New York Post reveals that cryptocurrency companies are cutting costs by pulling out of sponsorship and marketing deals as the crypto market crashed to its lowest in almost two years.
FTX pulls out of sports deal
Leading crypto exchange FTX, one of the biggest ad spenders in the industry, pulled out of a deal with Los Angeles Angels, which would have seen it have a patch on the MLB team jersey.
FTX paid $135 million to buy the naming rights to Miami Heats stadium in 2021, among other marketing moves.
Sources also confirm that a patch deal between NBA Washington Wizards and a crypto company has now been canceled. Some believed the deal would have been strategic, considering regulators who oversee the crypto space attend Wizards games.
However, it appears that the crypto companies are choosing self-preservation over advertising, especially with the crypto market cap falling below $1 trillion.
Have the crypto ads been successful?
Almost every major cryptocurrency company spent massively on crypto ads and endorsements in 2021 and early this year.
Their spending peaked with the Super Bowl ads in February, where at least three major crypto exchanges paid huge fees for a slot during the biggest sporting event on U.S. television.
However, the effects of the spending appear to be minimal as the industry did not witness an influx of retail investors as it envisaged.
Big spenders like Coinbase and Crypto.com have laid off employees, blaming the current market downturn for their decisions.
However, FTX, another of the big spenders, is not laying off employees as its CEO Sam Bankman-Fried said that the firm could keep growing regardless of the market conditions.
12) And because we hired carefully, we can keep growing regardless of market conditions.
Because we exponentially scaled our revenue and productivity, not our expenses.
But more importantly, because each person we add takes on a huge opportunity, and a huge responsibility.
— SBF (@SBF_FTX) June 6, 2022
Meanwhile, Binance CEO Chanpeng Zhao recently announced that the company will hire 2000 additional staff because it did not go on an ad-spending splurge like its competitors.