Apr 4, 2022
Wealthsimple’s crypto contest ad on brand, but not without risks: Experts
The benefits and risks of using 'gamified' investing apps
Wealthsimple’s newest promotion aims to give away a total of $30,000 worth of cryptocurrency to a dozen winners with Twitter ads featuring none other than Toronto Maple Leafs Captain John Tavares.
However, in the era of widespread scams, hacks and the stampede of retail investors into the still relatively-nascent space, companies will need to walk a fine line when formulating advertising strategies for their cryptocurrency products and platforms to maintain their credibility.
For marketing expert Peter Widdis, all aspects of an advertising campaign come down to strategic fit. That’s why he thinks Tavares was a great choice for the ad.
“A simple, personalized tweet by a credible athlete ... that brings instant accessibility to consumers who probably feel intimidated by this new type of currency,” he said via email.
“It’s 100 per cent on-brand for Wealthsimple,” he added, given the financial services firm’s history of marketing campaigns that involve celebrities.
The company recently used Canadian sprinter and Olympian Andre De Grasse in a similar giveaway contest in March of this year, and has used various celebrities in its ongoing “Money Diaries” series, where famous people talk about money-related issues.
“The celebrity brands of which Wealthsimple chose to align with (Tavares and De Grasse) only enriches (pun intended) the relevance, credibility trust for the Wealthsimple brand with millennial and centennial consumers,” Widdis said.
“John and Andre’s personal brands are synonymous with dedication, hard work, family - not to mention leadership in the Canadian community ... and that bodes well for simple partnership endeavours like this.”
While the ad might have mass appeal to hockey fans and beyond, crypto trading specifically is not for everybody, according to personal finance educator Kelley Keehn.
“It’s a clever campaign and no surprise they’re focusing on crypto to entice the younger generations looking for exciting and sexy investments. In a fast paced world, one can understand the lure,” she said by email.
“I’m all for getting people to invest, but not understanding the huge volatility of crypto is dangerous. It’s all we hear about these days and there’s totally a [fear of missing out] component that companies are playing on.”
Similar to many online trading platforms, just about anyone can sign up for an account, so it’s up to the user to determine and abide by their own risk tolerance. After being asked to comment on how it intends to protect its customers from crypto-related fraud, a Wealthsimple spokesperson pointed to the company’s disclaimer during the sign up process, including confirmation that the user understands they could “lost some or all of your money.”
Users who sign up to Wealthsimple’s platform also have to read a disclaimer that lists several reasons why they shouldn’t be trading cryptocurrencies.
Wealthsimple launched its crypto-trading platform in Aug. 2020 and has been building out its crypto-related offerings and increasing the different tokens available for trading.
“You need to know your risk vs. return profile. We all think we can handle more risk when things are hot. But when they crash, will you sell and lose?” Keehn said.
Adam O’Brien, the founder and chief executive officer of Edmonton-based bitcoin ATM provider Bitcoin Well, agreed that education is crucial, especially so new investors don’t find themselves in a potentially perilous financial situation.
“Many users new to the space see an advertisement or commercial and think that it is the best approach for them without doing their research, so the advertisements aren’t super useful in keeping users safe,” he said via email.
He pointed to the example of celebrities such as Kim Kardashian and Floyd Mayweather, who promoted a little-known digital token called EthereumMax on social media, which was ultimately found to be a so-called pump-and-dump scheme.
“It is imperative to do research and speak to experts prior to investing to understand all the risks and rewards associated with it. Education is key!” O’Brien said.
Whether or not he’s in favour of celebrity-oriented ad campaigns really depends on the approach being used and the product being endorsed, he added.
“In regards to celebrity endorsements, I am very skeptical of celebrities being brought on to advertise a token/coin/NFT. However, advertising a platform, specifically a platform with the ability to buy, sell and use bitcoin, is acceptable and exciting,” he said.