April 4, 2018Article

Will Ad Bans by Tech Giants become the Game Changer in the Crypto Industry?

The crypto craze has become one of the biggest trends in the business sector in recent years. It has grown from a buzzword to a bubble and is now going mainstream, which explains the many startups being established and existing businesses integrating cryptocurrency and blockchain in their business models. It is a revolution whose time has come, it cannot be avoided.

Despite the gradual growth and popularity, investor security remains a pressing issue in the cryptocurrency space. The industry is largely self-regulated and players in the market are left to determine terms and conditions of trading. Participants can choose to engage anonymously, an aspect that creates room for illegal activities such as terrorism financing, scamming, etc.

This situation has promoted regulators and other players to take actions like banning cryptocurrency trading and advertising, that have impacted the cryptocurrency industry. Some of the actions include banning crypto projects. Google and Twitter have become the latest stakeholders to ban crypto-related ads. Early this year, Facebook changed its advertising policy, effectively disallowing crypto-related ads.


Market Reaction

There is no doubt that the decision by tech giants, Google and Twitter will definitely affect the industry positively as well as negatively.

The cryptocurrency market is highly volatile in nature largely because it is still unregulated. As a result, any new development like the ban on crypto-related ads, sends shivers across board. The impact of this is an immediate drop of cryptocurrency prices and their respective market cap. This was observed on the day Google announced its intention to ban crypto ads starting June 2018. However, this impact on price is expected to end soon as investors and other stakeholders get to understand the implications of the ban.

Eugene Liebermann, CEO and founder of CAR Token Company says, “I am sure that in short term this will and actually has already done a negative impact on major of existing leading coins. This basically, caused by millions of people who ask their grandma for an investment advice. They should be banned from trading. Agree with me that XRP, BTC or ETH for instance don’t need and would never be advertised through the google ads or Facebook lookalike engine."

Following the blanket ban, companies seeking to raise capital through initial coin offerings (ICOs) are likely to create or adopt alternative advertising methods, including using platforms that have not banned crypto ads, to market their projects to investors.

Denis Farnosov, CEO and Founder, AlfaToken says, “ICO projects will look for other platforms that will allow ICO advertising. This includes Telegram channels, ICO tracking websites (some of them don’t integrate their banner ads with Google), crypto media websites and review sites. ICOs are going to be forced to use more content based marketing. This means articles, videos, audios that share the message in a manner that is more editorial and newsworthy style.”


Stakeholder Roles

On the other hand, the move by Google and Twitter to ban cryptocurrency ads will push some stakeholders in the cryptocurrency industry to burn the midnight oil to deliver their responsibilities seriously.

Blockchain firms will have to develop and adopt alternative advertising approaches. They will focus more on finding trusted partners and investors and building strong, long-term relationships. At the same time, regulators will have to policy complete formulation to regulate the industry and weed out scammers.

Crypto investors will be more careful when vetting crypto ventures to ensure they don’t fall victim to scammers. In the long run, these efforts will boost confidence in the cryptocurrency industry, attract more investors, increase the value of virtual currencies and cause an upsurge in crypto market capitalization.

All in all, the long term impact of the cryptocurrency ad ban will have minimal impact according to Steven Dryall, founding partner and director at Niko Coin.

He says, “Overall this should have little impact from a long term perspective. It should contribute to weeding out some of the unsavory participants in the industry resulting from less exposure to deceptive practices. Any viable cryptocurrency has a supporting community and building a quality community does not require advertising. China will do their own thing and either improve upon an existing setup or create a version of their own, suitable for the purposes that work for their economy.”

There are various advertising alternatives, existing and new ones to be created by blockchain firms, that can replace Google, Facebook and Twitter. We expect to see establishment of more invite-only marketing forums, online chat rooms, Telegram groups in the coming months. With such alternatives, the crypto ad ban by Twitter, Facebook and Google will not make a significant difference in the cryptocurrency industry.





Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.