During the 2020-2021 crypto bull market, crypto ads became a significant source of revenue for advertisers and influencers alike. Crypto companies spent thousands on ads and industry giants like FTX secured multi-million dollar deals with celebrities and sports teams.
However, the current crypto winter, made worse by the collapse of the major crypto exchange FTX, is having a significant impact on the advertising industry. With cryptocurrency prices dropping, crypto projects have less money to spend on promotion. Moreover, allegations of corporate mismanagement and fraud in FTX made advertisers wary of the potential reputational risk associated with crypto.
Those closely connected to FTX have seen the brunt of the impact. Crypto and finance influencers that promoted FTX are apologizing to their fans for failing to do due diligence. Paid celebrity sponsors could fare even worse. NFL quarterback Tom Brady and NBA star Steph Curry are now under investigation for their paid sponsorships with FTX. At the same time, Miami is trying to get out of the $135 million, 19-year deal with the bankrupt exchange for the naming rights to the FTX Arena.
The impact on advertising is even broader than that, so much so that it impacts Google’s revenue. Google gets most of its revenue from ads, and third-quarter revenue growth was down to just 6%. Moreover, Google’s video-sharing platform YouTube saw its ad revenue shrink from last year. Google executives said fewer crypto ads were partially responsible for a slowdown in revenue.
‘Still Great Amount of Value’ In the Space
The crypto crash has demonstrated the complexities of navigating digital advertising in a volatile industry. However, Matvey Diadkov, CEO of Bitmedia.io, says that there are still great opportunities in crypto advertising.
“Crypto and blockchain technology is not going away,” Diadkov told DailyCoin. “Decentralized projects will create a great amount of value, and investors will want to be a part of that,” he added.
Bitmedia.io has helped companies navigate the complex regulatory and technical environment of crypto advertising since 2014. Diadkov says that the present landscape is far from the most challenging it has ever been for crypto advertising.
Companies like Google and Meta used to refuse any type of crypto advertising. Since then, things have changed significantly. “We continue to expect further institutional adoption, as well as a further deepening of integration between crypto and traditional industries,” Diadkov said.
However, the recent collapse of FTX presents a new set of challenges for advertisers and crypto companies alike.
“The fallout from FTX has demonstrated the importance of public relations and reputational management for crypto projects,” he explained. To respond to the changing conditions, Bitmedia started offering content writing and PR services to crypto projects.
“Public scrutiny over crypto projects and advertising practices is essential. Crypto projects have to respond with greater transparency and more communication,” Diadkov concluded.
Advertising is an essential tool for crypto projects to reach the audience they need to scale. It is also crucial for onboarding new crypto users.