The marketing strategy for ICOs has been changing ever since the term was coined. An ICO, or Initial Coin Offering, is a way for startups to crowdfund capital by selling their own token in exchange for primarily Bitcoin or Ethereum. Investing in an ICO can lead to tremendous returns as can be seen with success stories such as NEO and Ethereum whose early investors are now looking at 200,000% returns.
Then came companies like Centra, which made false claims about partnerships, and Plexcoin, which promised investors exceedingly high returns. These strategies enticed investors but also drew the attention of the SEC, which became determined to put an end to the “strike it rich” marketing strategies of the past few years.
The Good and Bad of Social Media
Social media marketing has been one of the most powerful tools for ICOs to gain a following and bring value to their projects. Once cryptocurrency garnered the attention of mainstream curiosities, the social media giants began to wake up. In early 2018, Facebook announced that it would be banning ICO-related advertisements, and Twitter followed suit a couple of months later stating: “We have added a new policy for Twitter Ads relating to a cryptocurrency. Under this new policy, the advertisement of Initial Coin Offerings (ICOs) and token sales will be prohibited globally.”
In response to this, the cryptocurrency community has started looking toward more stable and verified ICOs and has become increasingly more critical of those who do not embrace transparency. There are listings such as Top ICO List, ICO Alert, Bestcoins, and many more which offer their services to ICOs and the community; these listings weed out ICOs that show signs of a potential scam and creating prerequisites to ensure that the companies they list have strong foundations. Startups looking to crowdfund via an Initial Coin Offering are strategizing more towards being listed and verified than garnering likes on Facebook.
Still, many ICOs like Centra have tried to use other untrustworthy tactics such as obtaining celebrity endorsements to promote their products. This created further skepticism within the community and is unlikely to continue since these celebrities can be held accountable for the ICO’s. As the SEC stated: “These endorsements may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.”