass could provide special access at shows, discounts on merch, and other perks. These are the makings of a new kind of rewards program, at a time when many brands are spinning up their own loyalty platforms. Loyalty programs are definitely having a moment, with every brand from Pizza Hut to Best Western developing them. Part of the impetus, too, is that the landscape for data is changing. Online platforms such as Apple and Google are phasing out cookies on web browsers and preventing internet tracking on devices, making it more difficult for marketers to reach their customers. Meanwhile, Web3 startups, developing NFTs, digital wallets, and crypto-tokens, are starting to see the potential to bring this technology into rewards programs, and ultimately into marketing.

It’s not just startups, either. Longtime marketing technology players such as Salesforce and Adobe have built NFT functionality into their platforms, and Amazon promised to support NFT functionality “down the road.” Even if someone thinks NFTs are just an inflated fad, marked by flashy sales of questionable digital artwork, the technology behind them is weaving its way into marketing infrastructure through rewards and loyalty programs and as vehicles for first-party data collection and management.

Direct to consumer

“The approach that Hang is taking is really right for the time that we’re in,” said Michael Gubman, a strategic growth specialist who has worked on NFT programs at TikTok and NFT startup Bitski. “The brands that adopt it now are going to lead the way on these new consumer touch points.”

Hang has a software development kit that brands can plug into their websites and apps to mint NFTs and build loyalty programs. Hang builds marketplaces where consumers accrue rewards through joining loyalty programs, and one of the benefits of NFT technology is that there is “liquidity,” so consumers can trade, sell or rent their rewards to other consumers. The promise of Web3 is that there will be interoperability, too, meaning these rewards can travel with a consumer wherever they go, physically or digitally. Increasingly concerts and other events are being held in virtual worlds and NFTs are collectible, like Pokémon in augmented reality.

Hang has worked with Budweiser, which has developed a virtual horse racing experience with Zed Run, a popular destination for NFT enthusiasts to bet on digital ponies. Hang has also worked with frozen yogurt brand Pinkberry and sports website Bleacher Report. Budweiser has been one of the leading brands in Web3, trying NFT programs through its relationship with its agency Vayner3, which is a part of VaynerMedia. Budweiser was not immediately available for comment on its Hang partnership.

The alcoholic beverage brand is a good example of a product that is typically sold in stores and stadiums, where the brand does not have a direct relationship with the customer at the point of sale. NFTs are one way to build that direct relationship, according to Hang CEO Matt Smolin.

Metaverse’s mainstream dilemma

SmartMedia has worked with a variety of brands, including KFC, Ben & Jerry’s and Rosewood Hotels and Resorts. One of the biggest hurdles to wider adoption, though, is that most people are not familiar with the technology and they don’t own cryptocurrencies. A report this week from Morning Consult hammered the point, saying that the metaverse “is still far from mainstream.” The survey found that 64% of U.S. adults know “not much” to “nothing” about the metaverse.

Meanwhile, headlines of late have not been good for NFT enthusiasts, who have seen marketplaces like OpenSea announce layoffs amid a “crypto winter.” This month, when Sony PlayStation launched a digital rewards program with NFT-like collectibles, execs were insistent not to call them NFTs.

Morning Consult’s survey did find a bright spot, particularly for festival brands like SuperFly’s SuperF3st: “Entertainment is the biggest draw to platforms that power the metaverse, and it shows,” Morning Consult wrote. “Just look at the buzz that entertainment-related metaverse events generate, like the Ariana Grande concert in Fortnite, the Electric Daisy Carnival in Roblox and the virtual Justin Bieber concert organized by interactive experience company Wave.”

One of the keys to NFT and metaverse marketing is to make it as easy as possible for the consumer to collect NFTs, join programs and swap rewards, without even needing to know about the blockchain or other technology that is hard to master, Hang’s Smolin said.

“That buyer and seller may not even know it’s on blockchain and still be able to do it,” Smolin said.

“There is a larger market of brands that haven’t done anything in this space,” Smolin said. “And when we speak with them, we tell them don’t worry about the word NFT. It’s just technology. It doesn’t mean anything, and in a few years no one’s going to be saying it. But how can we build a better system and program for you that will actually be substantially better for your customer than anything you’re already doing.”

The rewards are the point, and in that category, brands are starting to use NFT technology to create tiers of super-customers that also are invested in the success of the brand, since that earns them more valuable goods and services, in Smolin’s estimation.

“If this is a new valid class of assets that starts to grow market share in a significant way then brands want to be at the forefront,” Gubman, the NFT specialist, said. “Brands have to figure out how to give loyalty programs a lot of value. In the old days, you accrued points and if you couldn’t use them they expire or lose value. By having the ability to trade, sell or transfer points, they don’t have to lose value, and even if they lose value to me they may be valuable to someone else.”

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CORRECTION: A previous version of this story incorrectly attributed quotes from Michael Chock, chief solution officer at SmartMedia Technologies, to another person at the company.