'Loss of faith' Celebrities advocating crypto are not so vocal now

By: Tiffany HSU

NEW YORK: The crypto market is in the middle of a meltdown. Buyers beware. Enthusiasm for crypto from Hollywood celebrities and top athletes reached a fever pitch over the past year. On social media, during interviews and even in music videos, they portrayed virtual currency as a world with its own hip culture and philosophy — one that was more inclusive than traditional finance and that involved the chance to make loads of money.

The Super Bowl was nicknamed the “Crypto Bowl” this year because so many ads — which cost as much as $7 million for 30 seconds — featured the industry, several of them starring boldface names. But after investors watched hundreds of billions of dollars disappear in a sell-off this month, those famous boosters now face intensifying criticism that they helped drive vulnerable fans to invest in crypto without emphasising the risks. Unlike clothes or snacks or many other products hawked by celebrities, the crypto market is volatile and rife with scams.

“This is real money that people are investing,” said Giovanni Compiani, an assistant professor of marketing at the University of Chicago whose research has found that younger, lower-income investors tend to be overly optimistic about crypto’s trajectory. “Those who promote it should be more upfront about the potential downsides.” So far, crypto’s celebrity boosters have been largely silent about whether they have any second thoughts about their promotions. Crypto’s instability underscores a basic fallacy of celebrity marketing: A famous person’s endorsement may be memorable — but it does not make the product being pushed inherently worth trying. “This is what they do — they’re celebrities, they got offered money to promote something that has promise,” said Beth Egan, an associate professor of advertising at Syracuse University.

But it wasn’t without risk, Egan said. If the crypto industry had kept booming — or if it returns to its high-flying status — the endorsers could be lauded. But if the downturn continues, their reputations could suffer.

“If I were Matt Damon or Reese Witherspoon, I would be questioning my willingness to take on this kind of gig,” she said. In March, Crypto.com spent an average of $109,000 a day on digital advertising, according to estimates from the advertising analytics platform Pathmatics. In May, that has fallen to $24,669 a day. Spending at FTX, one of the crypto companies that most aggressively used celebrity promoters, slipped to $14,700 a day this month from $26,400 a day in March, according to Pathmatics. “We sort of created this arms race,” Brett Harrison, the president of FTX’s U.S. arm, said about the use of celebrity endorsers in an interview before the Super Bowl in February. “We’ve planted our flag there and we have such great presence that racing to grab all of the remaining properties and athletes and celebrities is not necessarily our top priority,” he said.

But the company, which would most “likely spend a pretty significant amount more” on marketing, is now focusing on reaching different demographics and pursuing more low-key tactics, such as digital campaigns and Google ads, he said. “We’re thinking of doing things a little bit differently than we were in the past,” he said.

Hsu is a reporter with NYT©2022

The New York Times