For the first time in the televised history of the Super Bowl, major cryptocurrency platforms from Coinbase to Crypto.com had the chance to promote their trading platforms to nearly millions of U.S. viewers this Sunday. With more than $7 million dollars paid by these big game day players for each 30 second slot, it begs the question — where does the line between investment advice and marketing speak end?
According to research by Morning Consult, “84 percent [viewers] said they usually pay ‘a lot’ or ‘some’ attention to the advertisements.” Such a high engagement for targeted ads is a salivating proposition for many companies, who possibly paid more than $6 million to have their company showcased during commercial breaks.
Furthermore, coming from tumultuous years of political upheavals and the pandemic, public backlash is a slippery slope for those wanting to make memorable impressions on potential customers. Most advertisements are lighthearted and comedic ranging from Amazon Alexa’s mind reading powers to General Motors Dr.EVil taking over the car company.
But what has kept many investors and regulators on edge is the growing presence of crypto and their respective trading platforms in American sports, a major speculative breeding ground that can balloon to a nearly $36 billion market for online sports betting. Trading company eToro, well known for its social trading app that allows investors to copy trades, is one of the few crypto trading companies we saw this past Sunday. The game day ad was its “first step” in looking to increase its presence in American markets. According to their chief marketing officer, Nir Szmulewicz, the company is looking to spend $25 million on a global marketing campaign.
Major crypto exchange, Crypto.com, has capitalized on the craze for these digital currencies amongst the sports betting crowd. UFC has secured a $17.5 million sponsorship agreement with Crypto.com. The iconic Staples Center, home to the Los Angeles Lakers, is in the process of being renamed Crypto.com Arena in a 20-year long deal worth $700 million. In the rather eerie ad featuring Matt Damon, the well-known actor displays many iconic moments in history that end with a welcome embrace to invest in crypto because, as we all know, fortune has to favor the brave.
I personally never understood the obsession with sports, but I do understand the appeal of betting. From casino Roulettes to online betting DraftKings, there is an exhilarating feeling of wagering a winning bet and being the only one in the room on her high horse. It feels nice to be fortunate enough to have made a risky bet — heck, it might want me to make another, even more risky bet.
However, generating mass appeal for risky trading propositions to an audience enthralled by sports betting is mildly concerning. It is unlikely for any sports fan to hear from their financial advisors, who understand the risks and rewards associated with investing in unpredictable assets, to jump on the bandwagon of crypto trading. Stock exchanges have undergone multiple regulatory upheavals with institutions such as FASB and SEC adding multiple rules into law that protect investors from fraud. Crypto is still something many regulators are slow to regulate at the speed it is developing in markets today. Not all crypto is bad, and the hope of financial innovation is something worth celebrating.
Yet, we see that there may also be detrimental social consequences that come from the mass-marketing of crypto trading platforms. Bitcoin has a large carbon footprint, with “bitcoin mining consumes 133.68 terawatt-hours a year of electricity.” This is not marketed to the viewer concerned about climate change. There are also growing concerns with rises in gambling as “calls to the national gambling hotline soared 45% in 2021 to 257,000.” This is not marketed to the novice crypto investor who may need to stomach wild swings in its price. These arguments have been used by various countries looking to ban their trading and mining operations in their countries.
As I contemplate these commercials and the world of investing, it’s worth understanding that cryptocurrencies are valid assets and like I mentioned last week, many investors hold them. But trading is not a bed of roses as displayed in these ads. Trading is like working out; you don’t get results after one day, sometimes it takes years to build a solid portfolio.
Not Financial Times (NFT) is an Opinion column created by Roshni Revankar ‘22 to share insights and research into students’ favorite companies, industry trends, and anything in financial markets that really irks their curiosity.
Be First to Comment