A hard lesson in hype advertising can be learned from the FTX catastrophe

A Super Bowl ad featuring Larry David had never, ever, ever been released. Weeks in advance, as is increasingly standard, there was no genuine teaser or trailer. Instead, cryptocurrency exchange FTX went old school and planned to surprise spectators with the renowned comedian during the actual game.

The Seinfeld and Curb Your Enthusiasm creator was depicted in the advertisement, “Don’t Miss Out on Crypto,” as a skeptic of such historical innovations as the wheel, the fork, the toilet, democracy, the light bulb, the dishwasher, the Sony Walkman, and, of course, FTX.

The commercial helped FTX become one of the Super Bowl’s most-retweeted brands and was named “Most Comical” by USA Today’s Ad Meter.

 

A little over three months before this advertisement ran, Bitcoin would reach its peak value. Since then, it has been slowly declining. The demise of the Terra/Luna currency and the bankruptcy of the cryptocurrency hedge firm Three Arrows, among other things, have made 2022 a difficult year for the sector. Then, on Friday, Sam Bankman-Fried, the founder and CEO of FTX, announced his resignation. Bring on the jokes: Larry was correct.

There are many concerns underlying the sudden rise and collapse of FTX, but one is how, for at least the past year, the majority of the brand’s advertising—and the majority of brands associated to cryptocurrencies—have leveraged fame and hype to paint cryptocurrency investment as a historically wise choice. Fortune favors the courageous, as Matt Damon famously remarked when equating the development of cryptography to that of human flight and space travel.

This year’s Super Bowl featured a commercial for Crytpo.com that featured both LeBron from 2022 and LeBron from 2003. Is the hype excessive, inquires the younger LeBron? Am I prepared? “I can’t tell you everything, but if you want to make history, you gotta call your own shots,” LeBron 2022 responds. Even with this flimsy disclaimer, “do your own research,” the slogan “Fortune favors the courageous” is still very apparent.

The implied message was very clear: If you wanted a ride to the promised land of cryptocurrency, you had best buy your ticket right away. After so much money has been lost, the habit of portraying it as a historically wise choice will only serve to strengthen the perception of the advertising business as glorified snake oil salesmen.

In addition to undertaking free PSAs and advocacy work for a variety of social causes, the advertising business has worked rather hard and spoken frequently about focusing on brand purpose work and brand transparency. This kind of creative production has reframed advertising’s historic reputation (as a media and a profession) as more style than substance, despite being blatantly evident award bait. All of that admirable work is undermined by the industry’s crypto work’s hyperbolic hubris, which is exemplified by its FTX work.

Since Kim Kardashian promoted EthereumMax in an Instagram Story on June 13, 2021, the topic of utilizing famous people to promote cryptocurrency companies has been up for debate for more than a year. The Financial Conduct Authority of the United Kingdom described that advertisement, which 21% of Americans saw, “the financial advertising with the single widest audience reach in history.” The SEC fined Kardashian $1.26 million in October for failing to disclose to that audience that she had received payment for the endorsement.

Tom Brady, Steph Curry, the Miami Heat, Mercedes Formula One, the Washington Wizards (NBA) and Capitals (NHL), the Golden State Warriors, and the University of Kentucky men’s basketball team were just a few of the notable athletes that FTX had amassed.

I had a conversation with R.A. Farrokhnia, a professor at the Columbia Business School and the executive director of the Columbia Fintech Initiative, last year about the challenges of using marketing strategies typically used for consumer packaged goods or entertainment for something as novel and perplexing as cryptocurrency. According to Farrokhnia, “this presents reputational problems for both ad firms and celebrities who are involved in these initiatives.”

Early on, Ben McKenzie (yes, Ryan from The O.C.) also forewarned of this.

Pereira O’Dell, the Matt Damon commercial agency for Crypto.com, and DentsuMB, the Super Bowl spot agency for FTX, did not respond to my requests for comment.

However, according to sources with knowledge of the production of FTX’s Super Bowl advertisement, the brand’s main objective was to be amusing, and there were minimal discussions on recognizing the risk involved in investing in cryptocurrencies. Don’t miss out was the message they intended to convey without stating, “Don’t miss out on becoming wealthy.” Given that the company also held a significant Bitcoin giveaway during the game, the mission was unsuccessful.

Chief Strategy Officer at The Martin Agency, Elizabeth Paul worked with Coinbase for almost a year before leaving the company at the end of 2021. (However, the agency did have some input over the brand’s own popular Super Bowl commercial.) She claims that the main focus of their strategy work with Coinbase was to present the company as the responsible, adult member of the group who supports regulation. It would have been better for the globe to view those investments more like a 401k than sports betting, according to Paul, for the long-term growth of the cryptocurrency industry.

The majority of cryptocurrency advertising felt more like FanDuel than Fidelity, which indicates that these brands and their agencies didn’t give this uncertain sector enough thought.

Paul claims that agencies always have a duty to use their power over clients for good, and that this responsibility doesn’t only apply to cryptocurrencies but applies to whatever category they are in. Paul cites a survey from 2021 that found people have more faith in brands to affect good social change than they do in the government or in religious institutions. According to Paul, “(agencies) always have the chance to stretch our storytelling and persuasion talents for good—to bend platforms and resources in ways that (are) good for businesses as well as the communities they serve.” “Or you can choose to abdicate that duty, decide not to challenge the brief, and participate, in which case you have made a contribution, good or bad.”

 

Marketers and advertisers must prioritize the former above the latter if they don’t want their efforts to lose their effectiveness and credibility. At least temporarily, the crypto winter has fundamentally changed how it will be promoted. Tom Brady’s call is not being anticipated by anyone.

According to Paul, cryptocurrency firms will eventually need to market themselves more like the institutions they aim to displace. They’ll probably need to behave like unattractive banks in order to give consumers a greater sense of security, she predicts.

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