Cryptocurrency exchange sponsorships continue to grab headlines. Crypto.com’s sponsorship of the former Staples Center and FTX’s deal to rename the home of the Miami Heat stand out. A real boost to sponsorship markets that are just recovering from the pandemic implosion. Besides the high rights fees, these deals highlight the fundamental ways sponsorships address marketing challenges.
Why Now?
Cryptocurrency trading is not a new phenomenon as its roots trace back to 2009. However, two factors have spawned the current wave of crypto sponsorships.
First, recent developments in technology, financial markets, venture capital investment, and trading speculation have sped cryptocurrency adoption in economies worldwide. More people are buying and holding more crypto. With increased consumer demand for crypto, digital cryptocurrency exchanges have the incentive to spend money on marketing to capture new customers. How much money? A lot of it.
Second, consumers have a massive range of choices in the crypto market. Today, there are more than 10,000 cryptocurrencies and approximately 314 exchanges. That means no-holds-barred marketing competition for crypto exchange services.
Now, we have lots of players with lots of money vying for consumer attention in a decentralized global market. So, what’s a marketer to do?
Why Sponsorship?
In a competitive market that’s well funded, sponsorship addresses three significant challenges for crypto exchanges.
Brand Awareness
Sponsorships offer high-profile opportunities to build brand awareness. When your brand name adorns a giant basketball arena in Los Angeles or Miami, UFC fight kits, or F1 events, your name will stand out. Additionally, it will spawn questions from sports fans like “what is “Crypto.com” or “FTX”?” in ways that advertising or other forms of marketing can’t prompt.
Credibility via Third-Party Validation
We often write about the superpowers of sponsorship. For example, in sponsorship, a sponsor’s image is enhanced by consumers’ positive image of the property. This “image transfer” is a form of third-party validation. When someone else recommends a brand, that recommendation holds more weight than bragging about itself. As a result of the sponsorship relationship, the LA Lakers, Miami Heat, UFC, and F1 have all lent their credibility to cryptocurrency trading. This validation creates a potent marketing outcome for these crypto exchange sponsors. (There’s also brand risk for these properties, but we’ll address that in an upcoming article.)
Storytelling Over the Long-Term
In contrast to one-shot opportunities to tell marketing stories, sponsorships offer multiple long-term options to deliver consumer messages. Most of the sponsorship deals described above provide multi-year platforms to build brand awareness and share the crypto story. Through message delivery in activation events, athlete endorsements, and brand exposure, crypto sponsors will have multiple opportunities to attract new customers versus their 313 competitors.
Final Thoughts
There is nothing unique about how sponsorship works for crypto exchange sponsors versus other sponsors. Every benefit described in this article applies in every respect to every type of sponsor. It’s just that the arrival of crypto sponsors is a valuable reminder to all of us who work in this industry about why sponsorship is such a unique and effective form of marketing.
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