Welcome to crypto!

By Francis Dumais, Managing partner @ Elevent

In recent decades, many industries have relied heavily on sponsorship as part of their communication strategy. Tobacco led the way in the ’90s, then beer brands took the lead, followed by telco, airlines, and sports betting. The latest entrant into the sponsorship arena is crypto: Nielsen is projecting US$5 billion in sponsorship investment from blockchain companies by 2026. All the same, there is reason to doubt that some of the extravagant agreements will ever come to fruition.

(If you’re keen to learn about the different phases of sponsorship, we invite you to read Part 1, Part 2, and Part 3 (coming soon) in our History of Sponsorship series.)

If, like me, you opened an account on a crypto exchange platform five years ago with pennies worth of bitcoin (BTC), a quick peek at your account every now and again would have triggered a pleasant reaction (albeit a little less so in the last couple of months). But while I was an early adopter, I certainly won’t be retiring anytime soon.

Investing in blockchain has now gained mainstream appeal. It’s hard to ignore a Super Bowl ad of Larry David shilling for crypto, or multi-million, multi-year, mega naming rights deals like the one to rebrand the Staples Center as the Crypto.com Arena or the lavish Miami Formula 1 Grand Prix title sponsorship.

First off, it’s important to note that there are tons of cryptocurrencies. The blockchain brands that have achieved global awareness are not coins, they are exchange platforms or investment vehicles. Think of them as banks 2.0 or even 3.0.

 

The Wild West

The rapid adoption of exchange platforms seemed to have accelerated during the pandemic, with large inflows of money and investments being directed into cryptocurrencies. And as their value increased, some investors reported spectacular returns—on paper.

But billionaire investor Warren Buffet, nicknamed the “Oracle of Omaha,” has called bitcoin “worthless” and compared it to “rat poison.” His view is that cryptocurrencies are a purely speculative class of investment and are not tied to an asset that holds value. (For an interesting discussion on crypto, check out Ezra Klein’s podcast “A Crypto Optimist and a Crypto Skeptic Walk Into a Podcast Studio” and “The Most Thorough Case Against Crypto I’ve Heard”).

While regulators have banned, or are considering a ban on, gambling and sports betting advertising, as in the UK and Chile, crypto has largely caught them by surprise, and although lawmakers are considering introducing guidelines, rapid adoption has been unrestricted.

 

What does all this mean, and why are brands investing in crypto sponsorships?

The crypto land grab reminds me a lot of the telco playbook from the early 2000s: build your brand awareness quickly and increase your client base ahead of your competitors. Those early entrants enjoyed greater opportunities to benefit from customer “stickiness” (engagement with the brand) and “barriers to exit” (obstacles that make it harder for customers to leave). First movers—pioneers—become strongly associated with a category. They project confidence and leadership, create familiarity, and achieve the goal of becoming the standard.

At the top of the crypto iceberg, we see deals to generate awareness and product adoption. But these partnerships are multifaceted: beneath the surface lie other business objectives, from influencing decision makers and investors, boosting stock market value, rewarding affiliated resellers, to generating new sales. These all feed the attention-getting, largest portion of the marketing funnel.

Crypto exchange platforms also invest heavily in performance marketing to fuel customer acquisition—think SEM, digital ads, etc. But the big sponsorships fuel the top of their funnels. Companies hope they won’t have to bid and pay for clicks through online searches, that potential clients will naturally search for their brand when looking to invest and trade crypto.

Products and services targeted to the general public typically aim for major sports sponsorships, big global platforms, and popular music events.

 

Does sports even make sense here? What’s the strategy?

There’s a history of trading platform sponsorships and advertising during sports events. Do you know who watches sports ALL THE TIME? Folks who participate in sports betting. Before sports gambling was legalized in the U.S., FanDuel and DraftKings advertised heavily during certain sports broadcasts. The overlap between this audience and crypto enthusiasts in terms of demographics, attitudes, and behaviours is fairly obvious.

Current crypto sponsors and their portfolios

Elevent conducted an audit of a number of crypto sponsorship agreements and found that, with a few exceptions, companies overwhelmingly align themselves with sports properties.

While brands like Coinbase and FTX focused on the U.S. market and Etoro, on the European market, others, like Crypto.com, seem poised to go global.

Binance

• Top properties: Grammys, Africa Cup of Nations, Alpine F1 Team, S.S. Lazio (serie A club)
• Market: North America, Europe, South America, Africa
• Status: Tier 1–2 sponsorship

FTX – filed for bankruptcy

• Top properties: Washington Wizards and Golden State Warriors (NBA) – suspended, Washington Capitals (NHL), Cricket World Cup and International Cricket Council – suspended, Mercedes AMG Petronas F1 Team- suspended, FTX Arena (Miami) FTX Owes Miami $16.5M For Arena Sponsorship Cancellation, League of Legends Championship Series (esports), MLB, FTX Field – suspended, Cal Athletics- suspended, TSM (esport) – suspended
• Market: United States, India, and global properties
• Status: Tier 1–2 sponsorship

Coinbase

• Top properties: NBA and WNBA (plus the esports leagues), and USA Basketball
• Market: United States
• Status: Tier 1–2 sponsorship

Grayscale

• Top properties: New York Giants
• Market: United States
• Status: Tier 2 sponsorship

Crypto.com

• Top properties: Crypto.com Arena (Los Angeles), Formula 1 (league level partnership), Italian GP, Miami GP, Aston Martin Cognizant F1 Team, FIFA World Cup Qatar 2022™, Paris Saint-Germain F.C., Montreal Canadiens and Los Angeles Kings (NHL), Philadelphia 76ers (NBA), Angel City FC (NWSL), UFC, Fnatic and The Italian Football Championship (Serie A).
• Market: Global
• Status: Tier 1–2 sponsorship

By far the largest player, the brand reportedly inked a low nine-figure multi-year naming rights deal with the Miami Grand Prix and paid $700 million to secure the naming rights of the former Staples Center for 20 years. 

Blockchain.com

• Top properties: Dallas Cowboys (NFL)
• Market: United States
• Status: Tier 2 sponsorship

Etoro

• Top properties: Leicester City F.C., Crystal Palace F.C., Tottenham Hotspur F.C., Everton F.C., Southampton F.C., Arsenal F.C., Aston Villa F.C., Newcastle United F.C., and Bologna F.C., FC Union Berlin, FC Augsburg, FC Kôln, European Football Club, West Bromwich Albion, Everton, Burnley FC, Hamburg FC, Eintracht Francfort, VfL Wolfsburg
• Market: Europe
• Status: Tier 2 sponsorship

Bybit

• Top properties: Formula 1 Red Bull Racing
• Market: Global
• Status: Tier 2 sponsorship

Tezos

• New Yorks Mets
• Oracle Red Bull Racing

BitMex

• AC Milan

BitMEX is a cryptocurrency exchange and derivative trading platform.

OKX

• Top properties: McLaren Formula 1, Manchester City (OKX Collective), Tribeca Film Festival
• Market: Global (not available in the US,  and is now under a blanket ban by Chinese regulators)
• Status: Tier 2-3 sponsorship

The world’s second largest cryptocurrency exchange by trading volume. Launched in 2017 by Chinese Bitcoin giant OKCoin.com, OKX is a digital asset futures trading exchange aimed specifically at institutional traders.

Stake.com

• Top properties: Alfa Romeo Formula One team
• Market: Global
• Status: Tier 1-2 sponsorship

Stake.com is the world’s biggest crypto casino and sportsbook, which has made its name for itself with an unprecedented 35 billion bets processed in just three years.

How will it impact the industry?

In the short term, blockchain is an entirely new, lucrative category that will generate new revenues for top properties.

Just as we saw sponsorship deals rapidly embraced with cannabis brands, existing players such as a banks and stock trading platforms will probably enter the market, and there will likely be consolidation as well as government intervention to regulate advertising in this industry.

The recent crash, or correction, in the value of cryptocurrency also means that there is less money going around and, in all likelihood, fewer new clients.

Is this a fad or long-lasting opportunity? Even for established industries, sponsorship usefulness has historically waned as the market reached maturity, and/or a focus on price rather than brand image led to cost cuts in advertising budgets. The same will presumably be true for this new category, but only time will tell.

Remember the Enron Field, The National Car Rental Center, the PSINet Stadium, the United Center, the Adelphia Coliseum, the Trans World Dome, the MCI Center? Many large sponsorship agreements did not last due to bankruptcy or other financial woes.

Like its price, the future of crypto is still highly volatile. One has only to recall the sale of an NFT created by the digital artist known as Beeple for a record-smashing $69 million in March 2021. In February 2022, sales dropped 40% from January, and sales in the past week were down about 29% from the week before.

 

Sources

https://www.sportspromedia.com/news/blockchain-crypto-nft-sports-sponsorship-nielsen-study/

https://www.nytimes.com/column/ezra-klein-podcast

https://www.morningbrew.com/daily/stories/anniversary-beeple-NFT-69-million

https://www.wsj.com/articles/nft-artists-get-first-major-test-since-cryptos-collapse-11656453852

https://www.espn.com/nba/story/_/id/32650662/staples-center-become-cryptocom-arena-rich-naming-rights-deal

https://www.grammy.com/news/recording-academy-brand-partners-2022-grammys-binance-ibm-mastercard-oneof-grey-goose-bulova-hilton-siriusxm-people-fiji-frontera-wines-united

https://www.binance.com/en/blog/community/binance-becomes-official-sponsor-of-the-totalenergies-africa-cup-of-nations-afcon-2021-421499824684903270

https://www.afa.com.ar/es/

https://www.forbes.com/sites/danieleproch/2021/10/14/serie-a-club-ss-lazio-strikes-35-million-sponsorship-deal-with-crypto-exchange-binance/?sh=8de0a7324c30

https://www.alpinecars.com/en/formula-1/our-partners/

https://nftmenaexhibit.com/

https://www.cnbc.com/2021/12/14/ftx-to-pay-golden-state-warriors-10-million-for-global-rights.html

https://tsm.gg/

https://www.furia.gg/

https://www.icc-cricket.com/

https://www.mercedesamgf1.com/en/

https://www.nba.com/sixers/

https://app.sponsorcircle.com/organizations/4526?kind=search_results

https://www.fifa.com/tournaments/mens/worldcup/qatar2022

https://www.cryptoarena.com/

https://crypto.com/company-news/conmebol-announces-multi-year-partnership-with-crypto-com-as-official-partner-of-conmebol-libertadores

https://www.astonmartin.com/fr/our-world/aston-martin-f1

https://blog.crypto.com/crypto-com-becomes-first-official-global-marketing-partner-of-twitch-rivals/

https://blog.crypto.com/afl-welcomes-crypto-com-in-landmark-five-year-partnership/

https://montrealgazette.com/sports/hockey/nhl/montreal-canadiens/montreal-canadiens-sign-one-year-deal-with-cryptocurrency-firm

https://crypto.com/company-news/crypto-com-joins-las-angel-city-football-club-as-founding-partner-becoming-first-major-cryptocurrency-platform-to-officially-partner-directly-with-a-womens-professional-sports-team

https://www.businesswire.com/news/home/20220503006358/en/LA-Kings-Celebrate-2022-Playoffs-With-the-Launch-of-the-Team%E2%80%99s-First-Ever-NFT-Collection-Powered-by-Crypto.com

https://fnatic.com/news/fnatic-and-cryptocom-enter-historic-partnership

https://www.coindesk.com/consensus2022/sponsors/

https://www.dallasnews.com/business/2022/04/13/dallas-cowboys-strike-deal-with-blockchaincom-in-nfls-first-crypto-partnership/

https://www.redbullracing.com/int-en

https://virtus.pro/en/club/partners

http://www.saopaulofc.net/

https://www.mancity.com/

https://www.mclaren.com/racing/partners/okx/

https://riseconf.com/partners

https://websummit.com/partners/event-partners

https://www.lcfc.com/news/1298900/leicester-city-football-club-renew-partnership-with-etoro/press-release

https://www.cpfc.co.uk/news/partner-news/crystal-palace-renew-partnership-with-global-multi-asset-investment-platform-etoro/2021-08-25/

https://www.tottenhamhotspur.com/news/2018/august/club-partners-with-etoro/

https://www.evertonfc.com/news/1832973/everton-agrees-etoro-extension

https://www.southamptonfc.com/saints-partners/etoro/etoro

https://www.etoro.com/news-and-analysis/etoro-updates/etoro-adds-arsenal-to-premier-league-partnerships/

https://www.avfc.co.uk/

https://www.nufc.co.uk/

https://www.bolognafc.it/

https://www.cagliaricalcio.com/club/sponsor

https://www.sampdoria.it/en/sponsor/

https://www.acspezia.com/

https://www.udinese.it/Apps/WebObjects/Udinese.woa/wa/viewSection

https://www.hellasverona.it/it/sponsor

https://headlinemoneyawards.co.uk/hma/en/page/sponsors-partners

https://www.leedsunited.com/

https://www.asmonaco.com/club/partenaires/

https://en.slavia.cz/partneri.asp

https://rbleipzig.com/en/business/partners/official-partners/

https://www.federugby.it/index.php?option=com_content&view=article&id=4428&Itemid=911

https://www.worldpadeltour.com/en/

https://www.cnbc.com/2010/01/20/The-Stadium-Curse:-Naming-Deals-Gone-Bust.html

https://www.thestreet.com/personal-finance/10-disasters-in-stadium-naming-rights-11536541