- Crypto brands need to establish consumer trust right now, even as many are paring down marketing.
- A slump in the crypto market has wiped away $2 trillion in value.
- Coinbase, the largest exchange in the US, recently laid off 18% of its staff.
Many crypto companies are cutting their marketing spending, even though they must win back consumer trust after sentiments for the asset class have plummeted in recent months.
Marketing spending by crypto firms on sites like Facebook, YouTube, and Hulu is down by at least 90% from a high earlier this year, according to market-research firm Sensor Tower, the Wall Street Journal reported. Television-ad spending has also decreased this year: Crypto.com's spending fell to $2.1 million in May from $15 million in November 2021, while Gemini's marketing decreased to $478,000 in May from $3.8 million in November.
Crypto companies' current marketing budgets stand in stark contrast to earlier this year, when some shelled out millions in Super Bowl and Winter Olympics placements featuring celebrities like LeBron James and Matt Damon.
The slowdown comes as the crypto market has suffered in recent months, thanks in part to waning consumer support amid volatility. The slump has wiped away about $2 trillion in value and the collapse of "stablecoins" like Luna and TerraUSD — which are considered less volatile than other cryptocurrencies because their value is pegged to a government-backed currency like the dollar — are also to blame, the Journal reported.
The most important thing for the crypto industry's survival right now is to earn back consumer trust.
"It's going to take a mix of advertising and other forms of communications to rehabilitate what one would say is a shaken image of the stability of investing in crypto," Andrew Frank, vice president and distinguished analyst at research firm Gartner, told the Journal.
Other experts said that crypto firms will have to continue marketing, even as federal agencies have recently announced they will crack down on false advertising materials and warn the public about companies that use celebrity endorsements.
One crypto company is trying to earn back trust by focusing on small advertisements that are educational, rather than large national campaigns.
"There's still a lot of information sharing that needs to be done," Pam Kramer, chief marketing officer of crypto trading platform Voyager Digital, told the Journal.
That may be a tall order given crypto's current market slump, which is affecting even the biggest players in the space.
Coinbase, the largest cryptocurrency exchange in the U.S., paused most of its advertising after spending 31 million on a Super Bowl ad earlier this year. The company last week laid off 18% of its staff, or about 1,100 workers, to stay afloat amid the economic downturn.