"Crypto Bowl" Ads Reviewed; Coinbase Joins Remittance Race
JPMC 'First' in the Metaverse, FTC Chair on Bank Mergers & Competition, CFPB Opens Rulemaking to the Public
Hey all, Jason here.
I didn’t watch the Super Bowl (it was on too late here, and also I don’t care about sports.) Held at SoFi Stadium and with numerous crypto and fintech companies advertising, it had a bit of a dotcom flavor. 2020’s big game saw no fewer than 17 dotcom companies run ads — including etrade, which was also present in this year’s game.
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JPMorgan Chase ‘First’ Bank In the Metaverse
JPMC’s presence in Decentraland was spearheaded by the bank’s Onyx blockchain unit. The Onyx lounge features a portrait of JPMC CEO Jamie Dimon, who once famously referred to bitcoin as “worthless,” and, for some reason, a roaming tiger:
The initiative appears to be more PR play than substance, as it was timed to promote the release of JPMC’s “Opportunities in the Metaverse” report, which declared the metaverse a $1 trillion per year opportunity.
The report appears designed to boost JPMC’s bona fides in the much-hyped and quickly evolving “Web3” space:
Still, I can’t help but feel that we’ve been here before.
Who Wore It Better?
Dutch bank ABN Amro opened a financial advice center in Second Life in 2006 — 16 years ago — that doesn’t look that different from JPMC’s Onyx lounge. ABN competitor ING followed suit, opening a presence in the virtual world in 2007, but shutting it down just one year later.
Have technology and consumer preferences changed enough for banks to find success this time around? The key elements that need to be present are utility — does the tech meet a need? — and convenience — is it an improvement over how consumers currently carry out a given function?
An easy historical example is phone banking vs. web banking, and then web banking vs. mobile banking. The tasks a user wanted to carry out didn’t change — check a balance, make a payment — but users naturally gravitated to modalities that were lower friction and thus easier to use.
So far, nothing I’ve seen suggests that ‘the metaverse’ represents a significant improvement in UX for carrying out day-to-day banking activities.
A Warning from Second Life
Second Life, the platform that ABN and ING experimented with 15 years ago, boasted in-world virtual banks as well — offering yields as high as 40% (sound familiar?)
How did those unlicensed virtual-world “banks” turn out in Second Life’s version of the metaverse? Not great, according to this report from 2008 (emphasis added):
“Last month Linden Labs, the San Francisco-based creator of Second Life, said it was banning all unregistered and unregulated ‘banks’ from the virtual world.
Linden Labs said the policy change followed complaints about several ‘in-world banks’ defaulting on their promises.
The complaints followed the collapse of so-called virtual bank Ginko Financial in August 2007. Ginko offered a 40%+ interest rate, but speculation among Second Life residents over whether it just a pyramid scheme eventually caused a run on the bank. Ginko reportedly ran out of funds owing customers more than US$750,000 in real money.”
Coinbase Enters Competition for US/Mexico Remittances
Coinbase is the latest company to throw its hat in the ring to compete for some $700 billion in remittances that flow out of the US annually.
The company announced last week it would begin by piloting a a free option to send crypto (including in the form of USDC stablecoin) to users in Mexico, who could then choose to hold the crypto or collect it as physical cash through a network of retailers in the country, including ubiquitous convenience store Oxxo:
Coinbase joins fellow remittance newcomer Revolut in competing for users’ business in the US/Mexico corridor.
But while Revolut only supports sending money to bank accounts in Mexico — a problem, in a country where only 37% of adults have a bank account, according to World Bank data from 2017 — Coinbase offers the crucial cash out capability.
When Revolut launches in Mexico, transfers from US users to Mexican users of Revolut will be instant and free. But, for now, Revolut is leveraging SWIFT to enable US users to send remittances to any Mexican bank account — which is neither fast (Revolut’s own FAQ acknowledges it can take 3-5 days), nor cheap (users get 10 free transfers per month, which Revolut is presumably subsidizing.)
Coinbase’s offering, by comparison, requires the recipient to have a Coinbase account, but it does support cash out. Cash in/cash out are the complicated and thus expensive pieces of operating a comprehensive remittance service — and thus consciously avoided by most tech-enabled remittance services.
Traditional services like Western Union, MoneyGram, and Ria remain the only options that directly support cash in and cash out (and, yes, that makes for a significantly more expensive transfer.)
Coinbase is covering the cash out fee through March 31st, after which users who opt to cash out their remittance will be charged a “nominal fee.”
Coinbase’s blog doesn’t elaborate on the size of the fee or how it will be determined (fixed fee or % of transfer), other than to claim the cost will be “25–50% cheaper than traditional cross border payment solutions.”
Coinbase and Revolut’s entry in to the space aren’t likely to cause a mammoth shift in behavior on their own, but represent increasing competition and innovation in the space — a view largely shared by NovoPayment’s CEO and co-founder Anabel Perez, who told me:
“It is a gigantic opportunity for companies in the crypto and digital asset space to optimize the $50+ billion remittance market in Mexico, where according to the LA Times, 3.8% of the entire GDP in 2020 was comprised of remittances alone. The greater accessibility and additional transaction options for consumers represented by programs like Coinbase’s and other digital finance providers could bring liquidity to investors and ensure the continuous flow of remittances to any recipients in Mexico. Crypto will not eat the traditional financial service providers, but it will start to gain traction as it approaches mainstream adoption.”
‘Crypto’ Bowl Commercials: Reviewed!
Many readers of this newsletter may be unaware that my background is primarily in marketing, so I was curious to see how different companies with largely similar products — FTX, Crypto.com, and Coinbase — approached advertising in the Super Bowl, where 30 seconds of ad time cost a reported $7 million (assuming everyone tuning in to the game saw your commercial, that would work out to a not terrible ~$62 CPM.)
The Super Bowl is the ultimate advertising reach play, with a reported 112 million people tuning in to see the Bengals battle the Rams at SoFi Stadium in Los Angeles.
The flip side of such huge reach is that the product and creative execution generally need to appeal to the broadest audience possible to justify the hefty price tag (or, I guess, aspire to). Ads tend to be brand-focused, rather than direct response.
The success of brand advertising is typically measured using ‘softer’ metrics, like whether they’re reaching the intended audience (GRPs against demo), share of voice, brand awareness, brand sentiment, brand recall, and so forth.
By contrast, direct response advertising is designed to get a consumer to take an action now, and has more ‘performance’ driven metrics, like cost per lead (CPL) or cost per acquisition (CAC) — think those late night cable commercials that encourage you to “Call Now!” A target CAC could be derived from or compared to the lifetime value (LTV) of customers driven from a specific campaign or advert, though tracking and attribution are always a challenge.
Brand marketing speaks to the top of funnel — promoting awareness of a brand and product — while direct response focuses on the bottom of funnel — driving home a core value proposition and encouraging a viewer to take a specific action now.
There is a ‘third way’ — so-called brand response advertising, which attempts to blend the two. The only TV commercial I was ever involved in making attempted to thread that needle.
FTX’s Spot Pushes FOMO
FTX’s minute-long spot features comedian Larry David, best known as co-creator of Seinfeld and star of HBO’s Curb Your Enthusiasm.
The bulk of the advert depicts David as various characters criticizing the viability of breakthrough ideas over the course of history — the wheel, the toilet, the Declaration of Independence.
After the setup, 45 seconds in, it cuts to the modern day, with a spokesperson holding a phone (it’s an app!) telling David “It’s FTX — it’s a safe, easy way to get into crypto” — answering the question, what is this?, and spelling out the value prop by countering perceived barriers to adoption: crypto is unsafe, crypto is too complicated.
The advert ends with a title card that encourages viewers: “Don’t miss out on crypto, NFTs, the next big thing.”
FTX’s spot is a good example of brand response — blending a brand focus with calling out specific value props and a soft call to action to “not miss out.”
Crypto.com’s Traditional Brand Play
Crypto.com’s ad features present-day Lebron James talking to his younger self. Set in young Lebron’s bedroom in 2003, it implicitly suggests crypto is the future — showing artifacts of the past (giant boombox, physical CDs) as young Lebron marvels about a future of cordless headphones and electric cars.
When young Lebron asks his older self if he’s ready for the big leagues, present day Lebron responds, “If you want to make history, you got to call your own shots.” The language speaks to Crypto.com’s brand positioning, which heavily leans in to longstanding American narratives of the self-made man and pulling one’s self up by the bootstraps.
Crypto.com’s tag line, “Fortune Favors the Brave,” flashes on the screen briefly, before the ad culminates with the company’s logo flanked by the Apple and Android app store badges.
Crypto.com’s advert is much more of a traditional brand advertisement — it uses casting, narrative, and imagery to reinforce brand identity.
There is no concrete mention of features, benefits, or a unique selling proposition. Nor is there a specific call to action, though the company’s name and app store badges implicitly tell people what the company is (something related to crypto) and where to go (the website or app store).
Coinbase’s QR Gamble: Go Big or Go Home
Coinbase’s floating QR code received by far the most attention from media commentators, ad industry analysts, and the crypto community.
The minute-long spot showed a QR code bouncing around the screen in a homage to the screensaver on an idle DVD player (apparently there is popular meme about this, which may or may not trace back to an episode of The Office.)
In the last second or so, the Coinbase logo briefly flashes on the screen, in a presentation styled to look old A/V equipment.
If you scanned the QR code, you were taken to a landing page at drops.coinbase.com, which promoted a free $15 worth of Bitcoin after users signed up and made their first crypto purchase. Users were also eligible to enter a sweepstakes to win $3 million in prizes.
The $15 bonus offer was time limited, encouraging users to sign up right away:
Coinbase’s ad stands in stark contrast to Crypto.com and FTX.
While Crypto.com was essentially a brand play, and FTX tried to have it both ways, Coinbase’s was pure direct response — scan this QR code. Not even a mention of what the product is, features/benefits, or why it’s uniquely better than the competition.
Coverage of the advert is largely positioning it as a success — that response was so overwhelming, that Coinbase’s app was temporarily unavailable (not exactly inspiring confidence in the stability of the app).
This all sounds great, right? So many people rushed to download the app and sign up it knocked the app offline.
Well, maybe. In the direct response framework, your success metric is CAC vs. LTV for the specific campaign — with LTV, hopefully, being a multiple higher than the cost to acquire a customer.
If I were running this campaign at Coinbase, I imagine a simplified analysis of the results might look something like the below. The benefit of a DR ad is that the results are more easily and quickly quantifiable — Coinbase definitely knows how many viewers scanned the QR code and hit its microsite. From there, it can track how many downloaded the Coinbase app, completed signing up for an account, linked a bank account, and made their first crypto purchase.
Still, even assuming relatively generous funnel metrics, the CAC for such a campaign was likely several times higher than Coinbase’s typical campaigns:
It will take time for Coinbase to understand what the value (LTV) of accounts that originated from this campaign look like, based on how long they maintain their account and the type and amount of transactions they carry out on Coinbase.
Incentivized campaigns tend to draw lower quality customers who are merely seeking a sign up bonus — just ask PayPal.
For those who didn’t scan it, all they would’ve seen is a QR code bouncing around their screen — no impact on brand metrics like awareness, favorability, or purchase intent.
eToro Straddles Stocks & Crypto
eToro isn’t, strictly speaking, a crypto app. It started life as a foreign exchange trading platform. Its popularity starting taking off in 2010, when it introduced its OpenBook “social” trading platform. Think of it something akin to Robinhood with components of Reddit’s WallStreetBets or “FinTwit” (finance twitter) built in.
eToro’s killer feature was the ability to “copy” top performing investors’ portfolios. The Israeli trading platform was founded in 2007, launching in the US only in 2018.
The company’s 30 second advert speaks to this and tries to have it both ways — appealing to both crypto and stock traders. It also identifies its target: those who are interested, but don’t know where to start.
The ad leverages on-screen graphics to demonstrate social features users are likely to be familiar with — liking and commenting, as they would on Twitter or Instagram. It also includes a couple subtle nods to crypto memes: “to the moon,” a Shiba Inu.
eToro’s ad falls more in the brand response bucket — it clearly messages what the product is (crypto/stock trading), its unique selling proposition (social trading and community), without hitting viewers over the head with a call to action.
And the winner is…
If I were making a spot, it probably would’ve come out something like eToro’s — clearly messaging what the product is and why it’s different/better. But I’ve always been more of a performance marketer, focused on the math and science of customer acquisition, rather than the creative execution.
In a high-stakes placement like the Super Bowl, you really only get one shot to get it right; you don’t have the luxury of A/B testing and iterating your way to the optimal creative execution.
If measured by interest, it would appear Coinbase is the winner of the “Crypto” Bowl:
But, the metrics that count — CAC, LTV, and return on ad spend — will take time to fully materialize.
Coinbase’s outlay — not just the media buy, but also a $3 million sweepstakes pot and $15 giveaway to new accounts — no doubt made for a large total price tag. How the cohort of users it attracted performs over time is what really matters in analyzing the success or failure of its ad.
Other Good Reads
NFTs, Cryptocurrencies and Web3 Are Multilevel Marketing Schemes for a New Generation (WSJ)
The Coming Boom in Metaverse Lending For Banks (Ron Shevlin/Forbes)
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