Advertising

Crypto companies are cutting social ad spend

The cuts are happening across platforms including Facebook, Instagram, and Snapchat, a marketing advisor for crypto companies told us.
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Francis Scialabba

· 3 min read

Unless you’ve been stuck under a virtual rock somewhere in the metaverse, you probably know that the crypto market is a bit of a mess right now, to put it gently. In November 2021, it was valued at $3 trillion. Last month, it fell to a $900 billion valuation—a whopping 70% drop from its record high.

Crypto ad spend has come down, too. The four companies that made up 93% of the 2022 ad spend in the category through May of this year—FTX, eToro, Crypto.com, and Coinbase—have all drastically tightened their belts since their Super Bowl appearances in February, according to MediaRadar. Coinbase, for instance, reduced its March marketing dollars by 98% month over month, then by another 68% in April.

MediaRadar

In recent months, companies like TikTok and Twitter have taken steps to make it easier for crypto brands to advertise on their platforms. But between the crash and a potential recession, those platforms are seeing some of those coveted marketing dollars disappear.

Re-evaluating

“We’ve always seen paid social as a major opportunity for us, largely because at eToro, our value proposition is that we’re a social investing platform,” Brad Michelson, eToro’s head of US marketing, told us.

Paid social is “still a big driver” in eToro’s marketing mix—Michelson called it a “primary channel”—but he noted that the team has “scaled back a bit, as everyone has, on these channels.”

For eToro, Michelson said, that means reducing spend on more experimental platforms for the brand, such as TikTok, Snapchat, and Reddit. But as Michelson himself pointed out, the platforms that drive results for one crypto or Web3 brand might not drive results for another.

Take Aubrey Strobel, a marketing advisor for crypto companies like bitcoin rewards brand Lolli, for instance, who told us she’s heard that Facebook, Snapchat, and Instagram budgets in the space have been cut “tremendously.” Or Michelle O’Connor, crypto tax firm TaxBit’s VP, marketing and communications, who said she reduced Taxbit’s social media ad spend by about 25% between Q1 and Q2 2022. She said the company’s primary social channels are Twitter and LinkedIn.

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Taxbit dialed back ad spend on Twitter the most, O’Connor explained, saying LinkedIn has a higher ROI for Taxbit than Twitter does (the company’s enterprise audience lives on LinkedIn, she said). “I haven’t turned LinkedIn down yet. But if I see that the metrics and numbers continue to increase, and I see the ROI decreasing, I’ll revisit and turn it down,” O’Connor told us.

To the moon → Moonwalking away

John Vance, director of growth marketing at web3 marketing firm Serotonin, said he’s seen paid social spend “decrease drastically” as we head into a potential recession. Most companies in the space that use paid social typically test “two or three channels” at a time (and one is probably Twitter), Vance told us.

Now, he said, these brands are likely scaling back and doing the bare-minimum paid spend, with a few taking advantage of lower ad rates on more experimental channels. For instance, Taxbit’s O’Connor said she’s actually been able to test and learn more frequently on platforms like TikTok lately due to cheaper inventory rates.

Vance said he first noticed the spending reduction in early June, when impending recession headlines started dominating the internet. About 50% of his clients have reduced paid social spend since then, while the other half have kept it stagnant, as it’s still a key revenue driver for many clients, Vance explained.

“There’s different strategies for each brand and whatever their risk tolerance is,” he said.

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