Instagram’s parent company, Meta, cut NFTs from its offering on March 13, as part of the company’s wider cutbacks to focus on profitability. Whether that will have an impact on fashion depends on the company.
In a tweet on March 13, leader of commerce at Instagram’s parent company Meta Stephen Kasriel said that the company will cut NFTs and instead focus on different ways of monetization on Reels. He also mentioned that the company is exploring ways that creators and brands can connect with fans through Instagram’s messaging.
Meta previously rolled out NFTs in a pilot program in May 2022. A select group of U.S. creators and collectors were able to connect their crypto wallets to their profile. They could also showcase NFTs on their profile grid by using a special tag confirming the image is an NFT. Access to these features was expanded to global users in August.
In November — again, to a limited number of creators —Meta extended the program to allow users to create NFTs within Instagram. Through an “end-to-end” toolkit, users could create, showcase and sell NFTs. The November update was the last in the Instagram NFT program.
The focus was on creators, rather than brands, but any brand could upload created NFTs and display them on the platform, starting in August 2022.
While NFTs have been less popular of late due, in part die their crypto connection and the fallout from FTX, the fashion industry has developed multiple PFP (picture of proof), POAP (proof of attendance protocol) and NFT art collections over the last 2 years. Many have grown new web3 communities, as a result. Brands that have done so successfully, based on NFT sales, include Gucci, Nike x RTFKT and Adidas. Blockchain analytics company Dune said that the fashion sector earned $245 million from NFT sales in 2022, with Nike generating $91.2 million in royalties and another $93.1 million in revenue.
Some brands have also tested NFTs this year as a loyalty play. YSL Beauty recently launched its third NFT drop focused on loyalty. Diane Hecquet, chief digital and marketing officer at YSL Beauty International said, “Web3 is an opportunity to reinvent customer relationship management. And it’s not about duplicating our web2 CRM in web3. We want to reinvent the link between users and the brand; traditional CRM is more based on purchase behavior, while, with web3, it will be based on engagement. With web3, we could have this long-term, always-on loyalty program with our community.”
Instagram pulling back on its NFT tools means that brands will no longer be able to offer NFTs on the platform and users won’t be able to put them in their profiles. The dates for when these will be cut from the platform will be decided in the next few weeks. It is unclear what will happen with existing NFTs that users have uploaded to their profile.
Instagram was one of the biggest social media platforms to experiment with NFTs, with a projected audience of 1.44 billion monthly active users by 2025, according to data analytics company Statista.
Cathy Hackl, chief metaverse officer at metaverse experience company Journey owns multiple fashion NFTs and has uploaded some to her Instagram feed. From a practical side, she understands the company’s move. “Seeing Meta shift its focus away from NFTs to other ventures is not a bad thing, it just means other organizations will take the lead and continue to explore new ways to connect with customers in web3 – like Salesforce, for example,” she said.
CRM software company Salesforce launched an NFT loyalty tool called Salesforce Web3 on March 18. It’s now aiming to help brands develop their NFT loyalty programs. With the tool, brands can mint and sell NFTs, view real-time customer data and monitor blockchain activity. The platform launched with various subscription tiers. Salesforce is used by over 150,000 companies. A company of its size jumping into the space shows that, for brands, there are still unexplored opportunities for customer experience with NFTs. Toy company Mattel and clothing brand Scotch and Soda have already launched multiple NFTs in Salesforce’s pilot program, and other fashion brands will be joining the loyalty program in the next few months.
“The Salesforce announcement is quite interesting because it happened the same week that Instagram made the really stupid move to cut NFTs,” said Ian Rogers, chief experience officer at blockchain hardware company Ledger. Rogers is also on the advisory board of Salesforce’s new program, as of December. Advisory board members include representatives from the online gaming platform Sandbox, as well as Unilever, Ticketmaster and Adidas. “This is the same company that’s devoted themselves to digital worlds, and somehow doesn’t believe in digital value.” Rogers believes that the prospect of customers wanting NFTs or digital collectibles will become more apparent as digital presence increases over the next 25 years and that Salesforce is capitalizing on a growing market.
Meta’s decision also spells an opportunity for newer, younger NFT platforms. “It’ll open the way for more startups to create new things and fill a potential void,” said Hackl. “At the end of the day, many companies both big and small are exploring new ways to interact with audiences and taking loyalty programs to new heights, and using web3 to do this.” Ultimately, she sees the decision as a great opportunity for others in the space to fill a rising consumer need to express their identity online and share their digital collections.