Inside the crypto advertising collapse on social media

The Web3 spending spree in advertising has dried up after years of flashy growth, and the “crypto winter” has especially hit social media sites, including Facebook, Instagram, Snapchat, Twitter and TikTok. In fact, in the U.S., crypto brands spent 96% less on social media and other digital channels in January versus a year earlier, according to new data from advertising analytics firm Pathmatics by Sensor Tower. It is a stunning collapse in crypto ad dollars, including from brands that were some of the most profligate spenders in recent years. Last year’s Super Bowl marked the height of crypto-advertising exuberance, with Coinbase, Crypto.com and eToro buying commercials. FTX also advertised in the game, with a star-studded spot—and then the crypto exchange collapsed by November. The FTX debacle took the wind out of a market that, until that point, had been a lucrative new source of easy money for ad agencies, media companies and social media sites. This year, crypto is out of the Super Bowl. But more than that, many crypto brands are barely spending at all. Companies that used to drop millions a month on Facebook, Instagram, Snapchat, TikTok and Twitter are now spending next to nothing. In January, crypto brands spent about $520,000 total on social media, display ads and connected TV in the U.S., according to Pathmatics by Sensor Tower. In January 2022, crypto brands spent almost $14 million on those channels. Social media apps are where startups in all categories—gaming, e-commerce, delivery services, and others—go to drive adoption. Facebook and Snap are known for turning a startup’s marketing dollars into app downloads and new users. Crypto ads dry up The decline in overall crypto ad spending in the U.S., comparing Jan. 1 to Jan. 29 in 2022 to 2023 Source: Pathmatics by Sensor Tower tracks ad spend of crypto brands across desktop, mobile and social media. ‘Logo slap’ The crypto companies represented a new breed of ad spender, too, moving quickly into high-profile brand executions, such as buying Super Bowl ads, and they were doling out big checks for arena naming rights and to appear on Formula 1 racecars. “Logo slap,” as Avery Akkineni, president of Vayner3, the Web3 consultancy within VaynerMedia, calls it. Crypto companies are shifting marketing messages from the celebrity-fueled commercials of the past few years and adopting a more muted tone, Akkineni said. “With crypto companies, these budgets have come way down,” Akkineni said in a recent phone interview, “but their mission remains to recruit new users, just with a more tempered approach.” FTX was a wake-up call for many crypto brands, as was the subsequent downturn in the price of Bitcoin, the cryptocurrency that propelled the industry for years. Bitcoin was down about 65% in 2022, but it is up about 40%, so far this year. Still, the turmoil in the crypto markets, and within NFTs, led to the coining of the term “crypto winter,” which is weeding out bad actors such as FTX, and forcing others to reconsider how they go to market. For advertising, it’s been a reckoning, too, because affluent crypto brands could spend in the hundreds of millions of dollars a year. Ad agencies and digital ad platforms will miss that money. Web3 and crypto company spending patterns Here are 6 top crypto advertisers and how much their ad spending changed in January 2023 compared to 2022 Source: Pathmatics by Sensor Tower tracks ad spend of crypto brands across desktop, mobile and social media. In 2022, FTX spent $22.3 million on social, display and video ads in the U.S., which doesn’t include all the TV, Super Bowl, out of home and sports deals, or worldwide figures. This year, FTX's spending has evaporated as it faces bankruptcy and criminal investigations. Others have drastically reduced their spending. Crypto.com, which was famous for buying sponsorship rights to the Los Angeles Lakers and Clippers arena in 2021, spent about $40,000 on social media and digital ads in the U.S. in January, down from more than $3 million in 2022. The crypto exchange Gemini spent $38,000 on social media and digital ads in the U.S. in January, down from about $3.9 million a year earlier. The data comes from Pathmatics by Sensor Tower, which does not have full access to every platform and ad dollar, so the information can detect trends in advertising markets but is not exact. Still, according to advertising experts, crypto advertising has plummeted on almost all fronts. Crypto ad spending had been ballooning for three years—from about $10 million in the U.S. in 2020 to about $99 million in 2022, on digital channels alone. For the social media sites, the crypto brands are only a small portion of their total ad revenue, but times are tough in digital advertising, and crypto is one more sector that is clearly hurting. For instance, Facebook and Instagram, which are owned by Meta, generated about $40 million from crypto advertisers in the U.S. in 2022, according to Pathmatics by Sensor Tower’s estimates. But crypto brands only spent about $237,000 on Facebook and Instagram ads in the U.S. in January 2023, down from almost $6 million in January 2022. Snapchat’s U.S. crypto ad dollars dropped to about $10,000 in January 2023 from $1.5 million in January 2022, according to Pathmatics by Sensor Tower. TikTok and Twitter both saw similar declines. Meta and Snap declined to comment for this story. Crypto ads take off Charting the rise of overall crypto ad spending in the U.S. in 2020, 2021, 2022 Source: Pathmatics by Sensor Tower tracks ad spend of crypto brands across desktop, mobile and social media. Boom to bust Until this year, top ad agencies were making fortunes off crypto largesse, according to one agency consulting executive, who spoke on the condition of anonymity. The consulting exec described two major crypto brands that recently pulled back on plans to spend up to $100 million each on marketing this year. The crypto firms, which the exec was not permitted to name, had planned to send requests for proposals to hire new ad agencies. Then, one brand shut down all advertising and the other postponed its agency search until later this year. “Crypto, it’s turning out, a lot of these companies are not being very well run obviously,” the consulting exec said. Until now, the ad world was feasting on those brands though, the exec said. “These companies typically wanted to spend a lot of money in a short amount of time, and agencies could help them do that,” the executive said, “So agencies love them, but they know they’re probably not going to be around very long.” Among the creative agencies that have done crypto campaigns, Pereira O'Dell worked with Crypto.com, Dentsu Creative worked with FTX and Accenture Song (formerly Accenture Interactive) worked with Coinbase. Not all crypto brands have stopped spending. Binance, for instance, had a rare uptick in ad spend in January in the U.S. OKX, the bitcoin and crypto exchange, spent about the same $180,000 on social and digital ads in the U.S. this January as it did in January 2022, according to Pathmatics by Sensor Tower. OKX has been more frugal, however. It was close to buying a Super Bowl ad this year before deciding against such a big purchase. OKX still plans to put millions of dollars into mobile advertising, according to Haider Rafique, OKX’s chief marketing officer, who recently spoke with Ad Age. Now is the time for crypto brands to advertise because there is less competition in the space, Rafique said. Contributing: Asa Hiken

Inside the crypto advertising collapse on social media

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