Disclaimer: This article is not meant to be taken as investment or legal advice, but rather as a rough template to show the process behind marketing an Initial Coin Offering and what the project’s stakeholders should consider when running one. A token is not to be taken lightly and is a very long-term commitment. There is no guarantee that you will be successful when following my recommendations. Given this field is relatively new and best practices on what to do and what not do are still being defined, I will update the post with changes as I collect them.
Without further ado, a step-by-step guide on planning and marketing your Initial Coin Offering campaign:
1. Challenge your product
A huge problem with ICO’s today is that they aren’t actually building any real blockchain-based technology. We see a lot of branding works, landing pages, sales funnels, and UI/UX mockups, with no backend technology. You can get away with launching an MVP or beta and then conducting your token sale, but I think it’s safe to say that most startups will have to raise a little equity investment to get their business off the ground. It takes money to make money, and this is no exception. You must have a product, and your product must use your token.
Blockchain has the potential to disrupt the world, but it requires serious people building real technology. Not vapor.
2. Challenge your token
Any successful token needs to have a combination of two things: performance and speculation.
- Performance is the actual utility of the token, how it makes people’s lives easier, and why it is traded
- Speculation is why this token will appreciate (does it actually have potential to become the “de-facto” token for this particular use case)
If you really believe in your token, gather a group of people knowledgable in the space to play devil’s advocate and challenge your assumptions, forcing you to defend them. If they tell you it doesn’t really sound useful, pay close attention to their reasoning. Ask the following questions:
- Who will want to buy and hold this token?
- Why would people want to use it?
- Under what scenarios will people need this token?
- Can the same job be done better in a different way, without tokens?
- What happens when the value of the token shoots up? Or down?
A whitepaper is essentially a prospectus that clearly outlines the technical aspects of the product, the problems it intends to solve, how it is going to address them, a description of the team, and a description of the token generation and distribution strategy.
It is at once a pitch deck, a business plan, a marketing plan, and a technical manual.
I can tell you from personal experience that writing a whitepaper is an arduous task that demands experts in marketing, token economics, game theory, incentive models, and blockchain. These are seriously complex documents and far too few teams are investing into proper writers and marketers for this component. Hiring vetted external writers can force the founders to be more rigorous and thorough, while bad vendors will cover up gaps in thinking or product inefficiencies with jargon and fluff. In my consulting business, the whitepapers we create must at least address the following components:
- The problem in the existing market
- The solution and the product
- Competitive landscape & market size
- Key investment considerations
- Technical explanation of the token economy and use case(s)
- Timeline for development and launch
- ICO Strategy (how many tokens to issue, distribution of tokens, price, market cap, phases of token release, payment processing, token deployment)
- Incentives of token ownership
- Team behind the project
- Legal aspects of the tokens
- Marketing strategy
Once a proper whitepaper is established, your development team can work on building the right product, while the business side can be confident and unified in speaking to investors even prior to the launch of the campaign.
4. Understand that tokens are project finance, not startup finance
Tokens are not stocks.
Despite their appeal, token are are not (yet) a good substitute for traditional venture capital, despite the growing buzz around Security Token Offerings, which is essentially just equity crowdfunding. Most successful utility tokens are like tradable kickstarter commitments for projects — you’re selling a future product to early buyers, and the future token has utility to the buyer.
The money you raise goes towards the project, not towards the company, and there is no reason not to raise some equity money in parallel to an ICO.
5. Know your target audience
When crafting your marketing strategy, keep your target audience in mind. There are four main token buyers:
1. Natural buyers — People who genuinely take interest in your project and want to use your product in the future. This is the most valuable segment, as you get both a loyal user and an investor.
2. Whales — Bitcoin and ethereum whales that are looking for token sales to reduce their exposure to bitcoin and avoid paying the heavy taxes on the crypto-to-fiat currency conversion.
3. Long-term investors — Institutional or private investors that will enter your campaign and hold for a long time.
4. Traders — Short term investors that will enter on the last days of the ICO and sell the token immediately at the first growth.
You may be aiming for the big whales who can make your ICO sell out in 30 minutes, but don’t count on that. Fewer and fewer of them are playing the token-flip game.
Focus your campaign around natural buyers and future users of your product. This is a 3–4 month marketing effort that requires hundreds of man hours, but gets you the highest quality investors and long term growth.
6. Set up your ICO Presale
An ICO presale is a token sale event that blockchain projects will run before the official ICO campaign goes live. The fundraising targets for this stage are significantly lower than the main ICO and the tokens are usually sold with a heavy discount. Many projects use presales as a way to accrue funds to cover expenses incurred by the main ICO, while investors see a successful presale as social validation.
Most ICOs run the presale and the main sale within a few days of each other because they don’t want the price of ether to move drastically in between. In the ideal scenario, the price of ether is the same and investors in the presale get more tokens. I’ve seen companies sell from 2 percent to 10 percent of tokens in the presale, depending on the demand.
Serious token hunters might expect a discount in the range of 50%, but keep in mind that many of these people will sell your token at the first sign of growth.
Whatever you are planning to spend on the marketing effort, double it. Here are some critical elements to consider:
- 7.1 Video: An ICO communication strategy demands a video component. This is not an option. Below are 4 unique types of video formats my creative team has adopted when working with startups and ICOs:
(ii) Founder interview mixed with existing footage (example)
(iii) Premium stock footage with advanced motion graphics (example)
(iv) Use-case micro videos
- 7.2 Advertising: Contextually and demographically targeted ads are a good way to amplify your content marketing efforts and reach investors. While I don’t believe that big token buyers are clicking on ads to find their next token, seeing the name of your ICO repeatedly will garner increased awareness and exposure. I would recommend experimenting with different types of advertising and pricing models (impressions vs direct response) at various stages of the token sale.
The only potential downside is that advertising is more likely to attract traders and token hunters over natural buyers that will stay with you long-term.
- 7.3 Public relations: Quality PR is far more important than advertising when it comes to establishing credibility, positioning your company as an innovator and thought leader, and convincing people of your business model. With mainstream media becoming more and more cynical about ICO’s, having a great story outside of the ICO is critical. Make sure to communicate with your audience both before and throughout the campaign. Tell readers about how their world will be different with your token in it, not how your token will go up in value. Tell a story.
- 7.4 Interviews: Set up as many interviews as possible with key journalists and video bloggers months in advance of of your ICO. These people will take on your project because your story interests them. As your ICO campaign gains traction, more and more video bloggers will ask to interview you. Take every chance you can get.
- 7.5 Blogging: Good ICO campaigns do a great job of leveraging existing blogging channels like Linkedin, Medium and Hacker Noon to take advantage of the audience and the reach that those platforms already have.
All the content that your ICO produces should be syndicated to both Medium and LinkedIn, as well as any other industry-specific media channels, like Hacker Noon.
- 7.6 Reddit & Bitcoin Talk: In addition to creating your own reddit channel, there are several thematic sub-reddits worth engaging to find your target investors, including /r/ethtrader/(~ 85,000 subscribers), /r/icocrypto (~ 9,500 subscribers), /r/bancor/(~ 2,600 readers)
- 7.7 Rating Agencies: There are special rating platforms that rate and audit ICOs for investors. Ratings are determined by bots as well as a wide range of experts that provide analytical, legal, and technical insights in their reports.
Rating agencies include Digrate (1 BTC), ICO Rating ($20k), and ICO Bench (0.4 BTC and up).
- 7.8 Quora discussions: There are many discussions on Quora about different ICOs and specific cryptocurrencies in which you can actively participate and link back to your ICO landing page.
- 7.9 Slack & Telegram: Creating your own channel on Slack and Telegram is a must have in your communications strategy. Potential investors live on these channels and can communicate with the project’s founders, team members, and between one another. These channels must be monitored 24/7, with all questions and false accusations raised by scammers being answered in a timely manner. Be honest and keep your word — your community is your greatest resource.
- 7.10 Roadshow: Meetups and conferences should be a major focus of your marketing activity since this is where you will find and communicate with your supporters and investors face-to-face to get your first capital. If you’re going after the Chinese market, you should attend (and host) events in China. If you are going after Russian capital, go to Moscow, and so on.
Many teams choose not to make their roadshow international, and it undoubtedly hurts their token sale. You can find a list of upcoming events on Coindesk and Coinschedule.
- 7.11 ICO calendars: Bloggers and journalists often create lists of “top ICO’s” (https://itsblockchain.com/top-5-upcoming-icos-to-invest-in/) on the basis of data from special ICO calendar sites like: Coinschedule.com, CoinGecko.com, ICOCrowd.com, ICOCountdown.com, ICO-List.com, and Coinlist.com
- 7.12 LinkedIn: This channel is great if you already have thousands of followers. There are also hundreds of groups that discuss ICO’s, and here are just a few: one, two, three, four, five.
- 7.13 Webinars: Schedule token specific webinars during your token sale using platforms like Zoom, where your audience can engage with the presenters and ask questions in a chat box. Rather than advertising your ICO, provide value to your viewers and discuss the various use cases of your system. Webinars are quite easy to set up and advertise, and they yield not only a real-time audience, but hundreds of new emails for your email marketing campaigns.
- 7.14 Influencer marketing: The biggest barrier of ICO’s is creating trust — trust in whether the team behind it has the chops to execute on their idea. One of the best ways to establish trust is through tried and tested influencer marketing. Find the right crypto influencers for your business, incentivize them properly, and grow your audience exponentially.
8. The Future
2018 will see more projects trying to shoehorn their way into the ICO framework. As this happens, cryprocurrencies will get further embedded in the financial world. Shakeouts and changes to the market are inevitable, and we will see a cleanse of bad actors who are attracted to the massive gains. This is just the beginning of an incredibly powerful and egalitarian fundraising model for new projects. Buyer and seller, beware.
Need assistance with whitepaper creation, token modeling, content creation, and marketing your ICO? Lets talk.