Episode 7 — A conversation with Kelley Weaver about the impact of the sweeping cryptocurrency and ICO advertising ban by Facebook, Google, Twitter, and other digital advertising platform giants.

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Chitra Ragavan
Chief Strategy Officer

Kelley Weaver
CEO and Founder
Melrose PR

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For many cryptocurrency companies, 2018 was the year of death by a thousand cuts when it came to promoting their products.

The marketing crisis was triggered almost a year ago late last January, when Facebook posted this blog, adding cryptocurrencies and Initial Coin Offerings (ICOs) to its list of “Prohibited Financial Products and Services” and issued a blanket ban on all crypto advertising on its platforms, including Facebook, Instagram, and Audience, just to name a few.

The message was clear: Facebook was implementing a zero-tolerance policy towards cryptocurrency. “Misleading or deceptive ads have no place on Facebook,” said Rob Leathern, Product Management Director at Facebook.

Facebook’s action came as a shock to many ICOs and crypto firms. But industry analysts said that in some ways, the timing wasn’t surprising if you were tracking the news and reading the regulatory tea leaves.

Just a few weeks earlier, in December 2017, the Chairman of the Securities and Exchange Commission (SEC), Jay Clayton, had issued this public statement, warning mom and pop investors about the dangers of ICOs, such as “greater opportunities for fraud and manipulation.”

Once Facebook expressed its position on crypto and ICO ads, it wasn’t long before other digital advertising giants followed suit with their own bans, some more stringent than others. And they all offered similar reasons to explain their decisions, which they said was rooted in protecting their communities. In March 2018, Google announced its policy, making the ban applicable to all of its platforms, including YouTube, as well as third party advertising networks, citing “consumer harm or potential consumer harm.” Twitter followed suit with a ban on ICOs and Token Sales, highlighting the dangers of content “associated with deception and fraud, both organic and paid.” Snapchat was next to follow. And it wasn’t just social media platforms. MailChimp also announced that it was shutting down ICO and crypto accounts because of the prevalence of “scams, fraud, phishing, and potentially misleading business practices . . .” And the list of platforms banning crypto ads kept growing.

Some industry analysts say that in addition to these companies’ stated goal of protecting their customers, the digital ad platforms were likely demonstrating at least some level of inherent self-interest in instituting the ban. Given the SEC’s warning, it was clear, these analysts say, that social media companies that were perceived as wittingly or even unwittingly abetting unscrupulous ICO actors, would likely feel the heavy hand of the U.S. Government coming down on them. Many of these companies, especially Facebook, already were under a microscope over the Russia election scandal and there are ongoing questions as to whether or not they are protecting customer data rights. So it was in these companies’ best interest, analysts say, to avoid further scrutiny by proactively instituting an ad ban.

Whatever the reasons, these bans are bound to have a tremendous impact on the crypto industry over time. According to a December 2017 report cited in CNBC, Facebook and Google account for 73% of all digital advertising in the United States, and 83% of all digital advertising growth. CNBC called Facebook and Google the “two-pony show,” of the online advertising industry. Facebook, Google, Twitter, and Snapchat together constitute the four largest digital ad platforms. With that kind of concentrated clout, the writing was on the wall for crypto businesses and ICOs in particular, because they depend on these massive platforms to reach a broad investor base.

(Disclosure: Gem’s portfolio app was adversely impacted by the ban.)

In late June, there was a partial reprieve when Facebook relaxed it’s previous “intentionally broad” ad ban. And by October, Google had partially lifted its own ad ban. Soon, other social media platforms also recalibrated their stance to varying degrees.

But the damage was done. With every announcement, the market had see-sawed and heave-hoed and crypto companies struggled to get their message out.

Many in the industry believe that the crypto ad shakedown will ultimately have a big beneficial effect, not only in protecting investors, but also in helping to clean up the industry by weeding out the plethora of fraudsters and scam artists. A June 2018 Wired article titled “The Hustlers Fueling Cryptocurrency’s Marketing Machine,” cited a Wall Street Journal investigation which concluded that nearly 20% of 1450 ICO projects were fraudulent.

But others in the crypto industry say that the bans are unfairly harming legitimate businesses under the guise of protecting retail investors.

I sat down with Kelley Weaver recently to talk about all these developments. As CEO and Founder of Melrose Public Relations, Kelley has been in the trenches with ICOs and crypto firms and has seen first hand, both sides of the coin, so to speak.

Kelley largely supports the ad ban decision by Facebook and other digital advertising platforms. “I think ultimately, Facebook made a call,” Kelley says, “To protect the greater public from misleading information.”

We talked about the sometimes creative workarounds that companies are employing to survive the ban. “. . . they’re not sitting around waiting for companies like Facebook to reverse their policies,” says Kelley, “They’re moving forward and trying to tell their stories using other methods.”

And we look ahead to how all of this is likely to play out this year.

Join me next week for a fascinating episode with my former colleague Matt Smith, Research/Engineering Architect at Spring Labs. Matt is going to walk us through the good, the bad, and the ugly of crypto prediction markets – where you can bet on events ranging from the relatively benign, such as the weather, to scary stuff like the probability of assassination of world leaders or the number of mass casualties in a future terrorist attack.

Topics Covered in This Episode

  • The ICO gold rush and resulting scams, frauds, and nefarious schemes
  • The ad ban as a way to protect innocent retail investors
  • Both sides of the ICO equation, the good and the bad
  • How the ad ban will help investors but also hurt legitimate businesses
  • Walking the fine balance between protecting investors and helping innovation
  • Companies are turning to other ways of getting the word out
  • Using the power of story-telling and platforms such as Telegram
  • The rise of influence marketing to replace ad campaigns
  • How the public relations industry is evolving to adapt to crypto and ICOs
  • A pause in action and the breath of fresh air in the post-ICO frenzy is a welcome change for PR firms
  • The importance of due diligence for PR and marketing firms in vetting ICOs from a liability perspective
  • Moving the narrative from the hype of ICOs to the promise of blockchain technology and cryptocurrency

About Your Host, Chitra Ragavan

A little background about me — I’m the Chief Strategy Officer at Gem, a Los Angeles-based crypto portfolio startup. Prior to Gem, I was Senior Counselor to the CEO of Palantir Technologies. Before entering the software startup world as advisor to CEOs, I was a long-time journalist at WTTW/Public Television in Chicago, National Public Radio (NPR) and U.S. News & World Report Magazine (U.S. News).

My goal is to provide independent and thoughtful analysis of the events and news shaping the industry.

By way of full disclosure, I am a crypto investor. If we ever mention a specific cryptocurrency in the context of a discussion, I will fully disclose my investments, if any, in that currency and expect the same from my guests. I’ll avoid any and all conflicts of interest in the course of these discussions.

You can learn more about me on LinkedIn, my website, or my Instagram.

Enjoy your crypto journey, unicorns!

Chitra Ragavan