Why Apes Could Be The Future Of Advertising
While watching the All-In Podcast last week, I was exposed to the concept of using content creation as a means to attract and redirect a following to other businesses or ventures: the combination of content and ancillary businesses. The podcast prompted me to revisit the concept and examine how advertising was done, how it is changing, and where it may go next.
How traditional advertising works and how content fits in
Companies that run ads extract revenue from matching advertisers to eyeballs. The important part of that relationship is to maintain a product, platform or service that attracts these eyeballs. Oftentimes doing so involves investing in marketing and advertising yourself to make people aware of your product, platform or service. However, not only do people have to become aware they have to take action through the form of a purchase, usage or sign-up. In other words, they have to become monetizable to the company. Once users become monetizable, the value they create has to surpass the value spent to acquire them. Ideally, companies want to reduce the cost of acquiring a customer since this reduces the downside risk that a customer will not bring more value than he or she was acquired for. But imagine if they could eliminate the cost of acquiring a customer altogether.
Content creation allows companies to do just that. Instead of purchasing ads to attract attention in a more brash manner, creators can make content and grow a following that they themselves can expose to a more organic form of advertising. For a company this may mean investing into content production in-house or purchasing a content producer. Doing either can enable a company to market its product or service in a new way.
Real world applications
This tactic comes in all shapes and sizes. It can be employed by a large company, a local small business, a content creator, and even a hobbyist.
I happen to fall into the hobbyist category. Creating art is one of my favorite pastimes. One of the caveats with creating art is that it has to find a home with those you know or on a wall. So, after painting for a while and filling up my walls, I had the desire to sell prints of my art, but I quickly realized I was ill positioned to do so. I realized that I would need at minimum some sort of a following or audience to get my art or storefront in front of people. Taking a look at existing shops online whether they be on Shopify or Etsy, it seems as though a many of them redirect their traffic from some form of social media whether it be Instagram or TikTok. Thats not to say that there is one way to having a successful art shop, but I feel for people to have the opportunity to like my art let alone purchase it they have to be exposed to it first. Non-digital methods for getting art in front of people can be limited based on where you live and who you know. Arts and crafts markets oftentimes don’t run with a frequency to make them viable on their own. Exhibitions oftentimes don’t entertain those without a following as new artists represent a risk on limited wall space. Social media, however, is an always available, infinite wall space competition in which anyone has the possibility to expand their reach. This realization has forced me to consider trying to grow a following on social media.
While I may be just beginning on this journey of expanding the reach of my content, creators on YouTube have long been fond of this strategy. Selling merchandise, specifically clothing tied to the content or your likeness, was one of the earliest and more simple ways to monetize the audience a creator already had. In the past couple of years, creators have grown past clothing merchandise and diversified into hair care products, tools, ticketing for sporting events, art, and even food. We see it increasingly today with some of the largest content creators on YouTube. Peter McKinnon, who runs a channel consisting of photography and filmmaking videos, sells a camera tool. Mr.Beast, who runs a channel consisting of expensive stunts and challenge videos, sells burgers and chocolate bars. KSI and Logan Paul, who run channels that make videos across a variety of genres, sell a hydration drink. It seems that if you have access to an audience, you can redirect them to a multitude of ventures.
What's next?
Up till now the models we have explored are the traditional model where one purchases ads for outreach, and the content model where one makes content for outreach. Now, imagine now a model where the content creator and the business are decoupled, yet still maintain a symbiotic relationship of mutual benefit.
An existing business that operates like this is The Bored Ape Yacht Club. The Bored Ape Yacht Club (BAYC) is a collection of 10,000 unique Ape themed NFTs where each holder of an Ape has commercial rights to his or her Ape.
The Bored Apes in the months following their release grew in popularity as speculators, investors and celebrities bought into the club. What is interesting and what I think separates the Bored Ape Yacht Club is the way their community has evolved since this point of popularity to utilize their NFTs. This was in part motivated by the way in which the Apes were set up. The founders realized that in giving the community the creative rights to their Apes, that they were essentially tapping into the creativity of their holders. Giving holders the power to create with their NFTs allowed Apes to become a distributed brand and remain in the spotlight. Holders began by creating merchandise such as T-shirts with their Ape likeness on them. As those T-shirts were bought by fellow holders and people wanting a piece of the club for themselves, the Apes began to grow as a symbol and community. And almost like the playbook had existed before, holders quickly grew to use Apes to market more than just clothing merchandise. Each project launched in association with the Ape had access to the attention brought by the community. The release of the NFT Apes have spawned a growing repository of businesses built by holders where the Ape represents a form of advertising or new mode of outreach. The creation of a flywheel of value for not only the original creators but the holders and entire community as well followed.
While this may not be the next evolution of advertising exactly in this form, it is definitely fascinating to see it play out. A great example of the dynamic described above is a new BAYC themed burger chain called Bored & Hungry. This burger chain uses the likeness of a Bored Ape to promote its burgers. As a result, they have access to an entire community of other NFT holders and outreach to more people without needing to advertise through traditional methods. The success of the burger chain then spurring more holders to create with their Ape likenesses.
I also learnt of a team of people who go by Jenkins the Valet who aim to create IP centered around NFT communities. Their first project is a novel being written about Bored Apes called Bored & Dangerous. The novel is community generated meaning a community of NFT holders were given the chance to vote on elements of the book such as the plot. Additionally, as part of the project, Ape holders were able to license their Apes to be used in the plot or illustrations within the novel. In this case, Jenkins the Valet did not necessarily even need to own an ape, they were able to approach the community for usage and leverage the community to advertise a novel.
I think while incredibly cool, it is important to recognize that this cycle cannot be endlessly fruitful. The Apes may not gain traction past those who are already involved in the NFT space, or they may be overtaken in popularity by another project. But while their recognition grows, they provide insight into what the world of advertising may look like in the future.
It remains to be seen how advertising will shift in the coming years. As the importance of content grows, new models of advertising will emerge that allow new businesses to flourish and challenge the incumbents reliant upon more traditional means of advertising.
