June 2021 saw the announcement of a $100 million branding deal between Formula One and cryptocurrency exchange Crypto.com, along with being named the official cryptocurrency and NFT partner of Formula One.
Just a few months later, Formula One team Mercedes announced its partnership with global cryptocurrency firm FTX, giving them access to drivers such as Lewis Hamilton and Valtteri Bottas. In June, FTX also signed a deal with Major League Baseball worth $18 billion.
Clearly, cryptocurrency projects represent billions of dollars in marketing spend, but it may seem strange that so many of them are primarily using these big sponsorships as their main form of marketing.
Up until now, crypto companies were severely limited in the marketing channels that were available to them, but with Facebook recently lifting its ban on cryptocurrency ads, all of this is set to change. So why has Facebook been reluctant to allow crypto ads to run on its site, and what have the motivations been for the lift in these restrictions?
Scaling back restrictions on crypto ads
Facebook’s initial ban on crypto ads came in June 2018 as a response to the slew of Initial Coin Offerings that resulted in many consumers being scammed.
This banned ads for any financial products and services associated with these misleading or deceptive tactics, though was eased in May 2019 as Facebook began ramping up its own blockchain project Libra, now rebranded Diem and yet to be publicly released.
Though the easing of these restrictions allowed crypto ads with prior written approval from the company, or those advertising blockchain technologies and industry news, it still required businesses related to cryptocurrency to submit an application outlining the licenses they had obtained and whether they were traded on a public stock exchange.
While crypto advertisers will still require written permission from Facebook, they have expanded the regulatory licenses they will be willing to accept from three to 27, making it easier for small start-ups in the crypto and NFT industries to reach potential customers.
How does Facebook and Meta benefit?
This new revision to Facebook’s rule around crypto advertising comes shortly after the rebrand of its parent company to Meta, with a new focus on developing the virtual reality ecosystem of the metaverse, where cryptocurrencies and other virtual tokens such as NFTs will no doubt play a central role.
Besides the as-of-yet unknown implications the realisation of the metaverse and Web 3.0 will have, the recent privacy updates to iOS, along with the decrease in user confidence in the platform over privacy concerns have led to the potential in a decline for Facebook in their ad revenue.
The change in policy will therefore not only allow Facebook to recover some of their ad revenue, but will enable them to secure more stable revenue streams, while also attracting interest in Meta from large retail investors.
A changing consensus on cryptocurrency
While Facebook will undoubtedly benefit in terms of revenue from allowing crypto ads, it can also be seen as a reflection of the shifting public perception of cryptocurrency.
While blockchain technologies have been around in one form or another for the past decade, the last two years has seen more people become aware of it, and its increased adoption into the mainstream. Consumers aged 18-30 are far more likely to personally know someone who has invested and made money with cryptocurrencies or NFTs, and its rapid adoption by social media influencers has cemented it as something that is here to stay.
Facebook/Meta themselves cite the matured and stabilised crypto landscape that has legitimised it in the public consensus, along with the increase in government regulation that defines clearer responsibilities, as a motivating factor in this new policy change.
Cryptocurrency and NFT projects have the potential to generate high levels of revenue, giving them huge budgets when it comes to marketing. As opportunities in digital advertising open up to these companies, it will become a game changer for mass adoption and allowing more people than ever before to access cryptocurrencies.
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