Crypto.com’s billion-dollar-plus sports sponsorship agreements have allowed the cryptocurrency platform to reach the “widest global audience” and spurred rapid user growth, the company’s chief marketing officer, Steven Kalifowitz, has said, speaking at the Sports Matters conference in Singapore yesterday (September 26).
The company’s users have exploded from 10 million at the end of the first quarter 2021 to 50 million in April this year. This growth has been supported by huge spend on sports sponsorship.
Crypto.com has invested well over $1bn (€1bn) in sports sponsorship since launching in 2016. This includes sponsoring the venue formerly known as the Staples Centre ($700m for naming rights over 20 years); Formula 1 ($150m over five years); the Ultimate Fighting Championship ($175m over 10 years); the 2022 Fifa World Cup (expected to be at least $40m); and French Ligue 1 club Paris Saint-Germain (at least $25m over three years).
Kalifowitz gave a resounding endorsement of the power of sports sponsorship and traditional, ‘above the line’ marketing, saying his company is able to engage a “large swathe of society” through its attention-grabbing deals with some of sport’s largest properties.
“I’ve always been a tech person and…been in that area of industry. But, really, the basic stuff from 20, 30 years ago, still works. Our brand activations had no real social component – it was really all traditional, above-the-line. The social part was the stuff where other people share stuff on social and see us there. But I don’t think it had the impact that being in the real world, being on broadcast TV, or being in a physical environment [had] – that impact just changed how people perceive the brand.”
He added: “We really focus on reaching the widest global audience. Every Formula 1 race is a global event. They happen in different cities around the world and they draw an amazing global audience.”
In addition to its global partner sponsorship deal with Formula 1, Cyrpto.com also holds the naming rights to the Miami Grand Prix and a global sponsorship agreement with the Aston Martin racing team.
It is not just Formula 1’s global presence that makes it so attractive, Kalifowitz said, but also its ability to draw people who are not “mainstream” sports fans. He explained: “A lot of people didn’t grow up watching Formula 1…And the same thing with the UFC…but today it’s an insanely big sport. And anybody who is drawn to [those sports] is somebody who would be willing to, or just have a propensity in their subconscious to, try something new.”
Although Formula 1 was quickly identified as a key property for Crypto.com, Kalifowitz said the platform was careful to partner with a racing team that fitted with the values and ethos the brand aspires to.
“Red Bull are awesome,” he said. “But Red Bull is all about breaking the rules and, as a brand, we are not interested in that. Aston Martin projects the sense of staying power and commitment to quality and longevity. There’s so many parallels between their brand and ours that it was awesome to do that [deal].”
Assessing sponsorship strategy
Crypto.com’s big spending in sports sponsorship may not last much longer, however.
The boom in investment in sports sponsorship in the last year by the cryptocurrency sector was spurred by two factors: explosive growth in consumer adoption of cryptocurrencies amid a massive bull market; and the fact that advertising by cryptocurrency exchanges is curtailed in certain markets and on certain platforms.
This year, the value of cryptocurrencies has crashed globally. The sector is also attracting increasing attention from regulators. Some commentators expect the headwinds will see cryptocurrency companies reduce their sponsorship activities.
Concerns about regulations across Europe are thought to have derailed a €100m sponsorship agreement between Crypto.com and Uefa earlier this year, as reportedly exclusively by SportBusiness. The deal would have seen the platform replace Russian energy company Gazprom as a Champions League sponsor.
Kalifowitz said Crypto.com plans to take stock of its current sponsorship deals before continuing with its current approach.
“What I’m going to do now is assess, like a gap analysis, where are the places where we expected to have resonance but don’t and where are we seeing diminishing returns,” he said. “Because, at a certain point, the more [deals] you add, it just doesn’t do much. Right now, we’re in that space of trying to assess that.”
However, Kalifowitz said he had been surprised by the return the platform earned on its sponsorship investments to date and did not say outright that it is planning to scale back:
“The return has been…I didn’t expect to see the reaction in the first year that we have had. And so it’s very much about [thinking], ‘We’ve got a lot of assets, now let’s see how they’re working and improve.’”
‘People wouldn’t pick up the phone’
While Crypto.com is now one of sport’s biggest spending sponsors, Kalifowitz said the platform initially struggled to attract the attention of rights-holders, such was the unfamiliarity with, and distrust of, the cryptocurrency sector.
“People wouldn’t pick up the phone or reply to anything…almost nobody replied at the beginning because [they] were like, ‘What’s this crypto thing,’?” said Kalifowitz, who joined the platform in 2020. The marketing chief’s background includes stints as an Emmy-winning sports television producer in the US, and senior roles in Southeast Asia at companies including Twitter and advertising firm R/GA.
“Regardless of how much money you have, [rights-holders] need to vet you. They’re putting your logo, your brand, your company with them and it would be a shame if they did that and we were not a trustworthy company…And, so, the pitch was really important. It was very much focussed on [making rights-holders] feel comfortable going down this path [with us] because [they] know we’re here for the long term.”
Kalifowitz said this year’s Super Bowl commercial, which saw basketball legend LeBron James encourage his younger self to “call his own shots”, marked a pivot towards a subtler pitch to both consumers and partners.
“LebBron didn’t tell you about crypto in the same way that ‘Think Different’ [the slogan used by Apple from 1997 to 2002] wasn’t telling you to buy an Apple computer. [The commercial] just tells you about the company and how the company sees the world. And so it was very much about projecting this [concept] to teams and leagues and properties: We’re here for the long term, we are trustworthy and we can prove that to you.”