“Advertising Has Taken a Hit”: The Crypto Crisis Has Created an Advertising Void

“Advertising Has Taken a Hit”: The Crypto Crisis Has Created an Advertising Void

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Don’t expect to see many crypto ads for a minute. Companies that support them cut costs wherever they can, including The advertisement.

It’s all they can do to ride out a storm that’s been swirling around since the fall. Since November, the value of the cryptocurrency market has fallen from $3 trillion to around $900 billion, and analysts predict the crash will continue.

Cue a scramble from investors to cash in on cryptocurrencies at a time when there isn’t necessarily a group of buyers. This is where the kicker lies: the scarier crypto investors are, the more they pump these currencies into the market, leaving excess supply with limited demand. Bad news for any company willing to fuel the belief among investors that cryptocurrencies will make them richer. This belief has undoubtedly been shaken and with it the views of crypto bosses.

Advertising

The fast-growing, short-term mindset that has guided many of them over the past two years has warped into a more conservative, survivalist mindset. Businesses are cutting costs in a market that has lost as much value as crypto. As always, ad dollars are among the first to go.

“I can tell you that the amount spent by these companies has dropped by an average of about 70% over the past few months,” said Zachary Greene, founder and CEO of crypto investing and funding website GreeneryFinancial.com. “Due to the loss of advertising revenue and other income due to the recession, we have had to stop all our ongoing marketing ourselves, temporarily lay off some team members and reduce hours for others during the last month.”

Life happens fast in crypto businesses. It wasn’t until earlier this year that they were spending millions of dollars on ads during the Super Bowl. Now they hardly advertise. The digital ad spend of the 10 cryptocurrency advertisers has fallen by around 90% since November, according to data tracked by digital ad intelligence platform Pathmatics. Worse still, no one knows when those dollars will recover. The focus is on the when, not the if.

Of course, there are the true believers, the ideologues who believe that these virtual currencies are here to stay. But these are not the ones that crypto advertisers have really targeted. Instead, they were looking for new investors, attracted to the sector thanks to FOMO. This fear is much rarer now than it ever was. And in its place, there is the regret of having involved as much as them. The last thing crypto advertisers think about is chasing new investors who are more conservative than ever.

“From what I’ve seen, referrals that are already online will be honored, but I’m having trouble seeing anything else materialize, at least while the crypto winter lasts,” said Dion Guillaume, global head of public relations and communications at cryptocurrency. Gate.io exchange. “As in any industry, some tough decisions have to be made during tough times.”

Pull the ad or push it. Shift the voicemail or dial it down. Stop acquiring new customers or focus on lighter acquisition models; marketers are trying to make sense of all this and more as they adapt to the ebbs and flows of the market.

Take for example the ad spend of the biggest crypto advertisers. It’s in a state of flux, according to MediaRadar’s analysis of 200 crypto trading platforms and forex advertisements on national television, magazines, newspapers as well as online channels, including websites, podcasts, Facebook and YouTube.

Coinbase ad spend dropped 98% between February and March. Another 68% was cut from that expense a month later in April. Then spending started to recover in May, with 17 times what had been spent the previous month. It’s a similar story on Crypto.com. Spending fell 71% in March from the previous month. In April, another 68% was cut from its spending. Like Coinbase, Crypto.com increased advertising in May, which was up 70% from the previous month.

Of course, not all of this volatility in advertising spending is due to cost reductions. It is more complicated than that. For starters, the lack of major sporting events like the NFL season and the Winter Olympics may have played a role in the drop in advertising. Likewise, advertising in this market tends to be driven by the price of the crypto and its performance in the market. Not to mention the animosity that people currently have towards these companies.

“Crypto advertising has taken a hit recently,” said Harrison Jordan, a Canada-based NFT attorney. “Brands more hesitant to be associated with crypto as markets crash.”

Like so many things, this downturn happened gradually. After the Super Bowl, crypto advertisers started pulling advertising after spending so much money over a concentrated period of time. This quickly became more acute as the stock market crash worsened.

Ad spend for linear TV impressions of the top five crypto advertisers in the US fell sharply in April 2022, after rising steadily from October 2021 to February 2022 when several crypto brands aired Super Bowl ads. , according to TV review and analysis company Samba TV. Between February 2022 and May 2022, there was a 64% drop in total linear ad impressions for these crypto advertisers.

“Crypto advertisers were quick to reign in ad spend as the crypto market bottomed, clearly showing a correlation between valuation and willingness to lean into advertising,” Dallas said. Lawrence, vice president of television analytics and analytics firm Samba TV.

These are steep drops, no doubt. But they’re not a complete break from advertising. Few cryptocurrency businesses can afford to do this. Not when customer acquisition is so important – especially for exchanges like Coinbase and FTX. They should continue to spend, albeit in a more measured and meaningful way – or at least those who can afford it should. The reality is that some of these companies weren’t smart enough to have a robust war chest in case of a storm. For those that have, advertising dollars are moving away from media deals, towards more targeted advertising strategies, as well as a greater focus on improving the underlying product.

“Depending on your product’s role in all of this, brands may need to rely on messaging to support their users in different ways,” said Pat Larsen, CEO and co-founder of crypto tax software ZenLedger. “By finding ways to provide value and help users succeed in a bear market, a brand can assert its role in consumers’ lives.”

Conclusion: Crypto businesses are using this time to strengthen their long-term strategies. After all, volatility is normal in this market, and while this tumultuous time is more acute thanks to a turbulent economy, industry watchers are certain it will eventually rebound, as it has many times before. . Whenever that moment happens, investors and brands will be quick to turn back the clock. Crypto marketers will want to be able to leverage this hype to amplify their own brands.

“In the short term, ad managers need to rethink their media plans, but this is enabling new conversations and strategies at every level,” said Michael Gaizutis, Founder and Chief Experience Officer at RNO1, a design agency for experiences in technology. , e-commerce and Web3. “Digital currencies and digital ecosystems are here to stay: from crypto to digital assets to future metaverses. Those who embrace this now will be greatly rewarded in the not so distant future.

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