On July 11, 2019, then-President Donald Trump tweeted he was “not a fan of Bitcoin or any so-called crypto-currency.” As of December 15, with his first NFT launch or โdrop,โ that sold out within 24 hours, it appears times have changed.
And no wonder. Regardless of personal opinions about the man or his politics, it’s hard to throw shade on Donald Trump’s instincts to pursue financial opportunity, not to mention his appetite for the spotlight.
The bottom line is the collectibles NFT space continues to mature despite the broader crypto market. Yes, there have been a few high-profile drop flops, primarily due to bad marketing. But as we’ll see in a bit, the Trump marketing teamโs smart strategy was key to a successful drop.
There is money to be made in NFTs for influencers, so it is not surprising that Trump has now seen the light (and opportunity) in monetizing his audience via collectible NFTs. Let’s take a closer look at the ups and downs of the recent Trump Trading Cards NFT drop.
Anatomy of the Trump NFT Drop
In December, crypto-twitter and the NFT world gasped (and smirked) as The Don dropped his first NFT project on the Polygon blockchain, complete with a hilarious, exquisitely on-brand promotional video. The NFTs sold out within 24 hours for an estimated take of $4.5 million.
The collection featured 45,000 tokens, with 44,000 for sale for $99 each. (More about that missing 1K in a minute). The campaign styles them as โcollectible trading cards,โ similar to baseball cards.
The images featured a svelte, muscular Trump in manly, heroic costumes and backdrops. In one card, heโs wearing a red jacket, Christmas tie, and a Santa hat because, as he tells us in the video, “Remember, Christmas is coming, and these make a GREAT Christmas gift!”
In an interesting example of how the pre-internet and web3 worlds still collide, when customers purchased certain cards with rarity elements, the benefit included entry into an old-school sweepstakes drawing. With NFT collections, rarity elements introduce scarcity into the pricing strategy. Visual elements or features are present on only a few NFTs, making those cards more valuable due to scarcity.
Prizes included autographs and copies of Trumpโs book. The most popular involved access opportunities to Trump, such as a Zoom call, a round of golf, or drinks at his Mar-a-Lago estate in Florida. People who bought 45 cards or more earned an invitation to a dinner with the former president.
The value an NFT carries is called โutility.โ A standalone art NFTโs value lies in potential resale value. The Trump cards, or NFTs, had specific benefits attached to them, also called โrewardโ utility.
The collection sold out in 12 hours with a floor price (the lowest available) of $99. While sales volume has dropped about 90%, at the time of this writing, the floor price for the NFTs was still about $248, well above the initial $99 offering price. If you want to see more analytics from the drop, check out the collectionโs page on the NFT marketplace OpenSea.
On January 12, the campaign wallet that sold the original NFTs minted the access pass tokens for the sweepstakes prizes. The website says the campaign will airdrop tokens into the winnersโ wallets.
The tokens feature images of Trump holding a sign resembling a ticket, listing the prizes featured in the original drop.
Fine print and legalese for the Trump NFT drop
A “no purchase is necessary” disclaimer keeps the campaign sweepstakes kosher with the “Lottery Law” enforced by the FTC, FCC, and USPS. Fans who don’t want to buy an NFT can enter the sweepstakes by sending a self-addressed stamped envelope to a real-world address.
Even though no purchase is required to enter the sweepstakes, winners must have a crypto wallet because prizes are distributed via an air-drop into the winnerโs wallet.
According to more fine print, Trump did not own the NFTs, nor is he participating in any benefit from resales on the secondary market. Below is the official boilerplate:
“NFT INT LLC is not owned, managed, or controlled by Donald J. Trump, The Trump Organization, CIC Digital LLC, or any of their respective principals or affiliates.
NFT INT LLC uses Donald J. Trump’s name, likeness, and image under paid license from CIC Digital LLC, which license may be terminated or revoked according to its terms.”
This disclaimer is intended to keep the SEC at bay: Trump Digital Trading Cards (NFTs) are intended as collectible items for individual enjoyment only, not for investment vehicles.
Technically, Trump didn’t make any money from the drop per se but from licensing fees. NFT INT made a profit from direct sales and makes 10% on the resale of the NFTs.
Sold Out: What Was the Trump NFT Drop Secret to Success?
Like a hit movie loved by the public and hated by critics, Trump’s sold-out drop was raked over the coals by commentators on both sides of the political fence. Stephen Colbert delivered a scathing review on his Late Show monologue. Far-right Capitol riot participant Anthime Gionet (@BakedAlaska) tweeted, “I can’t believe I’m going to jail for an NFT salesman.”
Like it or not (and many did not), the Trump drop was a masterclass in NFT mainstream engagement. After the fact, Polygon saw a spike in activity, but the promotional magic wasn’t necessarily on chain. Below are some elements that made the drop a success:
Meet your people where they are.
Trump’s team knew they were not launching to a group of primarily crypto-native NFT insiders.
The sales stats proved them right. 70% of the sales were to first-time NFT buyers.
Instead of trying to sell NFTs in the video, Trump led with an analogy his audience already knew and trusted – baseball trading cards and sweepstakes.
Other points that helped the campaign performance:
Polarizing project video
Love it or hate it – that is the point. The video on the landing page is pure Donald Trump, delighting his followers and leaving everyone else in shock, as usual.
Familiar look and feel
The landing page is a virtual adaptation of tried and true direct mail copy. The neon colors and space-age fonts that characterize many NFT brand drops are nowhere in sight. The trading card graphics themselves are nostalgic and very un-fancy. Many criticized the visual imagery as poor quality, but one could argue that the low-fi art was 100% intentional. The campaign isnโt targeting art collectors. Super-slick or artsy graphics would be out of place and possibly a turn-off.
Use of sweepstakes
This isn’t the first time Trump has used (and raised eyebrows over using) sweepstakes for fundraising. His long-time followers are comfortable with the sweepstakes format, especially coming from him.
Watch the language
The copy on the landing page doesn’t assume the visitor knows (or cares) anything about NFTs. The copywriter took the time to define NFT insider terms, in this case defining the NFT world term for single super-rare NFTs:
“Some will be one-of-one’s (i.e., the only one in the world)”...
In the video, Trump also emphasizes that his NFTs are โdigital trading cards.โ When he says, “You can collect my cards just like a baseball card or other collectibles,โ he’s giving his audience a familiar analogy. Suddenly NFTs aren’t so scary after all.
Lastly, the rules and T&Cs are also very clear and jargon-free.
Emphasis on community
Community is the KEY to profitable NFT drops. In the video, Trump mentions that the cards are an exclusive way to enter “his” community. For his most avid fans, insider access to Trump and other mega MAGA fans is the ultimate dream.
Let the people use credit cards!
Credit cards are a crucial tool in opening up NFTs to the mainstream. Many people considering buying an NFT do not care one flip about cryptocurrency. Removing friction from the purchase process is low-hanging fruit for NFT campaigns.
Controversy Around Non-Fungible Trump
Because the drop involved Donald Trump, many in the NFT space closely scrutinized the fine print and the back end, raising some legitimate questions. Let’s look at a few.
25% of value skimmed pre-drop, off the top
Even though Trump told ArtNews that the NFTs were “about the art, not money,” some shenanigans with the minting of 1000 NFTs pre-drop point to a different story.
The Trump Trading Card site specifies a “strict limit of 100 Trump Digital Trading Cards per purchaser/household”.
However, OKHotshot (@NFTherder on Twitter), an on-chain analyst, tweeted on December 17 that 1000 NFT trading cards were minted and sent to a Trump admin wallet on December 14, before the project launched.
These included 68 of the most valuable images – 47 of the 179 single (1/1) NFTs and 21 of 70 autographed NFTs.
The website FAQs do say that 44,000 of the 45,000 images would be available for sale. Critics note that the site does not disclose that the 1000 in question would be minted pre-drop and skim 25% of the rarest off the top.
Look, but don’t touch – image rights and IP controversy.
Buyers of the Trump NFTs do not own the rights to the image – only the electronic record. They can’t reproduce the images on t-shirts, real paper, or any other way.
Image rights are an ongoing question mark with NFT IP. Like the Trump cards, some “art” NFTs do not include image rights to the original artwork. It’s like buying a painting from an artist and the artist retaining the licensing rights to the imagery of the artwork.
Speaking of image rights
Some critics say that the quality of the images is poor. The photoshopping is amateurish. Some question whether the campaign had the image rights to all the stock-image visuals in the trading cards.
Unhappy Trumper campers
The campaign’s biggest mistake was when Trump teased the drop news by saying he would have a “big announcement’ on Dec.15. Most of his followers were thinking in the context of his upcoming presidential run. They expected news of a running mate or another campaign-related topic.
Many were shocked when the news was about an NFT collection, taking to Twitter to express their displeasure. Some speculated that the drop was a form of media trolling, priming the pump for dominating media attention by whatever means possible going into the election cycle.
When the Big News turned out to be about NFTs, Trump unnecessarily antagonized his base and left many followers with a bad taste in their mouths. Collectible NFTs are something most of them don’t understand, are suspicious of, or both.
After the initial flurry of activity, trading volume on Trump’s NFTs dropped 90% in the next week. Some critics point to plummeting volume as a campaign failure and another example of how NFTs are hyped and useless.
Another way of looking at it: where did most buyers see value? In the chance of winning access to the former president, not the cards themselves โ at least for now.
Resale purchases of the Trump NFTs don’t include a sweepstake entry. It’s also a safe bet that secondary NFT buyers aren’t interested in entering sweepstakes by mailing a stamped envelope.
Since the sweepstake prizes were the utility value driver for the initial drop, it’s no surprise that resale volume tanked.
Moving Ahead
Has it crossed your mind that Donald Trump could have launched Trump Digital Trading without using NFTs at all? He could have created a regular sweepstakes, as he has in the past, using the digital โcardsโ with QR codes, for example, as tickets.
Yes, he could have done that, but he didnโt. Another ho-hum sweepstakes would not have attracted the lion’s share of attention, good and bad, to dominate a big slice of the US media for a couple of days. Perhaps the spotlight, not the NFTs or the money, was the whole point from the start.
Whether you are new to NFTs or currently trading crypto assets, ZenLedger can help you aggregate transactions across exchanges, compute your capital gain or loss, and auto-fill the IRS forms you need each year. You can even use our tax loss harvesting tool to identify ways to save throughout the year.
Get started with ZenLedger for free today!
The above is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
