Metaverse and NFT myopia: 3 common mistakes of luxury brands

Recently, I was drawn into a complex global meta-project for a European luxury brand that involved, among other things, NFTs and games. It only took a short revision of the project to recommend canceling every single aspect of it and making a complete reboot. The reason is three of the most common errors in metaverse projects I observe many times:

First, the project was completely self-centered. It was about offering brand elements such as NFTs, and the game was about aspects of the brand. Upon careful inspection, there was no reason for a customer to buy or even interact with it. It was not a unique story. Therefore, there was no value creation, which is the key to luxury. Luxury is extreme value creation for clients, and digital projects must undergo the same scrutiny of whether and how they create extreme value as all other projects. Just launching a meta-related project to be there and experiment is one of the biggest mistakes many luxury brands are making right now.

Secondly, the project had no intentionality. It was a collection of meta-related initiatives, but they were not linked, and there was no clear “endgame”. The reason for launching the project and the role this project has for the future of the brand was not defined precisely enough. The consensus among the team that had to carry out the project was that: it is dead on arrival, but the CEO wants it.

Third, the games were created on stand-alone platforms, not as part of existing games. This means that it will be a miracle if a significant number of the target audience will be willing to interact with it. In the meta-version, brands must be where the customers are, and stand-alone solutions can hardly compete with established games. Balenciaga had to learn this when the autumn collection 2021-22 was launched as a video game. Although it created some buzz, very few users were attracted to the game. Luxury brands must be where the audience is, and their suggestions must be relevant to those they want to attract.

Projects like the one I describe at the beginning of this column have almost become the norm. Like the endless attempts to make viral videos in the early days of Facebook or YouTube, apparently every brand now works with an NFT, driven by FOMO or vanity, but rarely by strategy. While many brands believe that it is just an experiment and the consequences will be limited, I am convinced that many will pay a high price for many of these initiatives outside the strategy. When customers who invest in an NFT see the value disappear over time because the initiative itself has no value other than being a brand NFT, they will attribute the loss of value to the brand. This will cost many brands significant trust and equity. Many luxury brands make time bombs and they do not even know it.

On top of this, when projects are off the brand and not exciting enough, the reaction of their – for the most part – Gen Z audience will be significant. If a digitally native and NFT-savvy Gen Z does not see the value of an initiative, they can question the brand as a whole.

This is not to say that luxury brands should not engage in metaverse projects. But if they do, it must be a clear strategic playbook. A clear signal for any project should only be given under the following conditions:

• It is a clear client-centered value creation approach. Launching an NFT to have one – often by using brand resources without a clear history – does not meet this requirement.
• It is a clear intentionality. Brands must have full clarity about the role of the metaverse initiative among all other initiatives and how it will benefit the brand in the long run.
• The initiative is where the audience is. More importantly, there must be desirability for the target audience.

Otherwise, the project will fail, even if it creates a short-term buzz and brands use it internally to show off their metaverse ambition. The stakes are simply too high, because when metaverse projects are done wrong, clients (current and potential) will shake their heads in disbelief, move on and let the value of the initiative collapse. It is better to pull the plug on many existing projects in the pipeline and recalibrate them to create concrete customer value.

This is an article that reflects the views of the author and does not necessarily represent the views of Jing Daily.

Named “Global Top Five Luxury Key Opinion Leaders to Watch,” Daniel Langer is the CEO of the strategy for luxury, lifestyle and consumer brand solid Equity, and the Executive Professor of Luxury Strategy and Pricing at Pepperdine University in Malibu, California. He consults many of the leading luxury brands in the world, is the author of several best-selling luxury management books, a global keynote speaker, and holds luxury master classes on the future of luxury, disruption and luxury metaverse in Europe, the United States and Asia. follow @drlanger