As cryptocurrency companies seek to reach the general public, some platforms are spending hundreds of millions of dollars sponsoring sports teams, stadiums, and even leagues in an attempt to win over new fans.
On September 22, Crypto.com struck an eight-figure deal with the Philadelphia 76ers to sponsor the jersey crest and have visibility in the arena. The crypto trading app will also work with the team’s leadership to develop non-fungible tokens (NFTs) and create a way for fans to use cryptocurrency to pay for tickets and other goods. The Hong Kong-based company will also appear elsewhere alongside the NBA franchise, including on TV shows and various other digital platforms.
Crypto.com Marketing Director Steven Kalifowitz acknowledges that in order to build the brand, he must also educate consumers about this new asset class.
“Crypto is not just another shoe,” he says. “It’s not a commodity or a suitcase or something. Getting into crypto is really a cultural thing.
Rich in money from greedy investors, a growing number of crypto brands are spending big to reach mass audiences through sports sponsorships and mainstream events. Other deals this month include cryptofinance firm XBTO which sponsors the Major League Soccer Inter Miami team, the FTX cryptocurrency exchange which sponsors the Mercedes-AMG Formula 1 team and the association. Learncrypto.com non-profit which sponsors the English Premier League team, Southampton FC.
Maybe sports arenas aren’t a bad way to go when it comes to finding new fans for a new – and yet largely unregulated – asset class that some critics dismiss like gaming and fans. say it’s the future of the internet as well as the economy. And in a rapidly growing and crowded market, the battle is not only to gain recognition, but market share as well.
“To me, this sounds like an arms race for user acquisition,” says Keith Soljacich, vice president / general manager of Experiential Tech at Digitas, a leading digital advertising agency. “It’s kind of like having a crypto wallet on a platform, it’s kind of like holding a Visa card too.”
The 76ers deal is just one of many deals Crypto.com has made over the past year as it is an aggressive sponsorship campaign totaling over $ 400 million in deals. Earlier this month, the company became the first official crypto platform partner of famous French football team Paris Saint-Germain. Crypto.com is also a sponsor of a wide range of teams including the Montreal Canadiens NHL, Fox Sports college football lunchtime coverage, the UFC and the Aston Martin Formula 1 team. , to name a few. Each of them also includes various other integrations far beyond a logo.
Chris Heck, president of business operations for the 76ers, said the team had been looking for a patch partner for a new jersey for a few years and had spoken to hundreds of companies. And because the shirt patch is a team’s most important partnership, it requires brands and teams to be “fully aligned”.
“As the world woke up in the crypto space just over a year ago, we were fortunate enough to venture down this path,” Heck said. “Think of it this way: the sport is entering the crypto age world, and we’re number one with Crypto.com. These are people who team up with benchmark brands like UFC, F1, PSG, and we become their brand and their choice in the United States with the big sports teams and that’s pretty cool.
All this to go beyond the current crypto user base to reach the masses: A study conducted by Crypto.com in July found that the total number of crypto users in the world had doubled from year to year. ‘other, from 106 million to 221 million. However, only a fraction of these are currently the company’s customers.
Earlier in September, FTX, a two-year-old startup also based in Hong Kong, announced a $ 20 million ad campaign featuring football legend Tom Brady and his wife, model and businesswoman Gisele Bündchen. . And like Crypto.com, FTX sponsors a wide range of teams and leagues in quick succession, including a five-year deal with Major League Baseball announced this summer.
“If we stop at just one deal and wait and see how it performs and see what comes out before closing another, the best opportunities might disappear,” said the president of FTX.US , Brett Harrison.
According to Harrison, FTX founder and CEO Sam Bankman-Fried asked for ideas on how to do something “big.” Someone then came up with the idea to buy the naming rights for a stadium, and a few months later they got the rights to rename the arena to the Miami Heat FTX Arena under a deal to $ 135 million approved in March.
“There’s a bunch of tech companies that know in their bones that if they don’t grow into brands quickly, there will be a time in the future when there will only be a few left,” says Jamie Shuttlesworth, Managing Director of Dentsu’s strategy. Americas, which became FTX’s reference agency in June.
According to Harrison, traditional advertising methods are important for building trust in crypto brands, especially since they deal with something like taking care of people’s money.
“When was the last time you saw an ad for maybe a bank appear at the top of your Google search and said, ‘It’s time to transfer all my money from my Chase or Citi account? “”
Large stadium and team sponsorships are often owned by brands that are already well known, but the crypto industry’s aggressive land grab in some ways resembles strategies in games like ‘Risk’ or ‘Monopoly’, where people can either wait for the right properties. or buy whatever they can as fast as possible.
Asked about the Monopoly metaphor, Harrison joked that “we try to plant our coins in as many parking spaces as possible”.
Sports organizations are encouraged to team up with crypto companies. Mike Proulx, Forester analyst and marketing expert, said many sports leagues want – and must – attract the next generation of fans.
“These types of deals seek to exploit the young, asymmetrical user base of crypto companies with NFTs which are, in a way, a modern / virtual version of the old-fashioned baseball cards,” he says. “And the benefit for crypto companies is, of course, to take advantage of the league IP which legitimizes their platform with trusted brands while increasing user numbers.”
The crypto industry has exhausted its home market, says RA Farrokhnia, professor at Columbia Business School, professor and executive director of Columbia Fintech Initiative. However, blockchain technology isn’t something that is easily explained to the average person – it involves cryptography, complex networks, and other concepts – and still isn’t at a point where users can easily navigate. .
According to Farrokhnia, questions remain as to whether the foundations and interfaces are advanced enough to justify the aggressive push towards mass adoption. Or, he asks, “are we putting the proverbial cart before the horse?”
“These are all the moving parts of this ecosystem and it looks like the pace of innovation has picked up,” he said. “But are we doing things in the right order? “
Farrokhnia also points out the irony that despite all the new innovations in cryptocurrency, companies are still using classic marketing models. However, he adds that little for athletes to market unregulated digital economies than to present things like CPG products or other categories of brands.
“What type of reputation risk could this have for teams, sports personalities, influencers or actors who engage in this type of campaign or marketing activity? Most likely, they have good lawyers who would protect them from such things, but you never know.