Marketing tactics have significantly evolved since the early days of crypto. Previously, Web3 projects were often aggressively marketed, in such a way that would achieve instant virality for some. However, the decentralized finance (DeFi) market has since matured, and Web3 startups are learning to slow down and be more methodical in their marketing efforts.
In this report, we discuss the important marketing nuances that distinguish Web3 Marketing Strategies from their Web2 counterparts.
What is Marketing Maturity and How Does it Evolve?
Marketing maturity describes the level of sophistication a startup has reached in terms of its marketing practices. The most powerful indicator of maturity is a startup’s approach to data. Early-stage startups collect very little data or collect it in an unstructured manner. Their efforts are often inefficient since they do not have full insight into what is working and what is not. As a startup matures, it learns to collect more data, consolidate it, and use it to get more fine-grained insights such as the cost of acquiring a new customer or the lifetime value of an existing customer. More mature startups can attribute revenue to specific marketing channels, which helps them optimize their resources.
The following diagram summarizes the journey to marketing maturity for a traditional B2C or transactional startup.
Set Marketing Goals Before Deciding on Tactics
Some inexperienced teams choose their marketing tactics based on what everyone else is doing, but this can be a risky approach. Every project is different and has slightly different marketing goals. These goals typically fall into two main categories: “customer acquisition” and “customer engagement”. In other words, getting people to try out your product, and getting them to stay loyal to your brand. These overarching categories inform more fine-grained goals such as getting X number of people to sign up to a Discord or register for an NFT whitelist.
For Web3, categories like “customer acquisition” and “customer engagement” have somewhat different nuances that depend on their stage and can encompass goals such as:
- Finding early backers
This tends to happen in the pre-seed and pre-product stages. It could be argued that customer acquisition can’t exist without a product. Yet in Web3, startups tend to be more aggressive in driving actions that validate their product concept, such as driving people to sign up for pre-product communities. Here, acquisition and engagement are stimulated by grass-roots marketing tactics that go beyond the founders’ personal networks. Projects are not really searching for “customers” per se, but backers. Yet their tactics will be similar to the ones they’ll use for finding customers later on. - Acquiring users to interact with a product and give feedback
More mature Web3 projects that are live on testnet can work on acquiring “users”. Note that the distinction between users and customers is more than just a semantic one. A user is someone who interacts with a product but isn’t necessarily providing any revenue, whereas a customer is usually someone who is paying for the product. Not everyone agrees on this distinction—former Twitter CEO Jack Dorsey famously wanted to refer to Twitter users as customers—but it’s a useful distinction for Web3 marketing. It’s possible to be a user of some Web3 services (infrastructure tools or free-to-play games) without generating revenue for a project, especially if it’s in its first iteration. - Acquiring community members to drive network effects
Usually, acquiring revenue-generating users is not the most immediate goal. Web3 relies on network effects more than any other industry and, in the early stages, a startup’s marketing resources are entirely focused on this goal. This means getting people to talk about their project, engaging with their brand, and participating in their communities. This builds a sustainable network that can then lead to revenue generation further down the line.
When Paying for Acquisition, Define a Target Market First
A well-defined target audience helps to shape every aspect of a marketing campaign, from content creation to influencer selection. In the early stages, many Web3 startups neglect to define target audiences in a meaningful level of detail, instead generally targeting anyone who is interested in crypto. This is a harmless mistake when a startup is not yet doing any paid marketing. However, once a startup starts committing budget to marketing, it’s essential to define a target audience in more detail. This is discussed more later when we cover optimizing marketing performance.
What Marketing Tactics Should Early-Stage Web3 Startups Use?
Usually, a startup’s tactics are specific to their business model and vertical, but Web3 startups as a whole tend to prefer different channels to their Web2 counterparts. For instance, in the Web2 world, influencer marketing is a tactic that is used heavily in certain verticals (such as fashion and makeup), but less so for others (such as SaaS tools and online banks). In Web3 however, influencer marketing is fairly ubiquitous across the board. This is perhaps because there’s a greater need for experts to help audiences navigate the technically complex, crowded, and fast-changing Web3 market.
The following diagram provides an overview of the traditional marketing tactics that are most preferred in Web3. The darker colored circles represent tactics that are most relevant for early-stage startups and larger circles represent the potential impact that the tactics can have on traffic and user acquisition.
Note that tactics such as influencer marketing can be expensive. Web3 startups that are not yet funded are better off trying free or low-cost marketing tactics first. This is especially valid if they’re yet not sure who their target audience is.
Low-Cost Marketing Tactics
Unlike paid advertising, these tactics usually revolve around content that provides some kind of value to the audience (such as education, entertainment, or inspiration). Because of its inherent value, this content tends to spread organically. It answers questions that people are typing into search engines or inspires people to share with their networks.
Create Content About Topics That Are Popular in Your Ecosystem
Research and cover a topic that will match search queries, is aligned with your project’s aims, and is being aligned in different crypto communities. This can be done in a variety of different formats such as:
- Blog Articles
In the traditional Web2 world, blogging is an effective but challenging tactic simply due to the sheer volume of content that is competing for the same audience. In Web3, there is a little less competition, although that is rapidly changing. Even now, Web3 startups are unlikely to get good results with generic listicles or vague, three-paragraph opinion pieces. Many teams will start by blogging about their vision and their roadmap, which is fine but unlikely to bring in a lot of traffic. Instead, founders should focus on content that adds value for their target audience. For example, developer-turned-marketer Martin Gontovnikas talks about the notion of “Content Products” that include interactive widgets that help to illustrate a concept. While his focus is developer-oriented content, the same principles can be applied to other audiences too. - Long-Form Social Posts
Traditional social media platforms like LinkedIn and Quora have large audiences and generous word limits on posts (200-600 words). This means that startups can get exposure by feeding out content in small chunks as an alternative to long-form blog pieces. For example, LifeDeFied, a Startup with Chainlink participant, ran a “DeFi Term of the Day” campaign where they provided small digestible chunks of explanatory content about the DeFi ecosystem. The aim was to help educate their target audience and create good will and brand equity rather than directly plug their product. LifeDeFied kept its costs down by offering college students an educational internship to learn and gain experience in Web3 by writing their posts. One post caught the attention of a well-connected user who shared it within their wider network. Within two weeks they went from having 1,000 users on their whitelist to around 16,000.
Play to Your Content Strengths
Written content is popular because it can attract organic search engine traffic, but it doesn’t have to be used exclusively. Many founders play to their strengths and create content in the format they’re most comfortable with. Other formats could include video, audio or even a series of animated GIFs. What’s important is that the messaging is clear and on-target.
For example, Cardano founder Charles Hoskinson famously speaks directly to his community through regular live streams. In his video content, he expresses his views on a wider range of topics that go far beyond the future of the Cardano ecosystem. While his content is not for everyone, he has found his content niche and uses it well.
Take SEO Seriously Early On
Most startups understand that SEO is important on an abstract level, but tend to postpone investing in it until they have enough content. Early on, they’re entirely focused on getting content out as quickly as possible and are reluctant to implement processes that might slow them down. For some, it’s easier to rely on content being shared on social media rather than having it rank higher in search engine results. This is a huge missed opportunity. Granted, it can take a long time to find the right keywords, get enough backlinks, and build the domain authority to rank in the top results, but it’s well worth the effort and can bring in far more traffic in the long term.
In Web3, a popular shortcut to rank higher is to use third-party platforms such as Medium or Hackernoon to publish long-form content. These platforms make it easy to get started, have high domain authority, and get a lot of organic traffic. Some experts advise against using Medium because it doesn’t generate traffic or domain authority for a startup’s own website. To circumvent this problem, startups will often publish content to their own websites first, then repost it in their Medium publications while configuring the original article URL as the canonical link.
Post Thoughtfully in Other Communities
Crypto communities are plagued by self-promotion. Project teams are well aware of how interconnected the Web3 ecosystem is and aim to capitalize on this. This tactic is fine in itself as long as these interactions add value. That’s why it’s important to follow the same principle as your main educational content, providing value without aggressively promoting your project. Answer questions and help people understand concepts related to your project (for example, inter-blockchain communication).
Also, make sure that people are aware of who you work for. For example, the data transformation tool dbt is famous for its thriving Slack community of analytics engineers. This community also contains many vendors whose aims are aligned with dbt’s and want to reach their community members. For this reason, dbt has very specific guidelines for vendor participation. For example, vendors are required to put their company name in parentheses in their profile names, such as “Alice (MyDataTool)”. These guidelines ensure that community members know who works for a vendor, allows vendors to build a little bit of brand recognition, and encourages vendors to add value.
Paid Marketing Tactics
Once a startup has received some initial seed funding, it can establish a marketing budget and look at where best to allocate that budget.
Affiliate Marketing
In affiliate marketing, content producers are paid commissions to direct readers to a startup’s website. However, these commissions can be conditional. Typically, commissions are paid after a referred user performs some specific action such as filling out a specific sign-up form or making a purchase. Amazon, for example, is famous for its affiliate program, which incentivizes content creators to review products and link to those products on Amazon. Affiliate marketing requires sophisticated tracking to automatically attribute and pay commission, which is why publishers typically use third-party providers. Right now, there are few affiliate technology providers that specialize in Web3, although emerging startups like Magic Square are looking to capitalize on this opportunity for Web3 mobile apps. In any case, affiliate marketing can be a powerful way to generate leads. Major crypto brands such as Binance, Coinbase, and Kucoin all have thriving in-house affiliate programs
Influencer Marketing
As mentioned, this method is extremely popular in Web3 because it can quickly generate a lot of leads. However, it can also be a risky tactic. Many startups try it too early and squander the traffic and budget. This is because they don’t think about how compatible the influencer’s audience might be with their own target audience. It takes time to select quality influencers and this tactic works best when startups build long-term relationships with compatible “micro influencers”. It might seem like a quick win to pay a super influencer with a massive follower count to mention your project, but this rarely leads to sustainable growth.
Engagement Incentives
Another classic tactic from the Web3 marketing playbook is to offer incentives to engage with a project in some way. There are many different kinds of incentives, with each depending on the project’s business model.
For example:
- DeFi protocols can incentivize users to provide liquidity with interest payments.
- NFT projects can incentivize users to submit their contact details by offering to put them on a whitelist for NFT airdrops.
- L1 protocols can incentivize users to secure the network and become a validator by offering a share of the transaction fees.
- Web3 gaming projects can incentivize players to play their games by building in play-to-earn economics.
Incentivization tactics such as rewarding people for performing prescribed tasks on social media should be used with caution. Essentially, this tactic is another form of paid promotion. Also, the prescribed tasks are easily automated and can thus be gamed. This leads to low-quality social media activity that rarely results in long-term network effects. Rewards work better when they are given spontaneously to loyal users who have engaged with the product.
Which Marketing Metrics Should Early-Stage Web3 Startups Track?
Since the goals of an early-stage startup are to drive awareness and leads for as little cost as possible, the focus should be on understanding how new users and community members are acquired.
Traffic Sources
At the beginning, an unknown project is usually discovered through organic sources such as search engines and non-paid social media mentions. If startups have the budget, they might add paid promotion to the mix. However, eventually more of that traffic should come from within the project’s network itself, meaning that a project’s own Discord server or Twitter account will drive traffic to their dApp, rather than someone else’s. Essentially, startups need to increase the proportion of direct traffic or traffic coming from within their own domains and accounts.
Percentage of Organically Acquired Users or Community Members
Since all Web3 projects rely on network effects, the goal is to acquire users who are motivated by the mission of the project itself. The fact that a user found the project or community organically is a stronger signal that they are likely to be more loyal over the long term. Paying for traffic is an acceptable tactic to gain momentum at the beginning, but startups should reduce their dependence on it as the project matures. In the long term, an overreliance on paid acquisition is a signal that the project is not achieving network effects due to issues with the project, its marketing, or the target market itself.
Cost of Acquired Customers (CAC)
This metric aims to quantify what startups spend on average to acquire each visitor or user. Many early-stage Web3 startups do not consider CAC when assessing marketing performance because they aren’t yet paying for traffic. On a very basic level, if a startup pays an influencer €5000 to promote their project and their dApp received 1000 extra unique users during the relevant timeframe, then the CAC was €5 per user. As discussed previously, this metric depends on what is counted as a true “customer acquisition”. Note that operational costs (such as paying writers to create content) are not usually included in CAC calculations. However, airdrops and other incentives technically count as paid acquisition, so they should be included in any CAC calculations. The purpose of CAC is to help startups allocate limited marketing budgets more effectively. The idea is to identify the tactics with the lowest CAC and eliminate tactics where the CAC is too high.
How Can Web3 Startups Evolve their Marketing Tactics?
As a startup matures, it starts to become more discerning about where to devote marketing resources. At the beginning, many teams try “spray and pray” approaches where they target a mass audience and hope that a few of them turn into users (spam emailing is obviously an extreme example of this tactic). In the later phases, a startup learns to reduce wastage and focus on what really brings results.
They can achieve this maturity in several different ways:
Defining Target Audiences With Greater Precision
Eventually, Web3 startups need to move beyond simply targeting “crypto folks”. In traditional marketing, audiences are segmented by demographics, geography, behavior, and psychological profile. Investopedia uses the example of “middle-class women between the ages of 35 and 55 who live in cold climates” as the potential target for a casual apparel company.
By and large, these segments apply to Web3 too, but with certain nuances. This is because the whole crypto market still skews male and is heavily weighted toward the Millennial and Gen Z generations (although Gen X crypto buyers apparently outspend Gen Z and Millennial buyers). Despite this narrower scope, there are many geographic and behavioral modalities that can be targeted.
The crypto market is also highly interconnected, so startups need to consider affinities with other Web3 communities as potential targeting criteria. A handy tool for quickly finding aligned communities is this subreddit analyzer. Reddit is extremely popular with many crypto communities, and this tool analyzes which other communities users post in besides the main target community.
Generally, each community will have a specific demographic make up that differs from the dominant bucket of “young and male” users. For example, women make up more than a third of collectors who buy fine art NFTs (where the focus is more on the artist themselves rather than an NFT brand). Thus, if a Web3 project wanted to target Gen Z or Millennial women, a marketing tactic could be to run ads on publications that review fine art NFT collections.
The key takeaway is that any marketing campaign risks being incredibly wasteful unless you define your target market in detail. Ask questions such as:
- How old is your target market? Gen Z, Millennial, Gen X?
- What are their Web3 interests? DeFi enthusiast? play-to-earn gamer? Bored Ape lover? Algonaut or Ethereum loyalist?
- What’s their role in the Web3 ecosystem? Developer or collector?
- What are their general interests? Sports betting, online gaming, art collecting, electronic music?
Experimenting With New Channels and Formats
Many startups stick with the same tried-and-trusted marketing channels for too long. A marketing team is more likely to mature when it’s constantly experimenting with new channels and formats. This requires startups to allocate a certain part of their marketing budget to testing and diversification.
This could mean running a small paid campaign on a new channel such as Stack Overflow, or experimenting with a new competition format such as giving users the opportunity to name the next NFT collection.
The end goal here is to reduce reliance on one particular channel, such as influencers, and ensure that different marketing tactics drive user acquisition in a way that’s more evenly distributed. This makes startups more resilient to changes that might disrupt certain marketing channels (such as increased regulations on crypto advertising).
Getting Better at Tracking and Automation
Tracking is the lifeblood that drives all forms of digital marketing. Most early-stage Web3 teams know the importance of Google Analytics and monitor their website traffic on at least a basic level. However, what distinguishes effective marketing teams is their ability to combine disparate data sources to get more granular insights into who their customers are and how a particular marketing campaign is performing. This is achieved through sophisticated campaign attribution. In other words, if a user spent $1,000 on NFTs, how was that user acquired? Did they respond to a paid advertisement? Did they see any of your content along the way?
This technique is called multi-touch attribution and it aims to quantify the influence that each marketing channel has on a user’s journey towards a conversion. However, it requires some degree of data science and development skill to set up. In Web3, startups are still trying to work out the technical hurdles involved in attributing on-chain activity with off-chain user data in a way that doesn’t compromise wallet security.
Often, startups will build custom in-house data pipelines to facilitate detailed campaign attribution. This isn’t always necessary since there are third-party tools such as HubSpot which are still useful for tracking off-chain conversions (i.e. user signups). However, regardless of which tools are used, this level of sophistication requires startups to invest in data analysis and tracking as a distinct in-house skill set (rather than relying on agencies or consultants).
Investing in a Reliable but Cost-Effective Marketing Tech Stack
A reliable marketing tech stack doesn’t have to include premium marketing systems such as Salesforce or Segment. When starting out, startups can get away with using cheaper open-source alternatives or the free tiers of established marketing tools.
Regardless of the tool specifics, it helps to think of a marketing toolset as a “stack” of components that help to drive users through the marketing funnel. The goal for any data-driven marketing team is to connect these components as much as possible to get the best possible insights.
The following table summarizes each state of the marketing funnel and proposes some affordable or free tools that early-stage startups can use to get better at each stage:
Although you might already be familiar with some of these tools, consider how many of these could be better connected for more fine-grained insights. You could connect customer data acquired through sign-up forms with data acquired through community platforms, for example.
There is still a lot that Web3 marketers can learn from their Web2 counterparts
While many Web3 veterans may dislike the idea of deeper user tracker, this is one of the many tradeoffs that come with industry maturation. Once Web3 technology vendors can find the right balance between better analytics and security, Web3 startups will be in a much better position to reach the latter phases of marketing maturity and reach the same level of sophistication as Web2 technology brands.
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Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
