Traditional marketing KPIs fall short in capturing the full value of Web3 campaigns, discover how blockchain metrics can help.
NFTs can shake up your marketing strategy in a number of different ways. But it will be difficult to truly understand just how successful any marketing campaign is without specific metrics and data on how it’s performing. Without adequate information about your customers and how they’re interacting with your NFTs, how will you know whether your campaign is on track, or not?
When the long-term performance of any factor of a business needs to be tracked in order to reach a goal, KPIs (key performance indicators) are used. Analyzng KPIs and making data-driven decisions are crucial components of success in any business.
Web3 technology, like NFTs, will have a significant impact on conventional business KPIs. You’re probably already familiar with metrics such as CPL, CLV, and CAC. Marketing campaigns for Web3 tech have some similarities to traditional campaigns, but diverge in the KPIs that are used to track success. Broadly speaking, this is because engagement with NFT-based campaigns is measured differently than engagement with a traditional marketing campaign. For this reason, it’s better to use Web3-relevant metrics when managing campaigns in the Web3 world.
So, how do you track the success of a Web3 marketing campaign? And what are some of the Web3 relevant KPIs that should be on your radar? In this post, we’ll share key marketing KPI examples and explain how NFTs and Web3 tech relate to measuring them.
Traditional marketing metrics
There are some pretty standard KPIs that marketers use day in, day out. For example:
- Cost-per-lead (CPL)
- Customer lifetime value (CLV)
- Customer acquisition cost (CAC)
While these metrics should still have their place in your KPI playbook, they can’t all be applied to NFT-based marketing campaigns. Let’s look at why.
To give a brief overview, Customer Lifetime Value (CLV) refers to the total amount of money a customer is likely to spend on your company’s products or services throughout your relationship. The income that comes from a customer is directly related to other KPIs like Customer Acquisition Cost (CAC) and Cost-per-lead (CPL).
CPL is the cost of acquiring a new lead, while CAC is the total amount spent on sales and marketing divided by the number of new customers. Not every lead will become a customer, hence, the more it costs to acquire a new lead, the more it costs to acquire a new customer.
CLV is a three-dimensional puzzle with lots of pieces. You have to consider the cost of your product, how much the average customer spends, retention probability, the average customer lifespan, purchase frequency, and more.
You may already begin to see the issues in using these metrics with an NFT-based marketing campaign. NFTs, being non-fungible, won’t necessarily have a fixed value. This means that it can be tricky to pin down a solid cost for acquiring a new customer.
Furthermore, NFTs have momentum – they’re bought, sold, and traded between multiple digital wallets. You, as the original creator of the NFT, are providing benefits for owners of the tokens. It’s not a simple case of you creating a product and selling it, but rather providing a good that is also a service.
Web3 marketing metrics
Thankfully, it’s not as if there’s no way to measure the success of your NFT campaign. Web3 provides plenty of tools to track how many people are interacting with your tokens. By utilizing these metrics, you’ll have a much clearer and more nuanced picture of your campaign’s outcome.
KPI 1: Number of active owner wallets
If a wallet owns one of your NFTs, it’s classified as an owner wallet. A wallet that is “active” is making transactions on blockchains over a specified timeframe, such as a month or year. Keeping an eye on the number of active wallets on the blockchain of your choice is wise for taking the temperature of the market. This assessment of how many owner wallets there are and how active the average wallet is within a time frame are extremely useful KPIs.
If the number of active wallets is stagnating, you may run into issues of market saturation where it’s difficult to attract new customers with your NFT marketing idea.
This relates to finding out how many NFTs your customers are purchasing on average. As well as keeping track of the overall market, you can also look at how many unique wallets own NFTs from previous collections you’ve released.
KPI 2: Market cap
You can take advantage of the blockchain’s powerful record-keeping capabilities to get a close estimate of your current NFT market cap – the total value of all NFTs in circulation.
This KPI is important to consider when figuring out the pricing of your NFT collection. Knowing the market cap of your NFT collection allows you to understand the relative size of your campaign compared to other similar campaigns. Other brands similar to yours on the surface level may have very different market caps for their NFT collections. This allows you to create a more accurately valued collection as well as attract potential investors by its overall value.
KPI 3: Active volume
This metric is the number of NFTs that are minted, claimed, and traded every day. Essentially, this is the measure of your NFT’s ecosystem to gauge just how popular and valuable they are. A higher active volume may represent more interest and engagement within your community. However, if your volume is high and your active owner wallets are low, it may be a sign that the NFT’s value is inflated or a select few individuals are buying up the NFTs to claim more token rewards such as airdrops (referred to as “wash trading”).
KPI 4: Holding length
NFTs allow you to collect royalties from the secondary market, so you should be aware of just how often individual wallets are reselling NFTs from your collection. An important metric to be aware of is the holding length, which is how long your NFTs are being held before they’re resold. If they are being resold, what, on average, is causing the sales? Does selling relate to when you release a new NFT collection?
Keeping track of the general estimated value of your NFT collections and exactly how long they’re held for will help you paint a better picture of your overall secondary market profit margins.
KPI 5: Interaction Rates
Following the holding length KPI, interaction rates represent how often your NFT owners are utilizing and interacting with your NFT services. When they purchase or claim an NFT, are they granted access to a community? What percentage of token holders are active within the community? If there are benefits attached to your NFT, are owners claiming them?
The rate at which your token holders interact with your NFTs will be directly related to the value of the NFT. A low interaction rate could be a sign of customer churn.
Reviewing the Web3 metrics of some popular brand campaigns
Bud Light N3XT
To promote its new zero-carb light beer, Bud Light launched an Ethereum-based NFT collection on OpenSea called N3XT. Bud Light originally minted 12,722 tokens that feature artwork that combines the new lite beer with pop culture backdrops. Token holders get access to exclusive NEXT merchandise and can vote on the designs of new merch. They also are granted access to exclusive NEXT brand/partner events.
OpenSea provides tons of data on the aforementioned key KPIs. For example, there are currently 5,167 owners of the N3XT collection with 41% unique owners. 3,447 owners own one NFT while 22% of owners own two or three. OpenSea also provides data on the number of sales over a select period and the average going price of an NFT in the collection.
By assessing these KPIs, we can gain some insight into the level of success achieved by Bud Light’s N3XT collection. But as we don’t know the correlation between N3XT NFT sales and NEXT beer product sales, we can’t connect all of the dots.
Adidas Originals NFT
In 2022, clothing brand Adidas collaborated with popular NFT collections Bored Ape Yacht Club, PUNKS Comic, and gmoney, to create an Into the Metaverse NFT collection. These NFTs featured futuristic clothing designed to be worn by virtual avatars in the Metaverse. However, they also granted token owners access to real-life physical merchandise.
Adidas minted 30,000 Into the Metaverse NFTs which were all sold in a matter of hours for around 0.2 ETH. This impressive initial 6000 ETH market cap has only grown since. Adidas has yet to mint another collection but, even almost a year later, the NFTs are being sold for around 2.7 ETH. Not all information about the collection is public, but the success of the NFTs may be attributed to their partnership with well-known Web3 partners.
A Journey with the Dogg
Unlike our previous examples, this much more intimate NFT collection was launched by American Rapper Snoop Dogg. These NFTs sold for between .5 ETH and .7 ETH with another art piece titled Snoop Dogge Coins selling separately. The collection is inspired by Snoop Dogg’s early memories with eight unique tokens featuring artwork of a younger Snoop. A portion of the profits from the proceeds went to supporting young, emerging crypto artists.
Snoop Dogg’s collection was auctioned off individually at set times, this imitates how rare collectibles are auctioned in the real world. Having an intimate collection with limited quantities allows fans to have a more personal connection with the artists they enjoy. It also serves to test the market without the risk that may be associated with minting a larger collection.
Entrepreneur Gary Vaynerchuk launched VeevFriends in 2021 with the goal of supporting creative and business endeavours. Originally, VeeFriends gained traction by featuring profile picture artwork and partnering with Macy’s Toys “R” Us. Today, they’re one of the most successful NFT collections with a market cap of 46,660 ETH and a floor price of 4.55 ETH. They integrate a myriad of different products, games, and merch drops to reward token holders.
The community’s famous characters have become iconic to the point of not only being NFTs but also collectible plushies. The characters are even featured in virtual games and multiple drops over several collections. VeeFriends are also on multiple blockchain networks to increase accessibility and visibility. As one of the most horizontally integrated NFT collections out there, it’s easy to see why VeeFriends took off and maintained its popularity.
The above campaigns have shown solid results thanks to a good understanding of Web3. But there's more to it. By exploring the NFT space in Web3, these companies are stepping into a new and exciting area early on. Customers who already like their brand get rewards when they engage with these NFTs, and it's a way for these companies to prove they're staying updated with where the internet's heading.
Ultimately, the success of your NFT collection will largely depend on your knowledge of Web3 as well as how closely you’re monitoring some of the KPIs we’ve mentioned. If you’re daunted by the prospect of launching a collection, partnering with a Web3 expert is a great approach to get your ideas off the ground.