What Porsche did wrong (and right) with their NFT drop
Porsche was the latest brand to release a full NFT collection, focusing on their signature 911 series. They did a lot of good things leading up to their attempt to sell out a 7,500 piece collection, but some major missteps led to them cutting the quantity mid-sale to a much smaller number.
The mint went live on January 23rd and they were able to sell 1,000+ NFTs before the sales price on the open market went into “contango.” In Finance, contango is a term for when the futures price of a commodity is higher than the spot price. I like to use the same term in NFTs for when the price on the open market for items being resold is below the price to buy new items from the collection itself. This is a signal that people are losing faith in the project and usually leads to the sale being stalled.
Once buying stopped, Porsche announced that they were going to cut the quantity being sold and started to release details of some of the utility that the NFT would be providing to buyers (NFT customization, exclusive events, physical items, etc). This enticed a few more buyers and the sale was closed at 2,363 items (revenue earned of approximately $3.500,000).
Here is what brands can learn about what Porsche did right and wrong along the way:
Right: Experimenting in web3!
At this bearish point in the crypto bull/bear four year cycle, I applaud any brand for even dipping their toe in the web3 water, nevermind releasing an entire collection!
Brands looking to enter web3 do not need to release an entire collection to get started, but with a clear strategy and defined goals, there are a number of great options to get started. This is an ambitious project and may still bring long term value to Porsche.
Right: Announcing the project during Art Basel at nft now’s Gateway event
Art Basel has become one of the premiere NFT events on the calendar the past two years and The Gateway is a major fixture. This year, nft now took over a whole city block for brand activations, while again hosting an NFT gallery and speakers in the historic Alfred I. DuPont Building.
On day one of the event, the Porsche team announced the project, sandwiched between talks from some of web3’s most influential people, like Swan Sit, Mythical Games CEO John Linden, and the always informative and entertaining Gary Vaynerchuk.
Right: They had a Proof of Attendance Protocol (POAP) !
POAP, the Proof of Attendance Protocol, is one of the easiest ways to onboard people into web3. POAPs are NFTs that are free to collectors that can be claimed at an event by attendees to prove that they were actually there!
At Porsche’s nft now Gateway “store,” attendees could claim a POAP by tapping their phone on an NFC device that had been placed on one of the walls. Those that claimed the POAP were later added to the whitelist for the full NFT drop for added utility.
Wrong: Lack of community building pre-drop
For most NFT projects, the Discord server is the heart and soul of the community. Before the drop, potential buyers congregate to meet, discuss their hopes for the project, and begin to build a culture around the upcoming drop. After the drop, it can be the communication hub for those that actually purchased the NFT.
Porsche chose to open a Discord server to make announcements, but did not open any channels for community conversations. This may have been a deliberate choice due to lack of a team to manage complicated security and moderation measures, but this decision likely didn’t help them to sell any NFTs.
They also did not use this channel as an opportunity to share much of the utility that the NFT would provide to buyers until well after the sale was looking to be having trouble.
Right: Requiring account creation to participate in the drop
There are many that may disagree with me on this one, but I think it’s reasonable to expect a major corporation to want to collect email addresses and other information from the people that may be purchasing from them (both for marketing and compliance reasons).
It’s not totally “web3,” but it really depends on why they were doing this drop and who they wanted the buyers to be. It’s actually a perfect segue to:
Wrong: Setting a confusing price point, which led to them not selling out the full 10,000 piece drop
Porsche waited until only a few days before the drop to release the mint price of 0.911 ETH or approximately $1,500 at that time. Their goal of making the price relevant to their Porsche 911 cars was notable, but received immediate pushback from pretty much everyone on “Crypto Twitter.”
To me, the reason for the pushback lies squarely in a lack of audience targeting. This price point made it neither accessible to all nor a luxury item. Here are some prices that would have made a lot more sense:
- 9.11 ETH or approximately $15,000 (in this scenario, the supply should be 911 pieces)
If the goal of this NFT drop was to learn if there are NFT enthusiasts that may also have the means to purchase Porsche automobiles, then this high price, low supply drop would have been a great way to identify people who may want to purchase a luxury vehicle today.
Usually it would cost Porsche thousands of dollars to acquire a legitimate lead, but getting $15,000 in revenue for audience acquisition is a great deal. Once the buyer owns the expensive NFT, there are any number of ways to continue to market the actual product and could have led to a number of physical sales. NFT whales love to show off their prized digital possessions in real life, so what better way to show off your Porsche NFT than to buy the matching physical car also.
This would have earned the brand over $13,000,000 in revenue with a sold out drop, with a potential short term LTV of much greater. This is a great example for future luxury brands to understand what is possible in this regard.
- .0911 ETH or approximately $150 (in this scenario, the supply should be 9,111 pieces)
This price, the price that most of Crypto Twitter was expecting, would have made the collection accessible to pretty much anyone. Not only that, there was a perfect marketing campaign to go with it.
In crypto and web3, there is a joke/meme that everyone is trying to get rich so they can buy a Lambo (Lamborghini). If making Porche the aspirational car purchase for every young, aspirational person, then setting the NFT price low could have gone a long way to convert the “Lambo” buyers to Porsche buyers.
This would have earned the brand over $1,300,000 in revenue with a long term LTV of potentially much greater.
- .3911 ETH or approximately $600 (in this scenario, the supply could likely still have been 9,111)
If they wanted the NFTs to be priced slightly higher than the $150 price point, but still have it resonate with web3, why not throw the “3” from web3 and build that into the marketing. I think you can still usurp “Lambo” with this plan and it won’t disqualify too many buyers. I believe that this price would have also had the support of the web3 community.
This would have earned the brand over $5,000,000 in revenue with a long term LTV of potentially much greater.
All this being said, brands can learn a lot from this project when it comes to their own web3 strategy. It’s also interesting to point out that the overall Porsche was not damaged by any of these activities.