I was recently invited to speak at the Blockchain & Bitcoin Conference, in Istanbul, Turkey. Prior the conference I was interviewed on the topic of ICO and these are my answers. As an expert in marketing, tell us, please, what differentiates good marketing of an ICO project from poor one?
It all boils down to “who” is backing the project rather than “how” the project is marketed. I have analysed many ICOs over the past year. Despite my 20 years of marketing experience, I still cannot see a clear correlation between marketing activities of an ICO and token sales result.
You will find that some ICOs spent nearly nothing in marketing, yet they attracted “millions in minutes”. Others spent a fortune in promoting on every possible Social Media and through countless roadshows, but failed to attract the targeted amount of investment.
In my analysis, an ICO is like a movie. That is why I refer to it as ICO-llywood.
Advisors are Actors, Whitepapers are Scripts and Early-Stage Investors are Movie Producers. To a certain degree, the more spectacular is an ICOs, the more successful is likely to be. But if you analyse the data closely enough, you will notice that very often, “successful” ICOs, have a handful large of investors, and a myriad of “small fish”.
As a result, many ICOs try to boot investments of small fish by labelling the pre-sale tokens sold, as achieved within minutes. Very often it is not true.
What most common mistakes do marketing specialists make when they promote an ICO project?
Simple. They don’t sell. Placing ads on Instagram and Facebook is not a marketing plan. It’s throwing money away. Moreover, recently Facebook had banned such ads, so many marketers have already started scratching their heads.
The cost of acquisition of such strategy is absurd. As I visit ICO conferences around the world, I always make sure to ask the question as “How is your token sales going so far?”, because that is what an ICO is all about: token sales.
If you ask the question as: “How is your ICO going?”, you would get vague and unquantifiable answers, such as: “Very well: we have Mr So and So as an Adviser.” My general impression is that too many are focusing on marketing their ICO, and not enough are committed to selling their tokens.
How is marketing of ICO projects changing with the arrival of big investors in the market?
ICOs are a low-risk way for big investors to cash out quickly. Some of the “successful” ICOs I have analysed, are based on poor ideas and with unrealistic action plans.
Nothing that in the traditional IPO world would have stood a chance to attract anyone’s attention. Because in the IPO world, ROI is projected in 5 to 7 years, while in the ICO, it’s 5 to 7 months.
Investors cash out much faster, so they do not need to scrutinize the project too closely. If the business idea does not fly, someone else will bear the loss.
Some of the marketing campaigns that I have seen recently are designed to build ROI for large investors, claiming spectacular growth potential for quick speculation, so that the most gullible among the small fish, can throw part of their small cryptocurrency holdings to a project designed to generate quick profits only for the big investors.
ICO projects set different goals: some plan to raise $2 million, other — $200 million.
How does marketing of such projects differ?
I realized that quite often the amount is determined by how much the big investor wants to make in return.
For example, in one of the ICOs that I have analysed, the big investor put 18 million dollars on the table and demanded to cap at 24.
The project actually sold far more tokens, but the main investor did not want to dilute the value of the token, so a ceiling was imposed. The investor demanded in return 21 million dollars for the initial 18 million dollars investment.
The company that launched the ICO was left with 3 “real” million dollars collected through the coin sales.
They announced that they collected 24 million, but they are actually scratching their head on how can they now keep their promises with only 3 million dollars worth of tokens. I have spoken to many ICO issuers and realized that too often the amount targeted is grossly guessed.
Breakdowns are shown in pie charts that always look the same, but rarely reason the amounts in details.
From what do you start working on a marketing campaign for an ICO project?
Sales target. At the moment of this interview, the most successful ICO ever had 33 thousand backers.
That is barely the population of the independent state of San Marino. The 10th largest ICO, only 2,200 backers.
The way I read it, is that the target audience for an ICO is extremely small. There are mostly 2 segments: the savvy and the fool. The fool would buy a token because of the promise of quick profits.
The savvy would buy the tokens because of the belief in the project.
A good marketing mix should address both, beyond the standard: “ICO is launching”.At first, I would analyse if the problem solved is a real problem.
If so, I would target the community that would benefit the most from such project.