In a recent announcement, Google’s Sustainable Ads Director, Scott Spencer, said his company will be updating its policies on financial service-related advertising to disallow adverts related to cryptocurrency content.
Soon after Google made public its decision to ban crypto-related adverts, another giant social networking platform, Twitter, announced its intention to disallow such adverts in less than a fortnight.
Google's ban will take effect in June and will prohibit any form of advertising aimed at marketing initial coin offerings (ICOs), trading advise, wallets among other crypto business activities. Both Twitter and Google announcements come barely a month after Facebook took a similar move.
Get Rich Quick
The astronomical growth in cryptocurrencies has generated interest among investors. With it, there has been a proliferation of online adverts, most of which are scams intended to defraud vulnerable investors. Internet companies cite lack of sufficient frameworks to guarantee consumer protection as the reason behind the bans.
Globally, regulators have issued several messages warning investors of the risks posed by the crypto market. Due to these warnings, internet companies view crypto-related advertisement, particularly those that position them as 'get rich quick' schemes, as harmful to their users.
Bojan Oremuz, CEO and founder of Emmares, says, "This move was supposedly triggered by many scams and untruthful ICOs that were harming their users. I agree that ads using sentences like ‘use your retirement funds to buy Bitcoin’ are not appropriate and are misleading various and in many cases the most vulnerable segments.”
On the flipside, Oremuz feels that the move taken by the internet firms will have an irreversible damage in the cryptocurrency industry.
He says, "I also believe strongly that this means those prohibitions will result in irreparable damage in the crypto world. Since the crypto market is based on investors who contribute to ICOs they believe in, the loss of billions of impressions from Facebook and Google platforms may very well be a big factor to reducing new investments."
The impact of the ban on crypto-related ads was evident. Google’s announcement sent cryptocurrency prices on a downward spiral until Bitcoin trade reached $8201 after losing by more than 10% of its value, based on Bitstamp exchange data. This is the lowest this currency has reached this month.
For leading currencies like Ethereum, Bitcoin, Litecoin and Ripple, this slump in price is likely to wear off soon because they are already popular and do not require advertising. However, Andrei Huseu, CEO of Wealthman, holds that the impact of steps taken by internet companies to ban crypto ads need to be viewed both in the short and long term.
"The impact of Google actions should be assessed in both short term and long term. In the short term, this decision probably has a negative effect as it creates a negative information background, which is very important for a volatile market, such as cryptocurrency market. It also can greatly complicate the conduct of marketing campaigns of ICO projects," he says.
But in the long run, Huseu is optimistic the ban will strengthen the market by weeding out scam coins and scheming actors thus providing stability.
“In the long term, however, this decision can make the whole industry less attractive to the scum projects, therefore will improve the market conditions," he adds.
According to Denis Farnosov, founder and CEO of AlfaToken, even with internet companies such as Google, Twitter and Facebook banning crypto ads, all is not lost. ICO companies can explore alternative mediums to market their projects.
He says, "Marketing through increased community engagement on social platforms, message boards and forums should be implemented. This means ICO Founders must engage with the community. Tools like AMAs are effective for telling the story directly to the audience. Press releases can be used as a marketing tool if they are written in a news style where value is added for the reader. I believe these channels will profit from this decision of Google and Facebook."
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.
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