Luxury brands’ use of NFTs as digital twins may undermine the perceived value of physical products, study finds

In an period the place know-how and luxurious converge, NFTs (Non-Fungible Tokens) have more and more change into half of the advertising and marketing methods for high-end manufacturers. Many luxurious corporations have adopted digital twinning, linking NFTs to their physical merchandise in an effort to create a seamless connection between the tangible and the digital.

Whereas this follow has been proven to be efficient in selling NFTs, a brand new study from the Faculty of Enterprise Administration at Bar-Ilan College in Israel and the Faculty of Enterprise and Legislation at the College of Agder in Norway has revealed stunning outcomes: these digital twins may really undermine the perceived luxurious of the physical merchandise they’re tied to.

In a sequence of eight experiments involving over 2,300 individuals, the researchers investigated how the launch of NFTs as digital twins affected the perceptions of the physical luxurious merchandise they have been related to. The findings counsel that, whereas NFTs may elevate the digital product itself, they will hurt the perceived value of the physical counterpart. Particularly, the analysis signifies that linking a luxurious merchandise to an NFT may introduce a way of “temporariness” to the product, diminishing its picture of timelessness—a vital facet of luxurious.

“This study challenges the use of digital twins in the luxurious sector. Our findings counsel not solely that digital twins fail to reinforce the perceived value of the physical product, but additionally that linked NFTs may introduce a way of novelty, digitalization, and impermanence that undermines conventional perceptions of luxurious,” stated Raz Henkin, a Ph.D. scholar at Bar-Ilan College and the lead researcher of this study.

“Luxury manufacturers, which have lengthy been recognized for his or her skill to convey exclusivity, timelessness, and custom, now face the problem of hanging the proper stability between sustaining their heritage and embracing innovation,” added Prof. Tobias Otterbring, from the College of Agder. Findings of the analysis confirmed that the connection between NFTs and luxurious gadgets, whereas revolutionary, can disrupt this delicate stability and finally have an effect on shopper perceptions.

The study’s findings have been not too long ago printed in a particular difficulty of the Journal of the Affiliation for Shopper Analysis targeted on Metaverse, Shopper Habits, and Effectively-Being.

Early insights from a preliminary follow-up study counsel that NFTs not solely increase issues round the notion of temporariness, but additionally, amongst shoppers unfamiliar with the know-how, they are often seen as missing authenticity. This additional erodes the luxurious standing of the linked physical merchandise.

Regardless of these issues, the researchers should not advising luxurious manufacturers to desert digital twins solely. Moderately, they emphasize the significance of cautious planning and strategic integration when advertising and marketing NFTs. By guaranteeing that NFTs are half of a broader technique that reinforces the timeless standing and the authenticity of their merchandise, luxurious manufacturers can mitigate the potential dangers of devaluing their physical gadgets.

“We imagine that whereas NFTs have their place in the advertising and marketing and digital engagement methods of luxurious manufacturers, their software should be approached with warning,” added Dr. Dikla Perez, from the Faculty of Enterprise Administration at Bar-Ilan College.

“Manufacturers ought to concentrate on defending the core values of authenticity, exclusivity and timelessness whereas incorporating these new applied sciences in ways in which do not undermine them.”