If you’ve been keeping up with developments in the crypto space, you might have noticed that there is a growing emphasis on sponsorship among crypto companies. Think of the crypto.com arena in Los Angeles, which cost millions to put in motion, crypto companies sponsoring all manner of sports teams, and even iconic celebrities like David Beckham being brought on for crypto campaigns.
Outside of the sheer scale of these sponsorship efforts, billions of dollars have been spent on these endeavours and from the outside looking in, it might seem jarring. But in this article, we will break down some of the reasons why crypto companies invest so much in sponsorship.
1. Visibility For Crypto Companies
Let’s face it, sports events drive a lot of visibility for both the teams playing on the companies associated with them. Think of the Super Bowl, which draws tens of millions of viewers and sells advertising slots for insane amounts of money. One of the final matches of the last UEFA Champions League drew in 450 million viewers, essentially putting millions of eyes on whichever companies sponsored the teams and the match itself.
In the case of naming arenas after crypto companies, the visibility generated goes beyond a 90-minute game and can last for years. The same applies to celebrity sponsorships in that major stars have millions of dedicated fans who watch everything they do. If they choose to platform a crypto company, that puts millions of eyes on it. As such, sponsorship is especially important for an industry like crypto which is relatively new and needs as much attention as it can get.
2. Credibility
When is sports team, celebrity or establishment takes a sponsorship from a crypto company, they are doing more than just lending access to their audience. They are also lending their credibility to them. Think of the way we instantly take certain products or companies more seriously if someone we respect is associated with them. Lots of people dismiss crypto and blockchain as being fads or scams, but being platformed by the likes of an arena in Los Angeles or a major sports team helps to lend more credibility.
After all, surely a major NBA team wouldn’t take sponsorship from a crappy company? Just like visibility, credibility is especially important to the crypto sector given the PR hurdles it has had to fight over the years. Crypto companies looking to get a leg up in terms of credibility can quite easily do so via sponsorship.
3. Driving Sales
After crypto companies gain visibility via sponsorship and credibility, the next step is to drive sales. This has been a tactic for many decades and is not unique to the crypto sector. Many of us have rushed out to buy a product or try out a service because a celebrity lent their name to it. in the same vein, people watching a sports game or looking at their favorite celebrity’s Instagram profile might choose to sign up on a crypto exchange, buy a token, or try out a crypto wallet because it was mentioned.
This is essentially the crypto sector tapping into the long-running business of sponsorship for sales. If there is a good enough audience and sponsor compatibility, crypto companies could make several times their initial investment from the sales generated afterwards.
4. Status
In the crypto industry, companies are always trying to outdo themselves in terms of who has the most customers, the biggest market share, and the most visibility. While there are practical reasons to spend money on sponsorships such as visibility, there is a status that comes with a crypto company being affiliated with certain people or businesses.
A crypto exchange like crypto.com will instantly be seen as one of the big players in the industry when it has an entire arena bearing its name. Likewise, a crypto company having an extensive roster of big celebrities wearing its logos and promoting it gains a leg up in the industry. This could be elevating them in the eyes of consumers or simply positioning them as better than their competitors. Either way, companies have been paying for status for decades and the crypto industry is not exempt.
5. Wider Inter-Industry Collaboration
While sponsorships have certainly been at the forefront, they are not the only way that the crypto sector is collaborating with other Industries. Take the many sports teams that are now launching their own crypto tokens. With this sort of ambitious leap into the blockchain space, sponsorship from a crypto exchange or any other company fits right into the larger strategy. Then we have to consider things like NBA Top Shot that minted and sold NFT or teams like the Sacramento Kings that used blockchain to track their merchandise.
What we have to keep in mind is that while the crypto industry is trying to gain access to mainstream platforms, many of these mainstream companies also want a piece of the crypto action. In that sense, both Industries and companies can benefit from sponsorship as a gateway towards other bigger projects or to test the waters. This is bolstered by demand from consumers who are happy to buy phantoms in exchange for rewards and leverage whatever crypto company is being platformed.
Conclusion
Mainstream companies spend billions each year on all sorts of sponsorship, From celebrity endorsements online to Super Bowl ads to sports teams. The crypto industry does the same, though with slightly different reasons in mind. As we’ve pointed out in this article, crypto companies benefit from a major visibility boost as well as improved credibility through these sponsorships. There is also the sales angle, with a successful campaign possibly raking in several times the initial investment.
Crypto companies seeking status and elevation among their competitors can do so via sponsorships as well. Finally, the increasing collaboration between the crypto sector and other Industries will mean that these sponsorships will only increase in the future and become more dynamic.
