Are ICOs the Future or a Passing Fad?

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If we say that the crypto world is a revolution, then in 2017, we saw a revolution within a revolution. Initial Coin Offerings (ICOs) boomed last year, raising over $5.6 billion in 2017. In total, there were 902 ICOs launched last year, 435 of which, or 48% were considered a success. From the remaining ICOs launched last year, 142 failed even before their launch date and 276 ICOs collapsed after their fund raise. By the end of 2017, there was an average of three ICOs closing per day. The end of the year also saw cryptocurrencies plummet in value with Bitcoin falling from $20,000 to $13,000. Even though Bitcoin (BTC) started the year at just $900, the heavy and sudden crash sparked countless articles predicting the end of the crypto bubble.

Fast forward to June 2018 and we see a very different story. Within just the first two months of the year, 50 successful ICOs were launched raising more than $1 billion in funds. By April of this year, 2017’s figure was already surpassed. A total of $6.3 billion was raised, 118% more than all of 2017’s total. The first quarter of the year witnessed 59 percent as many ICOs as in all of last year receive capital. If we are to include the pre-sales of the Telegram ICO, the most highly anticipated ICO of the year, investors have poured $9.2 billion year-to-date into a total of 343 ICOs so far.

However, the road to ICO success has been a rocky road with plenty of obstacles. One area that is proving a major obstacle to ICO success is the number of fraud or scam ICOs that have appeared. An inevitable downside of the increased popularity of ICOs has been the increased number of scam or fraudulent ICOs.  By April of this year, it was a reported by the New York-based Satis Group LLC that 81% of all ICOs were considered scam or fraud. Only 8% of all the ICOs being launched actually made it to the exchange. This figure is open to dispute too. MIT published Initial Coin Offerings and the Value of Crypto Tokens, authored by Christian Catalini and Joshua S. Gans, which showed that in their findings somewhere between 5% to 25% of ICOs could be considered frauds or scam ICOs. The amount of fraud or scam ICOs is probably somewhere between the two findings, but what we do know is that there are scam ICOs and both the regulatory authorities and advertising channels are cracking down on ICOs.

ICO Ad Bans

In January of this year, social media giant Facebook announced a total ban on ICO advertising. It launched a new ad policy which targeted binary options, cryptocurrencies and ICOs. The policy specifically prohibited ads for services and products “that are frequently associated with misleading or deceptive practices.” Shortly after Facebook announced a total ban, other social media channels followed suit. LinkedIn banned crypto advertising and then Twitter announced in March that it would cease allowing ICO or cryptocurrency advertising.

As stories of scam ICOs and the high-risk nature of investing in ICOs became more apparent, other marketing channels announced ad bans on ICOs. MailChimp, the largest emailing service provider banned all ICO advertising as of the end of March with other email service providers quickly following suit. However, what really shook up the world of ICO advertising was the ban by Google. In March, Google’s director of sustainable ads, Scott Spencer, said: “We updated several policies to address ads in unregulated or speculative financial products like binary options, cryptocurrency, foreign exchange markets and contracts for difference (or CFDs).” The Google ban which took effect this June is sure to have the biggest effect on how ICOs are marketed. It was estimated that somewhere between 40 – 80% of all ICO marketing budgets were being spent on Google advertising. Google’s reach and success rate have been attributed to the success and popularity of ICOs – both legit and scam.  So, with the marketing channels being squeezed and the number of fraud ICOs increasing, what’s next for ICOs?

Marketing an ICO in 2018 and Beyond

Despite the advertising bans from the biggest marketing channels, ICO marketing is not dead, far from it in fact. There are still many ways to market an ICO and any ICO that wants to be successful has to take a multifaceted approach anyway. ICO marketing channels include:

SEO – the foundation of any online campaign and what any serious ICO should spend time and money developing. There really is no better form of marketing than search engine optimization. It brings in long term traffic in a cost-effective manner and shows that an ICO is in it for the long term and not just about the launch.

PPC – Pay per click advertising may be heavily squeezed by the Facebook and Google bans, but PPC marketing for ICOs is not dead. What is happening is that ad networks are becoming increasingly popular for ICOs for PPC. As well as traditional ad networks, there are specialized crypto ad networks that feature media packages on some of the biggest and most popular crypto related sites.

Community Management – A unique form of marketing ICOs is seen in the role of the ICO community manager. Successful ICOs have someone or an agency in place that builds, informs and maintains a community long before an ICO launch and long after a launch. The community manager looks after Facebook groups, Twitter pages, manages a Telegram group and contributes to LinkedIn, Quora and Reddit discussions. Social media advertising may be banned, but social media still plays a massive part in building an ICO community and keeping them informed and engaged.

PR and Blogging Outreach – What may be considered traditional forms of marketing, still have an important part to play in ICO marketing. Press releases and guest posts help gain exposure, gain credibility and can compliment any effective off page SEO strategy.

ICOs Final Thoughts

One good aspect of the ad bans has been that it seems the less serious and scam ICOs will and are falling by the wayside. People are a bit more aware of what constitutes a scam ICO and it is a lot harder to market a scam ICO than ever before. That isn’t to say that scam ICOS do not and will not exist in the future, but the ad bans will definitely make it harder.

What is becoming increasingly apparent is the fact that ICOs, like blockchain technology and cryptocurrencies in general, are here to stay. The amounts raised by ICOs (initial Coin Offerings) to the amounts raised by Initial Public Offerings still remain relatively small, but with every financial quarter that passes, that is changing. ICOs have, so far, survived ad bans, country bans, regulatory squeezing, scam reports and crashes in the crypto markets. If they can survive those, then we should accept they are here to stay and not just a passing fad.

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