Porsche’s NFT Crash: A Warning On FOMO And Digital Asset Pitfalls – Jing Daily
German luxury sports car marque Porsche’s recent foray into non-fungible tokens (NFT) hit the skids after the assets’ value crashed and consumers lashed the offering, potentially damaging the brand’s reputation, trust and desirability. The case highlights the pitfalls of rushing in to digital tokens, a lesson other brands would be well advised to heed.
Unveiled during Art Basel Miami in November 2022, the automaker planned a release of 7,500 units at a minting price of 0.911 ETH (US$1,452, as of January 30) — a nod to the Porsche 911 brand icon. However, the brand was forced to take action on January 25 after the value of the initial tranche of assets’ dipped below the offering price, with observers complaining of high minting prices and a lack of utility, and some calling for a price reduction to 0.0911 ETH (US$145).
Porsche did not just halt the minting process, limiting supply to 2,363 tokens, but also scrambled to boost the NFTs’ intrinsic value by adding benefits money can’t buy, such as access to Porsche experiences. It worked — the floor price hit 2.5 ETH (US$3,968) on January 30, according to NFTGO, although the damage had been done.
I’ve presented masterclasses in London, Paris, Monaco, New York and Los Angeles on the best practices for metaverse projects covering NFTs and decentralized autonomous organizations (DAO), including the Équité x Jing Daily Metaverse Webinar series; taught MBA classes at Pepperdine University and New York University; and had the opportunity to review dozens of luxury metaverse projects in detail and advise numerous brands on the topic.
The key mistakes brands commonly make are treating digital assets differently than their physical counterparts and succumbing to the fear of missing out, or FOMO.
Let’s start with FOMO. Many metaverse projects are driven by a business’ desire to appear at the forefront of innovation and to not miss out on the hype. As prominent brands created NFTs, DAOs and other digital products and rolled out massive public relations campaigns around them, others felt the urge to quickly join in.
Some brands over-reached, hastily briefing agencies to quickly develop NFTs or other metaverse projects, launching them without deep strategic scrutiny. Marketing managers faced huge internal pressure to jump on the bandwagon. However, many managers lack significant experience in creating digital assets, and digital agencies often don’t understand luxury and its extreme value creation principles, leading to disastrous outcomes.