The FTX collapse is a harsh lesson in hype advertising

Larry David had never, ever, ever appeared in a Super Bowl commercial. There was no real teaser or trailer weeks beforehand, as is now custom. Instead, cryptocurrency exchange FTX decided to go old school and ambush audiences with the legendary comedian during the actual game.

Created with agency DentsuMB, “Don’t Miss Out on Crypto” featured the Curb Your Enthusiasm and Seinfeld creator being a skeptic on such historically important inventions as the wheel, the fork, the toilet, democracy, the light bulb, the dishwasher, the Sony Walkman, and, of course, FTX.

The spot made FTX one of the most retweeted brands during the Super Bowl, and won the “Most Comical” honorific from USA Today‘s Ad Meter.

Bitcoin would hit is peak value about three months before this commercial aired. It’s been on a gradual slide ever since. Meanwhile, the collapse of Terra/Luna currency, bankruptcy of crypto hedge fund Three Arrows, among others, has made 2022 a rough year for the category. Then on Friday, FTX founder and CEO Sam Bankman-Fried stepped down and the company declared bankruptcy. Cue the memes: Larry was right.

There are a laundry list of issues surrounding the dramatic rise and fall of FTX, but one is how most of the advertising for the brand—and the bulk of crypto-related brands—has, for at least the past year, used celebrity and hype to frame crypto investment as a historically good move. As Matt Damon (now infamously) said, while comparing crypto to the invention of human flight and space travel, “Fortune favors the brave.”

Crytpo.com was also in this year’s Super Bowl, with a spot starring both 2022 LeBron and 2003 LeBron. The younger LeBron asks, “Is the hype too much? Am I ready?” And 2022 LeBron answers, “I can’t tell you everything, but if you want to make history, you gotta call your own shots.” Despite this thinly-veiled version of “do your own research,” the tagline is still crystal clear: “Fortune favors the brave.”

The subtext was clear, the train was leaving the station, and if you wanted a ride to the crypto promised land, you better buy your ticket now. This trend of painting it as a historically good decision, after so much money has been lost, will only further entrench the ad industry’s reputation as glorified snake oil salespeople. 

The advertising industry is one that has worked relatively hard at—and talked a lot about—leaning into brand purpose work and brand transparency, while also taking on pro bono PSA and advocacy work for any number of social causes. While obviously blatant awards bait, this type of creative output has also reframed advertising’s traditional reputation (as both a media and a profession) as more style than substance. The hyperbolic hubris of the industry’s crypto work, as epitomized by its FTX work, undermines all that noble effort.

The debate around using major celebrities to market cryptocurrency companies has been happening for more than a year, at least since June 13, 2021, when Kim Kardashian posted an Instagram Story touting EthereumMax. According to a Morning Consult study, that ad was seen by 21% of Americans, and the U.K.’s Financial Conduct Authority called it, “the financial promotion with the single biggest audience reach in history.” In October, Kardashian was fined $1.26 million by the SEC for not disclosing to that audience that she was paid for the endorsement.

FTX had collected a very impressive stable of big sports names, including Tom Brady, Steph Curry, the Miami Heat, Mercedes Formula One, Washington Wizards (NBA) and Capitals (NHL), Golden State Warriors, and the University of Kentucky men’s basketball team.

Last year, I spoke to R.A. Farrokhnia, Columbia Business School professor and executive director of Columbia Fintech Initiative, about the complexities of using advertising methods typically familiar in consumer packaged goods or entertainment for something as new and confusing as crypto. “This poses reputational risks for both ad agencies and celebrities that are a part of these campaigns,” Farrokhnia said.

This is something that Ben McKenzie (yep, Ryan from The O.C.) also warned of early on.

Crypto.com’s Matt Damon ad agency Pereira O’Dell, and FTX’s Super Bowl spot agency DentsuMB didn’t return my requests to comment.

Sources familiar with the making of FTX’s Super Bowl ad, though, say that the brand’s biggest goal was to be entertaining, and that there were few conversations around acknowledging the risk in crypto investment. They wanted to say, “Don’t miss out,” without saying “don’t miss out on getting rich.” Mission not accomplished, seeing as the brand also ran a big Bitcoin giveaway during the game.

Elizabeth Paul is chief strategy officer at The Martin Agency, which worked with Coinbase for almost a year but ultimately resigned the business by end of 2021. (Though, the agency did have some influence on the brand’s own viral Super Bowl ad.) She says that the bulk of their strategy work with Coinbase was aiming to position the brand as the adult in the room, with support of regulation and responsible use. “For the long-term maturation of the crypto market, it would have been better for the world to look at those investments more like a 401k than sports betting,” says Paul.

The fact that most crypto advertising felt more FanDuel than Fidelity says that these brands and their agencies weren’t thinking deeply enough about the dynamics of this volatile market.

Paul says that agencies always have responsibility to use their influence on clients for good, and that choice isn’t limited to crypto, but a decision to make every day for every category they’re in. Paul points to a 2021 study that reported consumers have more faith in brands to impact positive social change than government or religious institutions. “As the builders of those brands, (agencies) always have the opportunity to flex our skills of storytelling and persuasion for good—to bend platforms and resources in ways that are (good) for businesses as well as the communities they serve,” says Paul. “Or you can abdicate that responsibility, choose not to question the brief and participate, in which case you have contributed for good or ill.”

Advertisers and marketers need to be aiming for the former over the latter, or else risk the dilution of effectiveness and trust in all their work. The crypto winter has fundamentally altered how it will be marketed, at least in the short term. No one is waiting for a call from Tom Brady.

Paul suggests that ultimately, crypto brands will have to advertise more like the institutions they’re looking to replace. “To give people a better sense of security, they’ll probably have to act like unsexy banks,” she says.

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