The new crypto wave is here. Even as global stock markets waver amid the second wave of coronavirus infections, the crypto market has soared. On 25 November 2020, Bitcoin breached the US$19,000 mark, bringing it to levels unseen since the 2017 crypto bubble.
This time, however, the price surge appears to also be driven by institutional, not just retail, investors. Volumes of institutional crypto products jumped in November. And earlier in October, payment giant PayPal announced that it would allow its customers to purchase Bitcoin and other cryptos through their accounts, joining payment firms Square and Revolut.
Whether this will prove to be a repeat of the 2017 bubble remains to be seen. But for marketing departments everywhere, there is one implication that cannot be ignored.
Being able to effectively communicate about crypto has never been more important
Rapidly rising prices draw attention. This recent price action will inevitably create more interest from investors of every kind – from institutional and high net worth to retail. Global asset-management powerhouse Fidelity, for example, has recommended a 5% target portfolio allocation to Bitcoin.
But as investors pour in, many of whom might have little prior understanding of crypto, who will win in the battle for these inflows?
The answer: companies that are best able to effectively communicate crypto’s unique value proposition in a way that is consistent with their own offerings.
This is also where many companies stumble. While they may be well versed in talking about more mainstream investment products, they often drop the ball when it comes to crypto. That’s why, in this article, we will look at four common barriers to effective crypto communication – and how you can solve them.
Problem #1: not properly understanding crypto’s value proposition and its risks
Let’s start with the obvious. To be able to effectively communicate crypto’s value proposition and the risks to be aware of, companies must first be able to understand it themselves. Otherwise they face alienating the part of their audience that is more crypto savvy. And once that credibility gap has been opened, it is exceedingly difficult to close.
Further, it can also lead to misaligned expectations. If investors buy into a company’s crypto products without fully understanding the risk it entails, they may be in for a rude awakening later. This can lead to ill will and potential reputational harm. Not a good outcome.
Solution: expend the effort to firmly grasp crypto’s fundamentals
There are so many facets to crypto (and thousands of different cryptos) that it is impossible to fully understand each one. But the fundamentals – increased anonymity, decentralisation and ‘trustlessness’, money-supply regulation mechanisms (and how they relate to current monetary policy) – are concepts that extend across the board. And they are crucial to communicating both crypto’s value and its risks.
Take the time to deeply understand these fundamentals – or at least hire an investment writing agency that does.
Problem #2: not understanding how familiar your audience is with crypto
Because crypto is so new, even sophisticated investors may not have a firm grasp of its fundamentals. For example, just because you are targeting accredited investors, that doesn’t mean you can assume they already understand the basics of crypto’s value proposition. The typical assumptions you can make about their understanding of core financial concepts go out of the window when it comes to crypto.
And if you don’t understand where your audience is coming from, you won’t be able to ‘meet them where they are’. Imagine starting off a piece by launching into the benefits of a decentralised app ecosystem – when your audience’s knowledge at crypto stops at the word Bitcoin. You’ll lose them immediately.
Solution: do the research to gain a deep understanding of your audience’s domain knowledge
It all comes down to knowing your customer – and we don’t mean in the compliance sense. In marketing, it’s called ‘knowing your list’. For crypto, a key part of this is understanding what your customers’ relevant domain knowledge is.
Of course, it is possible – and even likely – that your audience’s domain knowledge may be all over the map. While such situations do make things more difficult, they also present an opportunity for more in-depth segmentation. This would allow you to create more targeted content for each segment, which can lead to better results. After all, there’s a reason every serious marketer uses segmentation: it works.
Problem #3: not knowing how to quickly bring your audience ‘up to speed’
Continuing from the above, the next challenge is being able to quickly bring your audience ‘up to speed’. While this is important for your messaging around both pure information and persuasive sales, it is vital for the latter; without providing the right context, your offer will not make sense. Imagine trying to promote a low-cost ETF to an audience that has no idea about the difference between active and passive investing.
While this sounds simple on the surface, the challenge here is doing so in a way that is efficient, interesting and easily understandable. That’s where skill comes in.
Solution: relate it back to more mainstream financial concepts
In general, the most effective way is to relate crypto back to more mainstream financial concepts. Gold, for example, is often used to explain Bitcoin’s value proposition as a store of value. Another common analogy is using the concept of diversification and uncorrelated assets to demonstrate the value crypto can bring to a standard portfolio.
Again, this is all dependent on knowing your audience’s level of prior knowledge. For example, if they have no idea why diversification works then that must be explained before going into the analogy.
Problem #4: not understanding what your audience hopes crypto will do for them (and how they envision it fitting into their lives)
When it comes to persuasion and selling, it is not enough to simply understand your audience’s domain knowledge. You must go one level deeper, into what they hope crypto will do for them and how they envision it fitting into their financial lives.
Let’s break this down. What do they hope crypto will do for them? Is it:
- Huge returns, like the kind that minted young ‘Bitcoin millionaires’ and drove the 2017 bubble?
- An intelligent way to improve the risk-return profile of their investment portfolio?
- ‘Fun money’ that they can actively trade – separate from their main portfolio?
The way you write for one goal must be totally different than another.
Further, you must ask yourself how your audience wants to handle the security element of crypto – do they want to bear full responsibility for custody or would they rather use a trusted third party? One of the most popular sayings in the original crypto community is ‘not your keys, not your Bitcoin’. What it means is that giving up your private keys to a third party is inherently dangerous, so it’s your responsibility to keep your own private keys secure.
Yet, as mainstream adoption has increased, this has not played out. The crypto solutions offered by PayPal, Square and Revolut are all centralised – meaning users do not have control over their private keys. This may run contrary to the original tenets of crypto, but it seems most of the market has no issue with this.
Solution: understand your audience’s motivations
Once again, the answer to this question lies in detailed customer research. Understanding what your clients hope to get out of crypto is key to crafting persuasive messaging. This, combined with understanding their prior domain knowledge, will enable you to construct arguments in favour of certain narratives or market beliefs that support your message.
Effective crypto communication begins before a single word is written
In most cases, 80% of the work is done before a single word is written. That 80% is the deep customer research – understanding their knowledge and motivations surrounding crypto. Only after you have that dialled in can you craft truly effective messaging.
But once you’ve done that, that’s where the expertise of skilled and seasoned writers – such as those right here at Copylab – can help. Go here to find out more about how we can help you.
- The Power of Storytelling in Investment Communications - April 15, 2021
- 4 Barriers to Effective Crypto Communication (And How to Solve Them) - December 7, 2020