While the topics we all learned in school were pretty important — from math to history to science — most schools don’t teach a thing about personal finance or financial management, which arguably shapes a person’s entire future.
That's where influencer advertising comes into play in today's news cycle, especially with regard to crypto currencies.
Influencers like @girlsthatinvest, @calltoleap and @milansinghhh are providing useful educational content on money matters that can help the next generation of investors. In addition, high-profile TV commercials for cryptocurrencies have starred people like Matt Damon and Larry David.
The problem is that too many students graduate from high schools where they aren’t taught personal finance. They then become adults who don’t know enough about personal finance to make informed choices. That puts them in the position of feeling like they need to follow the advice of someone they trust when it comes to making decisions about money and investing.
Hence, the success of influencer advertising.
With a lack of knowledge — usually through no fault of their own — the general population tends to do whatever their favorite influencer tells them to do.
Influencer marketing campaigns
Unfortunately, many influencers either admit to not knowing much about crypto themselves — agreeing to do an ad because it's a gig — or have undisclosed conflicts of interest.
That's what happened when Logan Paul, a 27-year-old boxer, told his six million followers on Twitter that he was "all in" on Dink Doink. But amidst the general meltdown of the value of crypto currencies in 2022, Dink Doink fell to a fraction of a cent. Later people discovered Paul had failed to mention that he and the project's creator were friends and Paul had received a large allocation of Dink Doink coins when it launched.
Kim Kardashian also neglected to tell her Instagram followers that she was being paid $250,000 by EthereumMax to tout their tokens. Kardashian agreed to pay over a million dollars in penalties, plus accepted several other disciplinary actions.
As reported by the New York Times, Giovanni Compiani, an assistant professor of marketing at the University of Chicago has found that younger, lower-income investors tend to be overly optimistic about the long-term success of crypto. "This is real money that people are investing. Those who promote it should be more upfront about the potential downsides."
After the crypto market crashed in 2022, influencers who have had no comment about their crypto ads include Reese Witherspoon, Matt Damon, LeBron James, Gwyneth Paltrow, Mila Kunis, Aaron Rodgers and Tom Brady.
The crypto industry has used these types of influencers to garner interest from non-financial people, who trust someone just because they are famous.
It is important for influencers to be more transparent about their relationships with the brands they are promoting. If an influencer is being paid to promote a product, they should disclose that information up front.
Remember that this space is evolving all the time. It may be a good idea for you to bring in a compliance expert to confirm that all your ads are clean and above-board.
Reducing social influence
The Times also quoted Brett Harrison, the president of the US division of FTX (a crypto company that has used celebrity promoters quite aggressively to reach their target audience), "We sort of created this arms race. 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."
Harrison says they are now focusing on using less aggressive tactics, like digital marketing campaigns and Google ads, and trying to reach different demographics as potential customers. "We're thinking of doing things a little bit differently than we were in the past."
Like FTX, crypto companies are doing more "traditional" types of marketing, including SEO-based inbound marketing, social media marketing and paid ads online.
Paid ads that show up on Google when people search for "how to buy Bitcoin" or "Bitcoin price today" are less intrusive than a celebrity endorsement of a particular digital currency.
These are the types of marketing strategies that have been used for years by companies in other industries, and they will likely continue to be effective in reaching a wider, and more diverse audience.
Teach how to buy and sell without being influenced
But are these changes enough? Probably not. As a crypto company, it’s up to you to make sure your audience is well-informed so they can make good decisions about how to invest and save their money. You can share the following tips with them:
– Do your own research: This is the most important thing you can do. Read about the project, the team, the roadmap, the platform and the community. Don't just take someone's word for it.
– Diversify: Don't put all your eggs in one basket. Invest in a variety of projects and don't put more money into crypto than you can afford to lose.
– Know who you're following: Make sure you know who you're taking advice from. Check to see if they have any conflicts of interest. And be aware that even well-meaning influencers can be wrong.
– Be skeptical: Remember that everyone is trying to make money in crypto, including the influencers. So take everything with a grain of salt and don't believe the hype.”
Make sure your audience hears this message: “These are the best ways to reduce your dependence on influencers for advice. But even if you do all of those things, you're still taking a risk. So make sure you understand the risks before you invest.”
Investing in crypto isn’t for everyone. Help people self-identify as a good candidate or a bad candidate for these investments, and your customers will be more knowledgeable, more satisfied and more likely to help educate others as well.
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