Written by Hunter Murray and Scott Harrison

The Australian Open (AO) is one of the four Grand Slam tennis tournaments and is held annually in Melbourne, Australia. Spectators come from far and wide to witness the best tennis players on Earth battle it out. In 2021, organisers approved a non-fungible token (NFT) project – AO ArtBall – designed to make the AO the most accessible sports and entertainment event in the world.

This article uses the AO ArtBall project as a case study to explore the application of Web3 philosophy and technology, with lessons on how Web3 could shape the next evolution of membership programs.

Loyalty & Reward Co, a globally leading loyalty consultancy, also included the AO Artball project as a case study within the blockchain and Web3 loyalty chapter of Loyalty Programs: The Complete Guide.

What is the AO ArtBall NFT project?

The AO ArtBall NFT project aims to celebrate and showcase the creativity and innovation of the Australian Open, while also providing fans with a unique and collectible way to engage with the tournament.
The project involves a series of NFTs which signify membership and access to several AO ArtBall member benefits. Each token is represented as a digital tennis ball artwork, inspired by the AO, Australian culture, and the Australian landscape.

The creators experimental and fast-moving approach has garnered attention around the world, with the project building a reputation as a leader in both the sporting and Web3 industries. Each aspect of the project (incl. the artwork, technology, fan experience, tournament and connection to the sports world) has been considered to deliver an exceptional experience to ArtBall holders.

How much does an AO ArtBall cost?

In January 2022, arguably at the height of NFT mania, 6,766 AO ArtBall NFTs were released to the public for minting ahead of the two-week Australian Open tournament. Each ArtBall was listed at a price of 0.067 ETH (equivalent to $310 AUD at the time) and sold out in just three minutes.

For the 2023 tournament, 2,454 NFTs were initially released to the public at a minting price of 0.23 ETH (equivalent to $446 AUD at the time). However, due to waning market interest the AO were forced to drop the price to 0.11 ETH (below half the original price). Those who purchased at the higher mint price (0.23 ETH) were compensated with an extra AO ArtBall.

At the time of writing, there are still 1,036 ArtBalls available to mint. NFT marketplaces (such as Opensea) currently have an ArtBall floor price (lowest price) of 0.049 ETH (equivalent to $135 AUD).

Benefits and the value of AO ArtBall

The project evolves each year, introducing new benefits for members. The AO ArtBall project prioritises ongoing value as a fundamental principle, with a holder’s utility extending beyond the visual appeal of the artwork to encompass a variety of features and benefits that enhance the overall AO experience for existing and future audiences:

• Unique art – each ArtBall is unique down to the fuzz and its distinct type of artwork (which can be created by an artist, a collaborator or randomly generated through a series of computations).
• A court position – each ArtBall is linked to a plot on the official AO tennis court. Each year the plot for a particular ArtBall is rerolled (randomly allocated).
• Rewards for Match Points – if the match winning shot lands on a holder’s designated plot, the ArtBall is updated to record match information and the holder receives two tickets to the equivalent AO match the following year. Holders can also replay Match Point moments, which are 3D visualisations of the winning shot.
• The AO Academy – members are granted automatic access to curated, token-gated learning experiences for all things Web3 and Crypto in collaboration with an e-learning platform, Collective Shift.
• AO Ground Passes – In 2023, 2022 ArtBall holders received a pair of complimentary Seven Day Ground Passes for the second week of the AO which provided access to the AO grounds (including all the activities and festivities) and non-ticketed matches.
• Benefits in the AO Metaverse environment – anyone can access the expanded AO Metaverse in Decentraland, with ArtBall holders being granted additional access to new experiences, wearables and POAPs.
• Benefits from collaborators – the AO has established various partnerships with sport and Web3 related organisations, as well as leveraged existing partners, to deliver extra value to the ArtBall project in various ways (more detail available on this below).

Building a new Web3 coalition of partners

In 2023, the creators introduced external partners into the AO ArtBall ecosystem to deliver additional value to holders. Akin to a traditional loyalty program establishing a set of coalition partners, the AO developed collaborations with organisations across three categories:

• Existing AO partners (Marriot and Penfolds) – for example, Penfolds collaborated with AO on 6 ArtBalls for the 2023 mint. Holders receive 2 premium wines, vintage wine tasting in South Australia and future benefits such as global Penfolds experiences, virtual tasting and other loyalty benefits (TBA end of 2023) in addition to the standard 2023 ArtBall benefits.
• Sport (PUML, Vayner Sports Pass, Pro Tennis Fam, Joyride) – for example, Holders of ArtBalls and Vayner Sports Pass NFTs were granted early access to mint the new 2023 ArtBalls.
• Web3 (Collective Shift, Nouns, MetaKey, Crypto chicks, Creature World and more) – for example, Collective Shift provides ArtBall holders a free 12 month membership to their crypto research and education platform enabled through a token-gated experience.

An interesting element of the collaborator ArtBalls is that it has allowed more traditional, iconic brands to experiment within Web3, without the extensive investment of going it alone. Whilst in its very nascent form, it also offers a new perspective on how brands might approach direct partnerships, create partner ecosystems and encourage audiences to engage within these new ecosystems.

An ArtBall holder experience

We (Hunter and Scott) decided to experience our ArtBall holder benefits first-hand, and travelled to Melbourne, Australia for the second week of the 2023 AO tournament. A summary of our experience includes:

• Ground Pass Redemption – The redemption process to access our complimentary Ground Passes was easy. We simply had to connect our crypto wallet to a dedicated Ticketmaster landing page to verify our NFT ownership.
• AO Experience – We successfully entered the AO with our complimentary Ground Passes, with full reign around the AO park and spectated several matches, including the Aussie Men’s Double Semi-final (which had an awesome atmosphere).
• ArtBall Members Party – To enter the exclusive party at the AO Beach Bar, we used the Tokenproof app to verify our membership. Once inside, we were treated to finger foods and drinks whilst chatting to other ArtBall members and the creators. An exclusive tennis-related surprise turned out to be photo time with the two perpetual trophies.

On reflection, we felt like pioneers experiencing this wholistic Web3 experience, from the ArtBall purchase, to connecting wallets and attending the in-person event. The team of creators worked tirelessly to deliver everything they promised, and we had a great time experiencing this new approach to fan engagement.

Is it a success?

We participated in community activities. We travelled to Melbourne. We spent money on flights and accommodation, purchased merchandise, food and drinks at the AO and restaurants, bars and cafes. We even had friends come along with us. Would we have made any of this investment of our time and money otherwise? Unlikely. We’re now considering attending the following year and are more invested in the sport and the AO than ever before.

Learning opportunities for customer loyalty

Learnings from the AO ArtBall NFT project can be translated to other industries and membership and loyalty programs. The future of these programs, whether they are Web3 based or not, will be impacted by trends in the space.

Learning #1: Balance program value with revenue

Making the ArtBall project self-funded was a goal for 2023. However, the creators struggled to achieve the same demand as the previous year. This shortfall has likely caused some challenges with project funding and goals, particularly as they seek to expand the membership base.

Several Web3 projects have faced similar issues – with many NFT marketplaces now moving away from compulsory creator royalties (reducing a major source of ongoing revenue), operators need to look at legitimate alternatives to ensure perpetual project funding.

Takeaway: Members want ongoing value, but there also needs to be consistent funds to provide it. A successful project will ensure there is a balance of value, both on a user level and an operator level. A project’s strategy needs to be long-term focused, acknowledging that no project is immune to market forces.

Learning #2: More autonomy creates a double-edged sword for expectations

The AO ArtBall project is an example of how a brand could provide its customers with true ownership of their engagement and interaction. Members can choose to hold or sell their membership in the project at anytime via the secondary market. If the member no longer agrees with the direction of the project, or no longer perceives to be receiving value, they possess the autonomy to leave the relationship. For others, they will stay, leading to deeper engagement with the brand they are passionate about. This represents a significant departure from the traditional model of marketing and customer engagement.

It must be acknowledged that providing people with more autonomy over their ownership of membership could also increase their expectations for the quality and value provided.

Takeaway: Yes, the stakes are higher when you offer someone the option to ‘sell’ their loyalty – and potentially requires more effort by a brand – but this legitimate option to opt-out of the relationship could also lend itself to generating more truly loyal customers.

Learning #3: Prioritise inclusive design and community building for long-term success

The AO ArtBall project demonstrates how a Web3 lens can help create truly compelling experiences, but it also demonstrates the inherent challenges of adoption and scalability. Not all AO fans are Web3 literate, nor do they necessarily want to be. For 2023, it was evident that the AO ArtBall creators aimed to build upon the existing audience and welcome new members, but the ‘Web3-native’ design of the project impeded the ability to connect with that broader audience. Consumer uncertainty is one of the biggest hurdles to adoption.

To overcome this type of challenge, brands need to make fundamental design choices which create experiences that are inclusive and welcoming to a wide range of customers. The easiest step forward is to focus on how things are positioned and communicated. Firstly, focus on the opportunities that membership provides, rather than on the elements that alienate and create complexity (e.g., less jargon, more seamless onboarding). Secondly, focus on building a sustainable community which reflects the values and ideas that underpin the brand identity, rather than specific demographics or interests.

Takeaway: History shows going mainstream requires a fine balance between serving the most engaged, while also educating the majority. The low-hanging fruit may be ‘Web3-natives’, but it is essential to connect with a wider audience to achieve a level of adoption which makes it genuinely viable.

Game, set, match (until next time)

The AO ArtBall NFT project faces challenges, but there are also opportunities for improvement and growth. The learnings from this project can be applied to other membership and loyalty programs (both in and out of Web3) to improve overall impact. Always return to the basics: understand your product, audience and channels, distill the essence of your value proposition and set the conversion funnels for the goal you want.

The future possibilities and use cases for Web3 technology is still growing, and we are likely to see continued growth and development in this area over the coming decade and beyond.