Marketing strategies in the crypto industry are different today. In previous market cycles, many Web3 projects hoped for an overnight hit or community growth before releasing any product. Since then, the industry has matured, and Web3 startups have learned to slow down and adopt more sophisticated marketing strategies. More and more Web2 talent crosses over to Web3, which also makes Web3 startups begin to embrace more traditional Web2 marketing strategies. However, there are still some subtle differences in marketing strategies between Web3 and Web2, especially for early stage startups, and this article will explore these differences in depth.
As startups mature, so must the sophistication of their marketing strategies.
Regardless of the industry, setting the right goals is the key to success.
In the early days, customer acquisition and customer engagement required the same strategy.
Web3 startups don't need to spend too much on marketing.
Traditional marketing metrics are still critical to Web3.
Web3 faces unique challenges in market segmentation and attribution.
What is Marketing Maturity? How has marketing maturity evolved?
Marketing maturity refers to the sophistication of a startup's marketing strategy. The most effective indicator of maturity is the startup's data analytics program. Early-stage startups typically collect very small amounts of data, or the data is poorly structured. This can lead to severe inefficiencies, as companies cannot accurately judge the effectiveness of their marketing programs. As companies mature, they begin to collect more data, integrate it and use it to generate more granular insights, such as the cost of acquiring a new customer, or the lifetime value of an existing customer. Most established startups are able to attribute revenue to a specific marketing channel, which helps optimize resources.
The diagram below shows the different stages of marketing maturity for traditional B2C or transactional startups.
In this process, each link has a different focus - the source of the data.
Define your marketing goals before developing your marketing strategy
Some inexperienced startup teams refer to others' practices when developing their marketing strategies, but doing so carries a lot of risk. Every project is unique, so marketing goals will also vary. Marketing objectives are generally divided into two categories: "customer acquisition" and "customer interaction." In other words, get people to use your product and get them to become loyal to your brand. More specific goals can be formulated under these two categories, such as allowing N individuals to register for Discord groups, or register for NFT whitelists.
For Web3, startups at different stages have subtle differences in "customer acquisition" and "customer engagement" with the following goals:
Find early backers - this tends to happen before the seed round and before the product launch. Some people may question: even the product has not been able to acquire customers? But in the Web3 industry, startups are often more committed to product proof-of-concept, such as building a community before releasing a product. Here, user acquisition and user engagement are driven by grassroots marketing strategies that go beyond the founder’s personal network. What the project party is looking for is not a real "customer", but a "supporter". In this phase, however, the project's marketing strategy is the same as the strategy used to acquire real customers later.
Attract users to interact with the product and give feedback - Web3 projects that have been released on the testnet are relatively mature and can try to acquire "users". Note here that "user" and "customer" are only slightly semantically different. A user is someone who interacts with a product, but doesn't necessarily contribute any revenue; a customer is someone who pays for a product. However, some people disagree with this classification. Former Twitter CEO Jack Dorsey has publicly expressed his desire to refer to Twitter users as customers. But for Web3 marketing it is really necessary to separate the concepts of user and customer. Users of some Web3 services (such as infrastructure tools or free-to-play games) may not generate revenue for the project, especially in the first iteration.
Gaining community members, driving network effects - Often, the initial goal of a project is not to attract users who can generate revenue for the project. Web3 relies on network effects more than any other industry, and the marketing resources of early-stage startups are almost entirely devoted to this goal. This means building word of mouth for the project among the crowd, allowing people to interact with the brand and participate in the community. This will create a sustainable network and lay the groundwork for generating revenue streams later on.
Clarify the target market before investing resources to acquire customers - clarifying the target customer group allows the project party to effectively formulate a complete marketing strategy from content creation to influencer cooperation. Many early Web3 startups don’t pay enough attention to this, and don’t have a clear target audience, but indiscriminately cover all people who are interested in crypto. When startups haven't started spending money on marketing, it's okay to do so. But once the company starts investing real money to implement its marketing strategy, it must further refine its target customer base. We'll discuss this in detail later when we talk about how to optimize marketing effectiveness.
What marketing strategies should early Web3 startups adopt?
Generally speaking, what kind of marketing strategy a startup adopts depends on their business model and the vertical in which they operate. But most Web3 startups choose a different marketing channel than Web2 companies. For example, in the Web2 industry, verticals such as fashion and beauty enjoy co-marketing with influencers, but other verticals (such as SaaS tools and online banking) are less interested in influencers. In the Web3 space, however, influencer marketing is very common across various verticals. This may be because Web3 users need more expert guidance on how to navigate the complex and ever-changing Web3 world.
The chart below shows the most popular traditional marketing strategies in the Web3 space. The darker the circle, the more the marketing strategy is favored by early-stage startups, and the larger the circle, the greater the potential impact of these marketing strategies on traffic and user acquisition.
Early-stage Web3 startups prefer a slightly different strategy than Web2 startups.
It should be pointed out that the cost of marketing strategies such as Internet celebrities is also relatively high. Web3 startups that haven't raised funding are better off trying free or low-cost marketing strategies first. In particular, startups without a clear target audience should be more cautious.
low cost marketing strategy
Unlike paid advertising-style marketing, this low-cost marketing usually focuses on providing some kind of value (such as education, entertainment, or inspiration) to the customer base. Because of the intrinsic value of this type of marketing content, it usually spreads naturally. Such as answering questions entered by search engine users, or people's willingness to share these content in social networks.
Create content around hot topics in ecology
Research and discussion can revolve around the most talked about topics, project goals, or the common interests of the various crypto communities. The specific methods are as follows:
Blog Posts - In the traditional Web2 world, blogging is a very effective but also very challenging marketing strategy because of the need to compete with the mass of other blog posts for the reader's attention. The Web3 world is less competitive, but the landscape is changing rapidly. Today, Web3 startups also struggle to impress readers with mediocre data-driven articles or vague three-paragraph essays. Many project parties will share their vision and roadmap through blogs at the beginning, which is understandable, but it is also difficult to get a lot of traffic. Rather than producing such formatted blog posts, founders should focus on content that adds value to their target audience. For example, Martin Gontovnikas, who turned from a developer to a marketing expert, proposed the concept of "Content Products", which incorporates some interactive links to help project parties better communicate concepts. What he calls "content offerings" is aimed primarily at developers, but the concept applies to other audiences as well.
Long social media posts – Traditional social media platforms such as LinkedIn and Quora have a large number of users, and these platforms can post longer content, typically with a word limit of 200-600 words. As a result, startups can post segmented content on these social platforms in lieu of long blog posts. For example, LifeDeFied, a participant in the Startup with Chainlink program, launched an event called "DeFi Term of the Day" (a DeFi term per day) to popularize the DeFi ecosystem in easy-to-understand terms. The goal of this campaign is to educate the target audience and build a good image and brand equity, rather than simply product placement. LifeDeFied provides educational internship opportunities for college students. Interns learn and experience Web3 by writing articles, which also reduces LifeDeFied's operating costs. One of the articles gained the attention of a big V user, who reposted it on his social network. Within two weeks, LifeDeFied grew from 1,000 whitelisted users to 16,000 users.
Take advantage of your content
Text content is more popular because it naturally attracts search traffic, but it doesn't need to be limited to text. Many founders use their strengths to create content in the way they do best. In addition to text, you can create video, audio or even a series of GIFs. The most important thing is that the message conveyed is clear enough, in one sentence.
For example, Cardano founder Charles Hoskinson likes to communicate directly with the community through regular live broadcasts. In the video, in addition to talking about the future development of the Cardano ecosystem, he will also express his views on a range of other topics. Of course, not everyone is interested in what he has to say, but he does build a target audience and uses it well.
Focus on Search Engine Optimization (SEO) early on
Most startups generally understand the importance of SEO, but are often reluctant to invest resources into SEO until they have created enough content. In the beginning, these companies put all their energy into content creation and are reluctant to implement any process that might affect the efficiency of content creation. For some companies, it's easier to spread the content on social media than to optimize the content's ranking on search engines. And doing so would be a huge missed opportunity. Granted, it can take quite a while to find the right keywords, get enough backlinks, and build domain authority to rank at the top, but it’s worth it and can drive more traffic in the long run.
In the Web3 world, a common practice to rank well in search is to publish long-form content on third-party platforms like Medium or Hackernoon. These are great entry points to have high domain authority and drive traffic naturally. Some experts don't recommend using Medium because it doesn't drive traffic or build domain authority for a startup's own website. To solve this problem, startups usually publish content on their own website first, and then publish it on Medium, and put the original link on it as an authoritative link at the same time.
Post cautiously in other communities
In the crypto community, it is very common for the project side to do publicity in person. The project party is very aware that the Web3 ecosystem is interconnected, so it wants to use this to realize the realization. The strategy itself is fine, as long as it can generate added value. But at the same time, we must follow the same principles as content science, which is to focus on providing value instead of over-promoting your project; answering everyone's questions and helping them understand the concepts involved in your project (such as cross-chain communication).
Also, make sure to let everyone know which project you are from. For example, the Slack community of the data transformation tool dbt is very active, and its members are all analytical engineers. There are also many service providers in this community who share the same goals as dbt, and they also hope to attract their own community members here. Therefore, dbt has very specific rules for service provider participation. For example, a service provider must put parentheses after the nickname, with the company to which they belong, such as "Alice (MyDataTool)". These rules ensure that community members know who is from which service provider, and service providers can also take this opportunity to build some platform awareness and provide added value to users.
Paid Marketing Strategy
Once a startup has secured a seed round, it's time to set aside a marketing budget and develop a marketing strategy.
In the affiliate marketing model, startups pay content creators a commission to direct readers to their website. However, commissions can be linked to certain conditions. Most typically, commissions are paid when the referred user performs a specific action, such as completing a registration or purchase. Amazon, for example, employs this affiliate marketing model, incentivizing content creators to review products and share links to product pages on Amazon. Affiliate marketing requires complex tracking to automate attribution and pay commissions. Therefore, the publisher is usually a third party. There are few affiliate marketing technology providers focused on Web3, but startups such as Magic Square are trying to explore opportunities in the Web3 mobile application space. Regardless, affiliate marketing is a great way to generate leads. Mainstream crypto brands like Binance, Coinbase, and Kucoin all have strong affiliate marketing programs in-house.
As mentioned above, this pattern is very popular at Web3 because it generates a lot of leads quickly. However, this model can also be very risky. Many startups try an influencer marketing strategy too early and end up wasting a lot of traffic and budget. This is because they did not consider the degree of overlap between the online celebrity's fan base and the brand's own target audience. Finding the right big V to work with is not easy, it takes a long time, and this strategy works best when the startup has established a long-term relationship with the right “small influencer”. Paying a big influencer to promote your project may seem like a shortcut, but in reality it's hardly sustainable growth.
Incentive to participate
Another tactic that Web3 marketing often uses is the introduction of incentives to motivate users to participate in the project in some way. There are many different types of incentives, depending on the business model of the project.
DeFi protocols can use interest to incentivize users to provide liquidity.
NFT projects can add users to the NFT airdrop whitelist to incentivize them to submit contract details.
The L1 protocol can share a portion of transaction fees with users to incentivize them to secure the network and become validators.
The Web3 game project can create a P2E economic mechanism to motivate players to participate in the game.
Some incentives, such as motivating users to complete designated tasks on social media, should be used with caution. In the final analysis, this marketing strategy is also a kind of paid marketing. In addition, the specified tasks are easy to complete by bots, so people will take advantage of them. This will reduce the quality of activity on social media and make it difficult to generate any long-term network effects. The most effective use of a reward mechanism is to spontaneously reward loyal users of a product.
What marketing metrics should early-stage Web3 startups track?
The goal of an early-stage startup is to increase brand awareness and build leads at the lowest possible cost. Therefore, the focus should be on how to acquire new users and community members.
In the beginning, lesser-known projects are often discovered through endogenous channels such as search engines or free articles on social platforms. If the startup has some budget, it may also pay to promote it. But in the final analysis, more traffic should come from the project party's own network, that is, from the project party's own Discord channel or Twitter account, rather than from other channels. Ultimately, startups need to increase the percentage of direct traffic or traffic from their own domains and accounts.
Percentage of users or community members that grow organically
All Web3 projects need network effects to grow, so they all have a common goal of attracting users who share the project's vision. If a user discovers a project or community through endogenous channels, he is more likely to become a loyal user of the project in the long run. Paid traffic can build momentum in the beginning, but as the project matures, startups should reduce their reliance on paid traffic. In the long term, over-reliance on paid traffic indicates that the project is unable to achieve network effects, which may be due to the project itself, marketing strategy or target market.
customer acquisition cost
The purpose of this metric is to quantify the average cost a startup spends to acquire each visitor or user. Many early-stage Web3 startups don't consider customer acquisition costs when evaluating marketing effectiveness because they haven't started spending money on traffic. If a startup spends 5,000 euros to hire an influencer to promote its project and successfully attracts 1,000 users to the dApp within a certain period of time, the customer acquisition cost is 5 euros per user. As mentioned above, the key to this metric is what is really "acquisition." It’s important to note here that operating costs (such as paying a writer to create content) are usually not included in customer acquisition costs. But airdrop and other incentives are theoretically paid to acquire customers, so they should be included in the cost of customer acquisition. The purpose of calculating customer acquisition costs is to allow startups to allocate marketing budgets more efficiently. The key is to identify the marketing strategy with the lowest customer acquisition cost and eliminate the marketing strategy with high customer acquisition cost.
How can a Web3 startup improve its marketing strategy?
As startups mature, they will pay more attention to how to allocate marketing resources. In the beginning, many teams will adopt the strategy of "shooting the birds at random", covering all customer groups indiscriminately, and hoping that some of them will be converted into users (spam is obviously an extreme case). In later stages, startups will start to reduce waste and focus on initiatives that actually make a difference.
Companies can do this by:
Define your target audience more precisely
Ultimately, Web3 startups should narrow down their target audience, rather than indiscriminately covering all "crypto enthusiasts." In the traditional marketing model, market segmentation is based on demographic characteristics, geographic market, behavioral and psychological profiles. For example, Investopedia identified "middle-class women aged 35-55 living in the cold zone" as a potential target group for a casual wear company.
In general, these market segmentation methods also apply to Web3, but there are still some nuances. This is because the entire crypto market is still more male-oriented, and most users are post-80s, 90s, and 00s (though crypto buyers born in 1965-80s have significantly higher consumption levels than buyers born in 1980s, 90s, and 00s.). Although the scope is narrower, many geographic and behavioral patterns can still be identified.
In addition, the crypto market is interconnected, so startups can consider relevance to other Web3 communities when defining their target audience. A useful tool to quickly identify communities with the same goals is the subreddit analyzer. Reddit is very popular in many crypto communities, and this tool can analyze which other communities users post in in addition to the target community.
Generally speaking, in the user structure of each community, in addition to the majority of "young male users", there will be some special user groups. For example, women account for more than one-third of art NFT buyers (note: the focus of art NFTs is on the artist itself, not the NFT brand). So, if a Web3 project wanted to target women born in the 80s, 90s, and 00s, it could advertise in a publication devoted to art NFTs.
The key point here is that the target audience must be specifically defined first, otherwise any marketing campaign may cause a huge waste of resources. Try to answer the following questions first:
What is your target market age group? 10-25, 26-41, or 42-57? DeFi enthusiast or P2E gamer? Or a boring ape lover? Is it Algonaut or is it a big fan of Ethereum?
What is their contribution to the Web3 ecosystem? Is it a developer or a collector?
What hobbies do they have in common? Gambling, online gaming, art collection, or electronica?
Try new channels and models
Many startups are too obsessed with one established marketing channel. But in fact, the marketing team needs to keep trying new channels and new models to mature faster. This requires startups to allocate a portion of their marketing budget to explore diversified marketing channels.
For example, invest a small budget in paid marketing in new channels like Stack Overflow, or try new competition models, such as letting users name the next series of NFTs.
The ultimate goal is to reduce dependence on one channel (such as influencers) and ensure that various marketing strategies can go hand in hand to drive the customer acquisition process. Doing so allows startups to be quick and nimble when a marketing channel is disrupted, such as tightening regulations on crypto advertising.
Optimized tracking and automation
Tracking is the driving force behind all digital marketing channels. Most early Web3 teams understood the importance of Google Analytics and performed at least the most basic monitoring of website traffic. But effective marketing teams can pull together data sources to gain a more granular understanding of their customer profiles and how to conduct specific marketing campaigns. Doing this requires complex campaign attribution. In other words, if a user spends $1,000 on an NFT, how is the user acquired? How do users react to paid ads? Did the user see any marketing content along the way?
This method is called "multi-touch attribution", and the goal is to quantify the impact of each marketing channel on the user's conversion journey. But implementing it requires a certain level of data science and development expertise. In the Web3 space, startups are still working on how to use off-chain user data to attribute on-chain activity without compromising wallet security.