Porsche’s non-fungible token drop was supposed to be a game-changer. But in what has become a somewhat regular occurrence with NFT drops, it failed to live up to the hype.
The project, auspiciously announced at Art Basel Miami Beach, launched on Monday, and by Tuesday fewer than 1,500 of the collection’s 7,500 NFTs had been minted. Buyers, sensing this lack of demand, began listing their tokens on secondary marketplaces for less money. Hours later, after significant backlash online, Porsche cut the token supply and announced it would halt the mint. Only 2,383 NFTs had sold by the end of the fiasco, or just over 30 percent of the intended supply.
“Many customers from the Web3 community have obviously held back because direct resale seemed unprofitable due to the customization of the NFT,” said a Porsche spokesperson. “The size of the community is not decisive for us. What is crucial, is that we can offer the community the most exclusive and individual events and utilities possible.”
The floor price has risen steadily on OpenSea, which seems like a good thing, but in reality it shows people are buying and flipping for the arbitrage opportunity and not caring about Porsche’s Web3 community.
Poor numbers, social media backlash, premature cancelation by the brand — these are telltale signs of an NFT fail. So what happened, and what lessons can marketers intrepidly entering Web3 learn?
The tokens were sold on Porsche’s website for 0.911 ETH, or about $1,490 as of Monday morning. This may not have been that big of a deal a year ago, when the NFT market was still ripping and sellers could get away with shilling high-priced assets. But demand for digital tokens has since atrophied.
According to many angry Web3 enthusiasts on Twitter, now is not the time for anyone — especially not a traditional brand dropping its first collection — to list NFTs for exorbitant prices.
“When developing their token launch strategy, Porsche’s token prices likely reflected market expectations at that point in time,” said Michael Olaye, managing director of strategy and innovation at agency R/GA. “However, when the crypto and NFT market faced a decline, Porsche’s failure to adjust their approach suggests an underestimation of the correlation between market conditions and consumer loyalty to their brand.”
Art direction also posed a problem. Each token’s art is based on an all-white Porsche 911 model, but buyers can influence additional design with the project’s artist in a “collaborative and immersive journey lasting several months.” It’s unlikely many NFT buyers would want to wait several months to see what their NFT looks like. This detail was promoted as the NFTs’ major selling point, but instead it became a major hitch. Moreover, a protracted mint does not bode well for a timely and efficient roadmap.
The last problem is utility, or lack thereof. Porsche’s NFTs advertised nothing concrete in terms of the perks they offered buyers. Instead, the brand relied on simply owning an official piece of digital merchandise as reason enough to buy. In the collection’s original announcement, a Porsche executive said that owners would be able to gain exclusive access to experiences in the virtual and real world, as well as participate in “Porsche’s journey into the world of Web3 and enter into a dialogue with the brand.” None of this really says anything, and consumers could tell right away.
In other words, the project offered “a weak reward with little to no long-term value and a gimmick-like execution,” said Olaye. His advice: A brand must continuously review and adjust its go-to-market strategy in order to fit within the rapidly changing Web3 landscape.
From the perspective of enthusiasts on social media, the major recommendation is that brands entering Web3 need to partner with Web3-native companies before they launch into the space. Porsche did receive guidance from such an entity, namely, media company NFT Now, which Porsche referenced in its announcement as one of its “strategic business partners.” NFT Now did not immediately respond to a request for comment.