(Seven-time Super Bowl winner Tom Brady and his supermodel wife Gisele Bündchen are featured in a new commercial for cryptocurrency exchange FTX)
Cryptocurrency trading and commerce are becoming more mainstream. While it’s unlikely you will find many brick-and-mortar vendors that will accept Bitcoin, millions of vendors on PayPal and Square will transact using cryptocurrency. Crypto trading on PayPal has become mainstream as you can buy, sell and use their app to add Bitcoin, Ethereum, and Litecoin to your wallet. The widespread acceptance of cryptocurrency as a payment mechanism has been slow relative to its acceptance as a store of value. Many investors have been trading cryptocurrencies for years. Companies have been using celebrities to advocate for cryptocurrency as an alternative asset to reach many investors.
Tom Brady, Gisele, and Steph Curry
In Q3, cryptocurrency exchange FTX began running advertisements in the United States featuring Tom Brady and his supermodel wife, Gisele. According to a story in the Wall Street Journal, the company plans to spend $20 million on the ad campaign, coinciding with the American Football season. Using celebrities to endorse products is not new, but promoting new alternative assets seems unusual. FTX says it wants to be in direct competition with cryptocurrency platform giant Coinbase and believes that using celebrities in an ad campaign and social media will help them gain the traction they desire. The high-profile moves are not only to get the word out to new potential consumers. It also helps the company build trust and familiarity.
Tom Brady is not the only high-profile athlete that is promoting crypto trading. Steph Curr is also expected to have equity ownership in FTX to serve as a brand promoter. FTX is so active that it bought the naming rights to the Miami Heat arena, which is now called FTX Arena.
Brand Promotion is Not Straightforward
While FTX has successfully advertised its product through TV, it cannot promote its brand through TikTok videos. During the summer of 2021, TikTok decided to ban videos that promote crypto trading. In July, TikTok created an algorithm that can automatically block any video content violating the policy related to the crypto trading promotion. The ban is not just on advertising but also incorporates educational videos about crypto trading strategies.
Why is Celebrity Endorsement Dangerous?
The educational component is hard to understand, but TikTok is hellbent on removing crypto trading videos from its platform. The issue of celebrity endorsement can be dangerous for novice investors. Celebrities such as Kim Kardashian West and Elon Musk are touting several different cryptocurrency products. Stars are not getting paid to help novice investors trade the cryptocurrency markets. They are focused on promoting a specific brand and driving traffic to certain crypto sites. For example, Kim Kardashian posted a paid story on Instagram in June about EthereumMax. According to sources, more than 19% of respondents who took a survey said they had heard about the cryptocurrency from Kardashian’s Instagram post.
What is the Benefit of Celebrity Endorsement?
Crypto trading companies use celebrity endorsements to increase their exposure to several types of potential consumers. The target group they are likely after is those who have had very little exposure to crypto trading. The celebrity increases their knowledge of a potential new product and drives traffic to their site. With millions of people following her on Instagram, one post can be worth a fortune to a cryptocurrency trading site. The celebrity endorsement is also helpful to those on the fence concerning trading crypto. Seeing someone that you trust on TV or video that tells you about a trading platform helps build trust between a potential consumer and a trading platform. The celebrity endorsement is less geared to the advanced trader, as the exposure does little more than help make them aware of a new potential available site. Those who are actively trading have likely heard about any new operations that are currently available.
The Bottom Line
The cryptocurrency trading environment has attracted several platforms that provide access to the digital asset market. Some prominent players have established themselves in this arena, including Coinbase and PayPal. Each of these platforms have a total reach to provide their services to millions of users.
As new companies come on the scene, they attempt to play catch up. Many of them use celebrities to help endorse their products and drive traffic to their website. Athletic stars like Tom Brady and Steph Curry are using their fame to endorse crypto trading products. In some cases, these celebrities are getting paid for advertising, and in other cases, they have an equity stake in the operation. Using a star to endorse and advertise your investment vehicles is usually geared toward novice traders who might not have heard of cryptocurrency trading. It is also beneficial for those people who might be on the fence and need a celebrity to help increase their trust in this alternative asset.