FOMO is a strong motivator and interestingly, it remains a strong motivator even when it’s artificially induced. Because even when FOMO is artificially induced, we can’t help but fall victim to the loss aversion heuristic—it’s inbuilt into our psychology.
Another way of looking at FOMO is seeing it as a derivative of limited supply. If there was unlimited supply, whether from a quantity or time point of view, it would be difficult to induce FOMO, because buyers would know that the opportunity will always be there. FOMO exists when supply is limited and buyers knows that it’s limited.
Knowing that, it’s fairly easy, in theory, to create FOMO. Limit your supply and let people know that the supply is limited. Companies do this all the time, they say, “join this webinar now! we’re only hosting it for the next two days - don’t miss out!”, “shop this memorial day sale now!”, etc. This obviously works as companies try to induce FOMO all of the time, e.g. duration limited sales like Black Friday, announcing limited availability, etc.
But some companies are much better than others at generating demand via FOMO, so the natural question then is, what separates successful implementations from the unsuccessful ones?
There are two main components of generating effective FOMO - believability and demand.
Potential buyers have to really believe that supply is limited. If you put things on sale all of the time, like Banana Republic does, then the FOMO effect isn’t very powerful. There are some products that by nature are limited in supply, like events, e.g. concerts, festivals, etc. Events are limited by duration; an event can’t go on forever, it lasts for usually a night or a few days. Events are a common medium that invoke FOMO, because it’s instinctively understood that the opportunity to experience that event is limited.
But believability isn’t enough to generate effective FOMO, which is where demand comes in. Demand is the amount of people who want a given product. When demand is high, buyers instinctively know 1) they may lose the opportunity to buy if they wait too long (e.g. ticket sales, a limited amount of seats,) and 2) the more others want something, the more desirable it becomes, which further reduces their opportunity to buy.
Nike does a great job in creating FOMO with their limited sneaker releases. Nike’s marketing team often collaborates with outside brands to make sneakers. Collaborations, by nature, are limited in supply because they’re usually done on a per project-basis, and people know this. Nike then markets the limited sneaker through their channels to stir up demand. Finally, when the shoe is about to be “dropped,” you have to be on their webpage waiting for the drop countdown to reach zero. Once it reaches zero, you don’t even get to buy the sneaker! You merely find out if you’ve been selected for the privilege of buying the sneaker.
How crazy is that! Think about it. Nike’s products are artificially limited in supply. They can create as many of any particular shoe that they want. But they’ve made us believe that it truly is limited in supply.
They’ve made the FOMO surrounding their sneakers so believable and in demand that WE have to line up to buy from them. We have to be so lucky to win a lotto to even have the option to buy the sneaker. Of course, the resale market plays a big part in the high demand for Nike’s products, but that goes back to the fact that demand generates liquidity which generates FOMO.
Although leveraging FOMO can be highly profitable, I believe it’s manipulative in nature, which brings me to the concern of ethics.
When I say manipulative, I’m referring to the more devious form of manipulation, the “type of social influence that aims to change the behavior or perception of others through indirect, deceptive, or underhanded tactics.” (Wikipedia)
Artificially controlling supply to generate demand is much more devious when it comes to life’s necessities, like food, electricity, water, gas, etc., which is why government regulation is needed. But when we’re talking about voluntary situations, like buying luxury goods and events, it’s a bit more of a gray area. If a company lies in order to generate demand, I think that’s unethical and unkind and will bite the seller in the ass eventually, for more on that, read Mean People Fail by Paul Graham.
In Nike’s case, I’m not entirely sure what to think of the artificial limit on supply. In a way, it is manipulative, but at the same time, it gives the final owner of the shoe more happiness when they own the shoe and might make them more appreciative of the product and the creative energy that went into making and distributing it. And of course, ultimately, it’s up to the buyer to decide that they want to buy the shoe.