FTX: HOW SPORTS SPONSORSHIPS PROPELLED THEM TO THE TOP

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You saw that right. That is 7-time Superbowl winner, Tampa Buccaneers quarterback - Tom Brady.

He is just one of the many huge names involved with FTX.

Yes, FTX is a crypto exchange.

There’s no need to run. There’s no need to be scared.

If you know absolutely nothing about crypto, it’s okay!

This is simply about their marketing - which you will soon learn, is spectacular.

Company Overview

Valuation: $25 billion valuation (Source)

Est. 2020 Revenue: $85 million (Source)

Users: 1+ million (Source)

FTX is a cryptocurrency exchange platform that allows users to trade cryptocurrencies. It was founded by MIT graduates Sam Bankman-Fried and Gary Wang in May 2019.

As of July 2021, the exchange is averaging $10 billion of daily trading volume. The company did about $85 million in 2020 revenue but is projected to finish 2021 with $1 billion in revenue.

Breaking Down The Strategy

When you see Tom Brady in an advert - or any athlete for that matter - it’s usually for a sports brand: Nike, Under Armour, etc.

So, why in the world is Tom Brady the face of a crypto exchange?

In fact, Tom Brady is just one of many world-class athletes and influencers on FTX’s loaded team of ambassadors and partners.

Just take a look at some of the others:

• Steph Curry - Plays basketball for Golden State Warriors, widely regarded as the greatest point guard of all time.

• Shohei Ohtani - Best Major League Baseball Player ESPY Award 2021.

• Kevin O'Leary - World famous investor, best known for his role on Shark Tank.

• Trevor Lawrence - First-round draft pick and Jacksonville Jaguars quarterback.

• Gisele Bundchen - One of the most successful models in history.

• David Ortiz - 3x World Series Champion, 10x MLB All-Star.

• Udonis Haslem - 3x NBA champion and current Miami Heat captain.

• Mercedes AMG F1 - The world-renowned team including the likes of Lewis Hamilton, Valterri Bottas.

• TSM - A hugely successful US ESports team.

• Major League Baseball - The largest baseball organisation in the world.

A stacked lineup, to say the least.

However, this isn’t the only inroad in sports that FTX have made.

This year FTX signed a $17.5 million deal with U.C. Berkeley for the naming rights to their football field - now known as the FTX Field - marking the first-ever cryptocurrency collegiate sponsorship in the nation. (Source)

This is but a drop in the water compared to their $135 million purchase of the naming rights to the home of the Miami Heat - now known as the FTX Arena.

To say FTX have dipped their toe in the world of professional sports would be a huge understatement.

The question at hand is why?

Well, there is a multitude of reasons behind this move from FTX.

1. Target Market - FTX identified that the demographic of people who watch professional sports almost perfectly mirrors the demographic of those who own cryptocurrency. The Motley Fool recently did a study that determined the exact demographic of holders of cryptocurrency and found the following: “74% are male. 71% are white. The average age is 38, and 77% are under the age of 45.” I don’t even need to show you the stats on sports fans, you probably already know they are eerily similar to those of crypto holders. (Source) This means that FTX can target the exact audience they want by simply slapping their name all over the sports world. It is the perfect market for them to penetrate based on demographics. It’s also important to mention that gambling is extremely prominent in the sporting world. I am not saying that purchasing cryptocurrency is a gamble. However, I am pointing out that if someone is willing to put their money up to chance on a sports game, they will probably be willing to bet on a cryptocurrency increasing in value too.

2. Trust - The reason FTX went into the sports market was due to the correlation of the target market. That, however, doesn’t explain why they decided to rename stadiums and bring in Tom Brady rather than just paying for commercials. Although it may seem extravagant for FTX to be having stadiums named after the company, it is actually an extremely intelligent and calculated move. One of the biggest taboo’s around companies involved in crypto is the fact that they are untrustworthy or a scam. FTX is combatting that in multiple ways. Firstly, by having stadiums named after them, FTX becomes a household name without having to force their name down potential customers throats. When anyone is discussing where the next Miami Heat game is, they’ll say “the FTX”. This may sound simple but it is a hugely effective way to allow people to become much more comfortable with the name and inadvertently the company.Secondly, having athletes involved in the brand, that are role models to these sports fans allows the sports fans to trust them. “Tom Brady wouldn’t be the face of a brand that is a scam.”That’s the exact thought many sports fans will have had. They believe that these sports stars will have done a thorough check on the company prior to coming on board and therefore they trust the company too. This strategy is so much more powerful than you think. Just remember the likes of Fyre festival where thousands of people bought tickets to a festival that arguably never existed - simply because big stars had put their name on it.

FTX aren’t alone in their mission to plaster their name over the sports industry. They’re heavily accompanied by the likes of Binance, Coinbase and Crypto.com.

The most notable deal made in the space was by Crypto.com just this week; when they purchased the naming rights to the world-famous Staples Center.

The Staples Center will be renamed Crypto.com Arena in December after a deal was put together in the region of $700 million.

That's the largest naming right's deal in history.What will the ROI be for Crypto.com?Their token $CRO jumped about $2 billion in market cap within 24 hours of the announcement.On the day of the announcement searches for "Crypto" and "Staples Center" were trending with a minimum of 100k searches between the two.

Instant exposure. Immediate ROI.

This showed in real-time how valuable these deals can be.

The Lessons

There are 2 main lessons here:

1. Do your research - Without an intense about of research and due diligence, none of these deals would have come to be as effective as they have been. These crypto companies have spent hours of time and a huge amount of resources to ensure that their target market matched the demographic of their target audience. This is arguably the most important lesson to take from it - don’t just advertise for the sake of it! Work smarter, not harder.

2. The power of partnerships - To put it simply, when done right, they work! There is a reason why these companies pay millions of dollars to sponsor professional teams. It does have an effect and it does have a return. The whole idea of Growing Viral is to give small businesses a chance to replicate what billion-dollar businesses do. 99% of the time the things the “big boys” do, work just as well on a smaller scale. Partnerships and sponsorships work and are a huge opportunity for your company to grow!

How You Can Implement This

The chances are you don’t have $135 million to secure a naming rights deal for a huge arena as FTX did. However, this doesn’t mean you can’t do the exact same thing on a smaller scale.

Here are 3 great ways you could follow in FTX’s footsteps:

• Stadium Sponsor - Just because it’s not a huge arena in Miami doesn’t mean it’s not valuable. It also doesn’t have to be a whole stadium naming rights deal. If you know of a local team, try approaching them about sponsoring a stand or a section of the crowd.

• Ambassador Team - Again, you don’t have to have Tom Brady and Steph Curry on the team to make it a success. Look for micro-influencers in your niche and see if they’d be interested in coming on board. 10 ambassadors with 10k followers each are often much more valuable than one with 100k. The followers are much more engaging and also diverse.

• Kit Sponsor - FTX has its name on MLB referees. Crypto.com has its name on UFC fighters walkout shirts. Again, this exact thing can be replicated on a smaller scale. Just think, if you have a local business and sponsor all the local football (soccer for the Americans) teams in your area there will quickly become a buzz around your business. We actually did this with a football accessory company I work with - Grip:Seven (see photos below).

This has been a breakdown of FTX’s marketing strategy. I hope you have learned something and are able to implement a similar strategy into your business.

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I’ll see you next Sunday!