The shift to an NFT market is here. Sales volumes are soaring and conversations around NFTs are outperforming that of cryptocurrency.
With new markets come new audiences. To successfully tap into this new form of cash flow - you’ll need a deep understanding of who NFT buyers are and what motivates them to buy.
In this article Colormatics breaks down the history of NFT growth patterns, NFT buyer demographics and what motivates people to buy.
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How many NFT buyers are there?
The trading activity of NFTs tripled between July 01, 2021 and October 1, 2021. Topping out at more than 95,581 active wallets on nonfungible.com by the end of October 2021.
While the NFT buyers skyrocketed during recent months, the wheels of the NFT growth movement have been turning.
In late 2017, the first significant growth of NFT buyers began with the popularity of collectible CryptoKitties. After a rare kitty was sold for an extremely high price, people flocked to the game looking for their own rare kitty. The frenzy began for the same reason collectors pay large amounts for rare toys or books - scarcity in the market creates value.
In March 2021, media channels began reporting on one of the largest NFT sales to date. Digital artist Beeple sold an NFT of his work "Everyday: The First 5000 Days" for $69 million at Christie's.
The purchase of this NFT, especially through a very well-known auction house, is an indicator of how digital art may be acquired and traded in the future.
October 2021, global social media platform Facebook announced it was rebranding its company as "Meta." Meta intends to "bring the metaverse to life and help people connect, find communities and grow businesses."
NFT Buyer Demographics
Audiences within the NFT market continue to evolve with each historical moment. To date there are inferences we can make from early market indicators and US buyer statistics.
Google Source Trends indicate that the United States ranks 11th out of 65 regions regarding volume of keyword searches for NFT and non-fungible token topics.
Breaking this data down further, we can see granular results from states and cities that are leading the trend in this search term:
Top 5 states:
- New Jersey
Top 5 cities:
- San Francisco
- Los Angeles
- San Jose
- San Diego
It is no surprise that the search query results for non-fungible tokens and NFT exist within geographic tech hubs such as California and Austin, Texas.
Civicscience conducted a survey in April 2021 to learn how familiar the US population was with NFTs. The majority of people interested in NFTs (14%) are between the ages of 18 and 24. Followed by 25 - 34 year olds where 8% of respondents are interested in NFTs.
Data from Statistica shows that among the age group with the largest interest (18 - 34) men and women own NFTs fairly equally, with 24% men and 21% women.
It would be unwise to discount women in this market. The false conclusion that NFT is a male market happens when you include buyers 35+; who have less than 3% interest in buying an NFT.
Income gets interesting. The same civicscience survey shows those earning less than $25,000 (lower-income) investing in NFTs equal to those making more than $150,000 annually (upper-income.) Both of these demographics said they have invested in non-fungible tokens.
Middle income ($25,000 - $150,000) respondents were the least interested with up to 94% not interested in non-fungible tokens at all.
So, what does this tell us about NFT buyer demographics?
Recent survey data and Google trends indicate that a young, tech-savvy audience with disposable income dominate the NFT buyer market.
What Motivates People to Buy NFT
There is no guarantee that an NFT purchase will increase in value. On the contrary, it may actually decrease in value.
So why do people buy NFTs? Is it the thrill of the investment? The desire to own a unique digital object that none else can claim? Or maybe it is the excitement of new technology.
While NFT buyers represent a niche demographic of collectors, it’s important to note that their wants and needs are still developing and we are always uncovering what motivates the frenzy of NFT purchasing. Here is what we do know.
NFT flippers want to be the first to know about the next hot project and you can bet they are there for the drop. A flipper will try and purchase one of the limited items and then turn around and sell it for a higher price.
The NFT flipper is motivated to buy low and sell high. Getting their hands on a highly sought-after NFT and turning it around to sell for a profit is all a part of their strategy and they will be the early bird every time.
Profit is not always the motivator of an NFT purchase. Collectors want a coveted historical piece. This NFT buyer loves everything cool, novel or interesting.
This is evidenced by a survey done by civic science, where 41% of the survey respondents stated that if they purchased an NFT, they didn't expect it to grow in value. Indicating that the act of buying the item was not a financial investment decision.
NFT early adopters were primarily millennials who were already involved in Cryptocurrency and defined themselves as "crypto artists."
This was an organically grown community of video game artists and people working in the design & illustration field. Very similar to collectors today, early adopters purchased NFTs with the purpose of financially supporting artists and art they loved.
Early mainstream buyers saw a benefit in purchasing NFTs and rushed to cash in on the spoils. This is when the NFT audience took a significant turn from grassroots effort to new entrants interested in music, sports, and collecting fine contemporary art.
Very similar to flippers, this audience is interested in investing. They see NFTs as the future and want a piece of this new market.
Big brands and celebrities entering the NFT space are going to bring another new wave of buyers to NFTs.
This is prime time for brands to step into the current NFT market to interact with and better understand their audience in this emerging digital market.
NFT Audience Key Notes
The NFT buyers market is growing and evolving. As a business looking to tap into this space, you must have a deep understanding of how to target NFT audiences. Here’s a wrap-up of the current core characteristics:
- Tech Hubs: California and Austin, Texas
- Young: 18 - 34 year olds
- Disposable Income: $150,000+
- Understand Cryptocurrency
- Collectors or Investors