How Crypto.com is betting big on sports partnerships to reach one billion users

Cryptocurrency companies are betting that sports advertising will help them go mainstream, and none made more noise than Crypto.com with a Super Bowl Sunday ad and a $700 million last year to rebrand the Staples Center in Los Angeles as Crypto.com Arena.

Little known a year ago, the Singaporean private company aired a flashy Super Bowl ad alongside mega brands such as Budweiser, GM and Pringles, as well as rival crypto platforms, in a bid to dramatically expand its user base.

Other cryptocurrency platforms FTX, Bitbuy, and eToro also ran Super Bowl ads. But the game was just Crypto.com’s latest ad campaign.

Last year, he launched a $100 million (about Rs. 755 crore) advertising campaign in 20 countries with actor Matt Damon, signed sponsorship deals with the Philadelphia 76ers, Ultimate Fighting Championship and Formula 1 Racing, and secured 20 years of naming rights for the former Staples Center. On Thursday night, the Crypto.com Arena hosted the Super Bowl Music Fest.

Six-year-old Crypto.com is the brand name of a global group of entities operating as Foris DAX. Its finances are not entirely public and Crypto.com has not disclosed its investors, although it says it has no support on Wall Street.

Its aggressive marketing campaign has raised eyebrows. Some see this as a sign that the frothy crypto market is a bubble about to burst.

“There’s an enormous amount of money flowing through the system right now, and as a result, everyone is in land grabbing territory and looking for ways to make it work,” said Adam Shapiro, partner. of the investment company Klaros Group.

Founded in 2016 by Hong Kong-based entrepreneurs, Crypto.com is the sixth-largest cryptocurrency exchange by daily volume, according to researcher CryptoCompare. It has more than 10 million users but wants to reach another billion and become one of the top 20 global brands, said CEO Kris Marszalek.

Getting in front of ordinary Americans through sports partnerships is his strategy. Super Bowl advertising reaches approximately 100 million viewers. Broadcaster NBC charges up to $7 million (around Rs. 53 crore) for 30 seconds.

“If you potentially hit 150 million in a single event, it could pay for itself pretty quickly,” said Paul Rogash, chief executive of BetU, a crypto sports betting platform.

The crypto market had a dizzying year in 2021 as money poured in, pushing the value of all cryptocurrencies to over $3 trillion.

Crypto.com has been trying to get a head start with high-profile partnerships, including the one announced last month with basketball superstar Lebron James of the Los Angeles Lakers who will play his home games at the Crypto.com Arena. .

Its ad featuring Damon, directed by Oscar-winning cinematographer Wally Pfister, was so widely publicized that South Park parodied the ad during the Feb. 2 season premiere.

“The playbook they’re playing is we’ve got a lot of money. Let’s get our name out there,” said Robert Siegel, a senior lecturer at the Stanford Graduate School of Business and a venture capitalist.

Crypto.com declined to comment.

Crypto bubble?

The company started as a crypto wallet and payment platform named Monaco and in 2017 raised $25 million (roughly Rs. 190 crore) through an initial coin offering. In 2018, he renamed Crypto.com and launched an exchange in 2019.

Like its competitors, Crypto.com collects commissions on transactions, as well as on debit cards offered in partnership with Visa. It has a $500 million (about Rs. 3,780 crore) venture capital arm that invests in crypto and blockchain startups.

According to its website, the company has 3,000 employees worldwide and offers 584 positions in marketing, human resources, compliance, engineering, and business development, among others.

This staffing level is higher than the 2,781 employees listed in the latest filing of the largest US crypto exchange, Coinbase, which was founded in 2012 and has 72 million users.

Last year, Crypto.com said it was expanding its institutional customer base, like hedge funds and market makers.

Unlike Binance, Coinbase and other rivals with Wall Street investors, Crypto.com claims to have never raised institutional funds. Marszalek told Bloomberg in January that the company’s revenue grew 22 times over the past year.

“They’re probably making a lot of money at a time when a market is incredibly speculative,” Siegel said.

Some are comparing the crypto spending spree and the skyrocketing growth of Crypto.com to the dotcom bubble when several overly inflated tech companies went bankrupt. These people warned that investors are likely to abandon risky digital assets when the US Federal Reserve begins to aggressively hike rates.

Cryptocurrencies have had a rocky start to 2022, with Bitcoin tumbling below $40,000 (roughly Rs. 30 lakh) for the first time since the fall.

Crypto.com is trying to position itself ahead of the pullback and is spending whatever it takes to get there, said Mark Basa, global brand manager at crypto firm HOKK Finance.

“I think they’re going to win this race,” he added.