Fortune favors the brand: Why crypto marketing fails to live up to hype
As we appear to be entering a new phase in crypto’s notorious market cycles, excitement is once again growing at the prospect of rising investment and deeper liquidity. However, in order for the market to come back stronger, lessons must be learned from what happened before. The collapses of 2022 continue to be analyzed by TV stations, newspapers, magazines, blogs and social media. But among the extensive analyses, one key lesson has been missed.
Crypto has a branding problem
As is good practice in growing businesses, FTX spent 15% of its revenue on marketing and advertising, which included a cool $375 million on multi-year sport sponsoring contracts, including several stadium and co-branding naming rights.
This kind of investment isn’t unheard of, but it’s more typical of brands that target mass markets and global populations, such as beverages, financial services or automotive brands. In FTX’s case, what did that money actually buy?
It bought awareness and name recognition.
The FTX name became widely known far beyond the blockchain world. But why should the average citizen of Miami — home of the expensively named FTX Arena — know or care whether FTX is a government branch, a crypto exchange or an online travel agency?
This leads to another, more fundamental question: Why spend hundreds of millions of dollars on making sure everybody knows the name of your crypto exchange if it’s not even associated with anything in particular?
A simple truth
A business that makes a stupid amount of money can afford to burn millions. As we’ve seen from repeated cycles, there are few brakes on spending in crypto bull markets where marketing is king. But as we cautiously enter another bullish period, it’s time to reflect on the lasting value of all this marketing spend. FTX left a lesson to be learned — and it’s not about the size of its marketing budget. It’s about how it was spent.
There is arguably some value in anticipating mass-market adoption and pre-empting global brand awareness. But aside from that, it is difficult to understand the value of 80% of a population knowing your name if more than 95% are unlikely to even consider buying your product in the foreseeable future.
Plenty of sizzle, but where’s the sausage?
The crypto world has been incredibly strong at building hype. Yet, perhaps never in the history of advertising has the gap between the share of the market and the share of voice been this disconnected. There are few people left who don’t know about Bitcoin, but the percentage of people who use it is still in the single figures.
Building hype is good for starters. However, it needs to be followed up with substance and relevance. There is more to branding than just awareness and expectation.
We don’t want just the sizzle — we want the sausage.
The misunderstood meaning of branding
When communicating a brand, awareness is not enough — there must be substance. Name awareness is just the first of several conversion steps if you’re looking to generate ROI from your marketing and communication efforts.
“Fortune favors the brave” is a sentence that had millions of dollars in marketing spend lavished on it. The slogan was burnished by A-list Hollywood celebrities, flawless production and prime airtime slots on TV. But, how exactly is this statement related to the unique selling points of the business that paid for it?
However, here’s a word of caution. Thesubstance isn’t found in well-worn use case discussions, scalability solutions, superior speed, privacy or other technical features.
Crypto is not the brand
What’s the difference between all the crypto exchanges? Beyond metrics like volume, jurisdiction, trading conditions or purely technical aspects, can anyone truly say why they’ve chosen an exchange?
And yet, players in the crypto world are mostly focused on awareness. There’s a sense that because it’s so early in the game, as long as some of the new entrants randomly choose us — just because they’ve heard of us — we can declare growth. So, who needs branding, differentiation or customer loyalty?
For example, here’s a reality check: We have decades of precedent showing that many do not care about a better version of a product. Why should it be any different in crypto?
As long as crypto firms are selling to humans, the rules of psychology and branding apply. Companies sell products and services. But a customer buys a brand. What makes you unique? Why should they choose you?
A brand is neither a name nor a logo
A brand is the only asset that can be attributed to marketing and be found in a firm’s balance sheet as a (potentially very valuable) asset.
But a brand is not a name or a logo. A brand is a distinctive, memorable, credible and relevant promise. And, like it or not, firms need more than three letters to convey a message.
Before you can define your brand, you need to be able to answer defining questions about your business. What is it that you specifically stand for? What makes you stand apart in a way that people can relate to?
Brands stand stronger in the cold
Besides conveying a unique and relevant promise that leads to a sale, a key function of branding is to create loyalty. This is a connection that goes beyond the rational and technical specifications that your solution addresses.
Your brand establishes a bond. Without that bond, your customer base will simply erode more easily. People won’t mind swapping you for a younger model. When the sun shines in a bull market, creating an abundance of growth and prosperity, it’s easy to overlook the importance of establishing a brand.
But once the sun sets, where are the beacons of light, and why are they still there? Are they all identical? Has your brand managed to convey a unique selling point, and build trust, connection and loyalty?
Or was it all just awareness, FOMO and hype?
German is co-founder & chief relevance officer of THE RELEVANCE HOUSE, a branding, marketing & growth agency focused on blockchain and Web3.