What is an ICO?
An ICO (initial coin offering) is a relatively new way by which a company can raise money for their operations.
It is similar to an IPO (initial public offering), but instead of issuing equity shares to the public, a digital token is issued. This digital token usually has some form of utility, such as being used as the main payment method on the given platform.
It was in 2017 that ICOs first came to the fore, with many startups up the blockchain technology space using this crowdfunding method to raise funds instead of going down the traditional venture capital route.
There was more than $5 billion raised through ICOs in 2017, and this number set to be significantly bypassed in 2018 as more established companies are holding ICOs, rather than mainly startups. The popular messaging app Telegram, for example, is currently holding an ICO which is set to be the largest of all-time, having already raised more than $1.7 billion.
What types of ICO exist?
There are three different types of ICOs that can be seen.
1. Securities Token
A security is classified as being a tradeable asset. In ICOs, there are different types of securities tokens on offer, with some being backed by real estate while others can be redeemed for the precious metal.
If the ICO is based in the United States or it is dealing with US investors, then the token will need to follow the rules and regulations of the Securities and Exchange Commission (SEC).
2. Equity Token
This is the least common type of ICO, and it resembles traditional investing the most. This equity token allows the company to raise funds for their operations in return for giving the investor an equity stake in the company.
This means that equity token holders are effectively shareholders and have voting rights and may receive dividends.
3. Utility Token
The majority of ICOs involve securities tokens, but if a token passes what is called the Howey test, they can be categorized as a utility token. These tokens give the investor access to a given product or service.
As an example, Filecoin managed to raise $257 million through their ICO. They are working on a service for cloud storage that is decentralized and utilizes computer hard drive capacity that is not being used. Their tokens can be used by investors to buy storage space from Filecoin.
Why is it difficult to promote ICO?
It is important when promoting an ICO that you do not mislead potential investors or make any promises about guaranteed returns. Due to a significant number of scams (according to an Ernst & Young report, 10% of all funds raised through ICOs in 2017 was stolen), people are warier about trusting offerings. More about Misleading ads.
Also, as the sector has become such a popular way to raise funds, there are more and more ICOs being launched every day. This means that it is increasingly harder for an ICO to stand out from the crowd and will have to get creative with their promotion.
What kind of info is important to mention in the ads?
- Start date and a brief description. You should define the start date of the ICO and give a brief synopsis about what the project is about. Investors will be hooked in by innovative projects that solve a significant problem in the market.
- Amount already raised. If there has been a pre-ICO sale, you should mention how much has already been raised if it is a significant amount, as this gives potential investors an indication as to the popularity of the token sale.
- Bonuses and discounts. You should highlight any incentives that are on offer for investors, such as a discount when they sign up to the email list or partake in the pre-ICO sale.
- Prominent team members. If there are any notable team members or advisors who are well-known in the tech/crypto world or have worked on successful projects, you should mention them.
- Goal. Finally, you should detail what your fundraising goal is and what sort of roadmap is in place for the project.
How to understand that an ICO is legit?
There still is a lack of clear-cut regulations in the ICO sector, so you have to do your best to determine if an ICO is legit or not.
You should do background research on all of the team members and advisors to ensure that firstly they are real and secondly that they have proper experience in the given industry the ICO is targeting.
Then you should look for any potential warning signs on popular platforms that cryptocurrency enthusiasts frequent, such as the BitcoinTalk forum, Telegram, Twitter, Reddit, and Facebook.
Finally, you should check out what ratings the ICO as received by some of the popular ratings sites.
Are there any restrictions?
There have been a number of restrictions implemented since the start of 2018 related to ads promoting ICOs.
In January 2018, Facebook announced a ban on ads related to ICOs, with the likes of Twitter and Snapchat following suit. Google also announced a ban on these advertisements that would come into effect in June 2018.
It is also important that ads do not mislead investors or contain any illegitimate claims, such as promising a return on investment.
What are the main advertising goals of ICO campaigns?
1. Build Brand Awareness
As there is such saturation in the market, you want the ICO to stand out and attract potential investors. You should present why your given ICO has potential and allude to the significant problems that it is solving. You should also outline why investors should trust your ICO and invest in it.
2. Attract Potential Investors
It is important that an ICO campaign is constantly attracting new customers and getting investors on board. There is only a limited window to do so as the token sale only lasts for a short period of time so every opportunity to gain a potential investor matters.
3. Increase Conversion Rates
Whether you want people to sign up to the ICO email list or invest in the pre-sale, you should always use your campaigns to focus on increasing conversion rates. Incentives are a great way to do so, such as offering people a discount on the token sale when they sign up to the email list.
How to promote ICOs with Paid Traffic?
As there are a lot of major advertising networks such as Google, Facebook and Twitter putting a halt to ICO promotions, you will have to use a few different methods of paid traffic.
The main reason behind this ban was due to the significant number of ads that were for fraudulent ICOs that led to people losing their hard-earned money. As the vetting process for each specific offering looking to advertise would be too intensive, these companies decided to implement a blanket ban on ICOs advertising on their platforms.
In terms of paid traffic, the approach that appears to work best is utilizing massive scale campaigns (like popunders and native ads) which help to effectively build awareness, which is one of the key advertising goals for any ICO Promo campaign.
We recommend testing various combinations of different creatives and ad formats. We have prepared a short, handy table so you can easily mix and match your advertising activities:
Other paid methods
There are many leading publications related to ICOs online in which you can get articles featured, press releases circulated and take out ad space on. You can also look to cryptocurrency influencers to promote the ICO, as well as targeting popular meeting grounds for ICO enthusiasts, such as Telegram, forums, and Reddit. Therefore, it is important to not just rely on paid traffic, but also to implement traditional sources of traffic generation into your strategy.
The blockchain is a big topic of conversation and is definitely not limited to cryptocurrencies only, as you could see. We decided to divide this topic into a series of articles so we can go into depth on what advertisers and publishers need to know about blockchain technologies.
Next time, we will talk about the potential of Blockchain technology in digital advertising. Stay tuned!