Crypto winter could have multiple market implications for retailers and institutions. This article focuses on the impact of crypto winter on sports sponsorships and advertising deals.
Cryptocurrency companies are increasingly investing in sports sponsorships and advertising to promote their brands and products. The growth of the cryptocurrency industry and the increasing acceptance of digital assets into the mainstream are accelerating this trend.
Cryptocurrency companies sponsor a wide variety of sporting events and teams, including soccer clubs, basketball, and car races. Here are some examples of different genres of sponsorship that have spawned a wave of cryptocurrency advertising.
Big crypto deals of the last few years
Cryptocurrency brands helped the National Basketball Association (NBA) earn $1.64 billion in annual sponsorship fees for the 2021-2022 season. According to the report, this represents a year-over-year (YoY) increase of 12.50%.
Five brands—Crypto.com, Webbull, Coinbase, FTX, and Socios—account for 92% of the NBA’s crypto sector spending. Includes some of the league’s most high-profile inventories as sponsors of naming and jersey patches.
Crypto.com has acquired the naming rights to the Los Angeles Lakers’ home arena in a deal reportedly worth $700 million over 20 years. In addition, Crypto has served as nine new jersey patch sponsors, including a $10 million-plus annual deal with the Philadelphia 76ers and Crypto.com.
Famous teams have integrated digital currencies into payment systems. In 2021, the NBA’s Dallas Mavericks have announced that they will accept Dogecoin as payment for tickets and merchandise. The owner of the team, Mark His Cuban, is an avid supporter of cryptocurrencies.
Other sports jumped on the bandwagon
In 2020, English Premier League football club Southampton signed a sponsorship deal with cryptocurrency betting platform Sportsbet.io. In 2019, his Formula 1 racing team, Red Bull Racing, partnered with cryptocurrency company FuturoCoin. Other groups such as Ferrari and Mercedes have collaborated with Velas blockchain and his FTX.
In addition to sports sponsorships, crypto companies are investing in advertising through sports media. For example, during the 2022 Super Bowl, his FTX, a crypto exchange platform, ran a commercial featuring NFL stars Tom Brady and Patrick Mahomes.
There were Super Bowl ads, arenas, and celebrity endorsements. His commercial landed on TV during the nightly news.
Crypto companies were spending money everywhere and everywhere. In fact, by October 2022, cryptocurrency-related brands had made $223 million in advertising in the US. According to MediaRadar, this is a 150% increase from his $89 million for the entire 2021.
The sports industry has become an essential target for cryptocurrency companies as they seek to reach new audiences and promote their products.
2022: Year of Multiple Collapses
Many of the multiple collapses within the crypto domain have already been covered. The latest was the collapse of FTX, his one of the largest cryptocurrency exchanges. Given the severe ramifications, the industry has seen a significant market cap below his $1 trillion.
The so-called “Crypto Winter”, combined with a broader economic recession with the cost of living rising as inflation soars, has injected a lot of fear within the domain. Cryptocurrency institutions such as Coinbase, Crypto.com and Binance were affected. Senior management scrutinized advertising spend in that environment, making it more difficult to secure marketing dollars.
According to MediaRadar, the top crypto advertisers spent just $35 million on advertising in the third quarter of last year. That’s an 80% drop for him from the first quarter, which was boosted significantly from the country’s biggest sporting event, the Super Bowl.
Grant Harbin, CEO of performance marketing firm Headlight, told BeInCrypto:
“Crypto winter is crypto advertising winter.
Adverse market conditions have caused multiple cryptocurrency cohorts to cut their marketing budgets.
Cipher name not confirmed
With the Super Bowl kicking off in 2023, dubbed Super Bowl LVII, we saw a completely different scenario. As covered by BeInCrypto, the majority of advertising for sporting events was by alcohol and food companies.
Other events witnessed the same scene where big names in the crypto domain went missing. For example, a Formula One event. A completely different picture emerged last weekend when the team unveiled its 2023 car at the debut race of the season. Last year every team had at least one cryptocurrency sponsor, but that figure is now down to 60% and likely to drop further.
Big names such as Mercedes, representing seven-time world champion Lewis Hamilton, were the first to drop (collapse) their sponsorship of FTX.Mercedes may have claims in FTX’s bankruptcy process. Yes, and the filing indicates there are no other Crypto Native sponsors heading into 2023.
Most notably, Ferrari has exited its multi-year partnership with Velas Blockchain. Similarly, Red Bull Racing his team ended his relationship with Tezos.
Major bankruptcies and bankruptcies in 2022 cast an ominous shadow over the industry. Sponsorship costs depend on the size of the team.According to researchers, the cost is range $500,000 to $750,000 for small businesses and millions for large companies.
“It is no wonder that some cryptocurrency companies are exiting as token prices have dropped significantly.”
Countries such as Singapore have banned crypto advertising altogether.
Stopping Ads Could Affect Your Brand
Groups, whether in the cryptocurrency or traditional space, would be hit hard if they stopped advertising. Brands may face sales problems when they stop advertising.
Advertising is critical in creating awareness, building brand awareness, and shaping consumer perceptions of products and services. When brands stop advertising, they risk losing awareness and top of mind among consumers.
Advertising allows brands to maintain their market position and compete with other brands that continue to advertise. Over time, consumers may forget a brand or lose interest in its products and services. This can lead to lower sales and market share. Additionally, stopping advertising can also affect your brand reputation and image.
When a brand suddenly includes advertising, it can become less stable, thrive, or seen as more devoted to its customers. This can create a negative perception of the brand and undermine its appeal to consumers. In short, while other factors can affect a brand’s sales, an advertising stoppage can definitely lead to sales problems and other negative consequences.
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