January 25, 2023 | Seattle, WA
Porsche recently launched their #NFT to a highly unfavorable result. After announcing the NFT drop in December 2022 in Miami, the drop early this week was met with criticism from all sides but especially from the NFT and Crypto community saying that Brands need to listen more to them. You can read CoinDesk's opinion and recap on drop here.
Here is the TLDR on Porsche's NFT Drop
Porsche released a 7,500-edition collection of NFTs based on the 911 which is perhaps the most famous car in its offering. In attempting to stick with a Web3 and Crypto native experience, Porsche created an allowlist for people to sign up for access to mint a 911 Porsche NFT for .911 ETH, which at the time of mint was just under $1,500.
The 911 NFTs started finding their way onto OpenSea and were selling below the mint price which led to Porsche deciding to pause the mint at around 2300 NFTs.
Since the mint was paused, the floor price for the Porsche 911 NFTs went up and is currently sitting at 3 ETH as of Wednesday, January 25th.
The Web3 and NFT analysis on the Porsche NFT drop is wrong
By all means, the Porsche NFT can be considered an unsuccessful drop, but not for the reasons news outlets and commentators are saying, especially those in the #Web3 and #NFT community, who by their comments make it clear they have limited experience working with Brands.
Prominent figures in the NFT community and leaders of large NFT PFP projects have been quick to jump on Porsche NFT, thinking if Porsche were only to partner with them the drop would have gone better with many suggesting the NFT needed to be cheaper, be marketed towards the NFT community, welcomed by NFT PFP projects, or that they needed to provide more Web3 education, all of which were not the problem and reason for the poor release.
The issue with the Porsche #NFT drop is not that they didn’t get the #NFT community involved more, as they could have received even less involvement from the NFT community and still had a more successful launch. Fortune 1000 Brands like Porsche do not need the Web3 or NFT community to have a successful NFT launch.
Porsche forgot about its core customers
The real issue Porsche did not find success with the NFT is they did not get the Porsche community involved, as in people who own Porsches or are fans of the Brand. In 2021 alone, Porsche delivered over 300,000 vehicles, in a time of semi-conductor shortages and COVID-19 slowdowns.
Porsche has built an iconic brand since it started building cars in 1948 and there are millions of Porsche owners worldwide. A fan base that is accustomed to frequently attending or participating in car clubs, race teams, and car shows as even listed on their website. The average Porsche owner is over 50 years old and they created an experience for their first NFT that completely alienated this customer.
Keep payments and ownership simple
Brands do not need to be spending time explaining to their customers how to use new payment technology to acquire products and experiences from them. It's up to the Brand to make conversion simple for their core customer base to maximize acquisition, which unfortunately Porsche did not do. Instead of making it simple for the Porsche community to be able to acquire and store the NFTs on a Porsche web experience, they relied on the typical yet heavy #Web3 purchase flows involving crypto wallets and cryptocurrency, even pricing in crypto, all practices their average consumer and fan is not accustomed to and likely won't be doing anytime soon.
The importance of Utility
The utility of an NFT is discussed loosely by PFP projects, boasting promises of future value, experiences, games, etc. as a result of owning a particular NFT. The problem with PFP projects is they often are startups or side projects with small or less mature teams that only have resources as a result of the NFT sale. This is not the case for large brands, particularly with large followings such as Porsche. If Porsche would have focused on its core customer base, it could have unlocked several utility opportunities for NFT holders.
For example, Porsche NFTs could have been offered to anyone who takes a test-drive, anyone who recently purchased a Porsche, or to people who had recently attended a Porsche event. Utility for these Porsche NFTs could have been anything from discounted or free vehicle service, discounted or free car rental in other markets, access to private events, merchandise, higher trade-in value, or any other marketing decision Porsche would have wanted to unlock.
Instead, Porsche did not offer any meaningful utility and expected users to purchase strictly because it's a Porsche NFT and there is nice art. This being said, any company can add utility to an NFT at any point in the future and still have the token be the access point to the experience. As NFTs are essentially digital wrappers around content files, or programable content files, the Token ID and Smart Contract would just be the identifiers which allow access to the token holder to the future product, service, or offering.
What should Brands like Porsche be doing instead or for the next drop?
The most important aspect for Porsche and other Brands considering launching their own NFT collection or Web3 experiences is to make sure it speaks to their core customers and fans in a manner they are most likely to transact and convert. Brands will not have successful NFT collections if they do not get support and understanding from their core customer base and can risk losing their core customers if they begin to feel alienated or as if the brand is no longer serving them.
Five Tips for Brands looking to offer their first NFT
Now that we have established the importance of focusing on your customer, it's time to break down five important items for Brands to consider when releasing an NFT.
1.) Own the Customer Experience
Just as Brands prefer their customers to purchase products from them directly on their branded website or retail stores, Brands must ensure their customer's purchase, acquire, or are gifted their NFTs on the Brand's channels. Brands are not in the practice of sending their customers to third-party marketplaces over their own websites or retail store
2.) Make Crypto Payments secondary, Fiat Payments primary
This may sound crazy to those in the Web3 and NFT community, but as mentioned beforehand, Brands must focus on their core customer first. The average consumer is not familiar with how to use cryptocurrency or how to manage a crypto wallet, which should not prevent them from acquiring digital products or experiences from the Brands they love. Even crypto-centric consumers can be hesitant to spend their cryptocurrency to purchase NFTs if the price of the cryptocurrency has been volatile and they don't want to use it at a lower value than what they paid to obtain the crypto.
3.) Custody the NFT for your Customers on your Channels
If Brands are offering NFTs to their core customer, chances are they trust the Brand to keep their information and products purchased safe. As we have already established that the Brand's core customer is not likely to have a crypto-wallet, the crypto-wallet should not be a barrier to the customer acquiring the NFT. Brands should work with a Web3 technology partner to custody NFTs on behalf of their customers and make them accessible via the Brand's website.
4.) Avoid getting involved in Secondary Markets
If a Brand does not currently get involved with the secondary market activity of its physical products then NFTs are not the place to start worrying about secondary markets, as it puts Brands in a position to have to manage speculative expectations of growth and profit, which creates a multitude of problems and customer management. Not to mention if a Brand promotes the secondary market or insinuates growth or profits to customers they start to skirt the line of securities laws. Your core customers are less likely to try to flip the products you sell to them.
5.) Launch with scarcity
One of the greatest benefits of digital inventory is you can create digital products on demand or as needed, therefore there is no need to mint 10,000 NFTs or a high number of NFTs before knowing if the NFT collection is going to be successful. Instead focus on a lower, achievable number and set milestones that will unlock the minting of more NFTs until the high number is reached. This way you can make sure there is not an overabundant supply. In this model, NFTs with lower Token IDs (meaning minted first or earliest) could receive additional offers or perks. Porsche NFT did this unintentionally as a result of the slow start to minting and in doing so create the scarcity that drove the price of the NFT up to 3 ETH when it had been trading at below the mint price. This has seemed to improve the outlook on the NFT launch, though secondary sales should not be a driver in the success of an NFT for Brands.
Brands can have a successful NFT drop and NFT product offering without the NFT and Crypto community if they just focus on their core customer. Niftmint supports Brands with technology and expertise in implementing and executing these five tips for Brands looking to offer NFTs to their customers.
About Niftmint
Niftmint makes it simple for Brands to Mint, Sell, and Custody NFTs directly on their site while abstracting crypto and crypto-wallets from the Brand and their Customers via our embedded Nifmint Wallet. Niftmint has productized all smart contracts, wallet creations, token deployments, and transfers while providing a user experience native to traditional Commerce.
About the Author
Jonathan G. Blanco is the Founder and CEO of Niftmint and has been building companies at the intersection of Web3 and Commerce since 2017, working with leading brands to establish, build, and execute Web3 Commerce in their organizations. As a Product and Branding leader, Jonathan has been working with and building Brands since 2009 and has been building retail technology and commerce integrations since 2014. Jonathan has long been an advocate for Web3 always doing so from a product and customer lens to make sure the experience is true to the business need.