As we appear to be entering a new phase of the infamous cryptocurrency market cycles, excitement is once again building at the prospect of increased investment and greater liquidity. However, for the market to come back stronger, it needs to learn from what happened before. TV stations, newspapers, magazines, blogs and social media continue to analyze the collapses of 2022. However, one key lesson was missing from the extensive analyses.
Crypto has a brand problem
As is good practice in growing companies, FTX spent 15% of its marketing and advertising revenue, which included a cool $375 million in multi-year sports sponsorship deals, including several stadium naming rights and co-branding.
This kind of investment is not unheard of, but is more typical for brands that target mass markets and global populations, such as beverage, financial services or automotive brands. In the case of FTX, what did they actually buy with that money?
It bought awareness and name recognition.
The FTX name has become widely known far beyond the blockchain world. But why should the average citizen of Miami – home of the dearly named FTX Arena – know or care whether FTX is a government arm, a crypto exchange or an online travel agency?
This leads to another, more fundamental question: Why spend hundreds of millions of dollars to make sure everyone knows the name of your crypto exchange if it’s not even connected to anything in particular?
Simple truth
A business that makes stupid money can afford to burn millions. As we’ve seen from repeated cycles, there are few brakes on spending in crypto bull markets marketing is king. But as we cautiously enter another bullish period, it’s time to think about the lasting value of all that marketing spending. FTX has 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 probably some value in anticipating mass market adoption and preventing global brand awareness. But beyond that, it’s hard to see the value when 80% of the population knows your name more than 95% they are unlikely to even consider buying your product anytime soon.
Lots of hissing, but where’s the sausage?
The crypto world has been incredibly strong in building hype. Yet perhaps never in the history of advertising has the divide between market share and share of voice been so separated. There are few people left who don’t know about Bitcoin, but the percentage of people using it is still in the single digits.
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Building hype is a good place to start. However, it must be followed by content and relevance. A brand means more than just awareness and expectation.
We don’t just want sizzle – we want sausage.
Misunderstood brand meaning
When communicating about a brand, awareness is not enough – there must be substance. Name awareness is only the first of several conversion steps if you want to generate ROI from your marketing and communications efforts.
“Fortune favors the brave” is a phrase on which millions of dollars of marketing spend have been spent. The slogan was polished with A-list Hollywood celebrities, flawless production and prime time slots on TV. But how exactly does this statement relate to the unique selling points of the company that paid for it?
However, here is a warning. Thesubstance is not found in hackneyed discussions of use cases, scalability solutions, superior speed, privacy, or other technical features.
Crypto is not a brand
What is the difference between all crypto exchanges? Beyond metrics like volume, jurisdiction, trading conditions or purely technical aspects, can anyone really say why they chose an exchange?
And yet, players in the crypto world mostly focus on awareness. There’s a sense that because it’s so early in the game, if some 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 don’t care about a better version of a product. Why should it be any different in cryptocurrencies?
It is not.
As long as crypto firms sell to people, the rules of psychology and branding apply. Companies sell products and services. But the customer buys the brand. What makes you unique? Why should they choose you?
A brand is not a name or a logo
A brand is the only asset that can be attributed to marketing and can be found on a company’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, trustworthy and relevant promise. And like it or not, businesses need more than three letters to get their message across.
Before you can define your brand, you need to be able to answer defining questions about your business. What exactly do you stand for? What sets you apart in a way that people can relate to?
The marks are stronger in the cold
In addition to conveying a unique and relevant promise that leads to sales, a key function of branding is to create loyalty. It is a connection that goes beyond the rational and technical specifications that your solution addresses.
Your brand creates a bond. Without this bond, your customer base will be more easily eroded. People won’t mind trading you in for a younger model. When the sun is shining 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 goes down, 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 the co-founder and chief executive officer of the company THE RELEVANCE HOUSEbranding, marketing and growth agency focused on blockchain and Web3.
This article was published via the Cointelegraph Innovation Circle, a trusted organization of blockchain technology industry leaders and experts who are building the future through the power of connection, collaboration and thought leadership. The views expressed do not necessarily reflect those of Cointelegraph.
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