Advertising

Back on track: Kraken inks F1 crypto sponsorship deal with Williams Racing

Kraken has inked a partnership deal with Williams Racing marking the first major return to F1 for crypto this year.

Formula 1 teams could be warming to crypto advertising again despite a crypto sponsorship exodus in the wake of last year’s high-profile meltdowns.

On March 28, American crypto exchange Kraken announced that it was partnering with the Williams Racing F1 team in a new sponsorship and Web3 deal. The move marks the first major crypto company to ink a new deal in Formula 1 racing this year.

The deal will not only involve Kraken branding emblazoned on the Willams race cars, but branded team merchandise and nonfungible tokens (NFTs) for team fans to collect.

The rear wing of the car will also showcase KrakenNFT customer-owned digital collectibles artwork from leading third-party NFT projects at select races.

Williams Racing commercial director James Bower said, “We’re excited to get the partnership underway to offer our fans cutting-edge crypto and Web3 experiences, while also enabling Kraken to reach new institutional clients and businesses through our network and events.”

Today we’re thrilled to announce Kraken as an official partner of @WilliamsRacing!

Together we’re accelerating the crypto revolution on and off the grid

More info: https://t.co/ASxKLrBlFo pic.twitter.com/5RfIdkZKbZ

— Kraken Exchange (@krakenfx) March 28, 2023

Several Formula 1 racing teams quickly dropped their crypto sponsorship deals when things started to melt in late 2022. In mid-November, the Mercedes F1 team suspended a partnership agreement worth an estimated $27 million with the embattled FTX exchange.

Furthermore, Ferrari abruptly ended a long-term arrangement with the Swiss blockchain organization Velas in January. Alfa Romeo dropped its sponsor, Vauld, following troubles at the crypto lender last year.

In September, Singapore put the brakes on crypto advertising around the track but allowed it to remain on the cars. Other countries including France also placed restrictions on trackside crypto commercials last year forcing some teams to remove them.

However, some sponsorship deals have remained. The Aston Martin team has retained its crypto sponsors, Crypto.com and Socios. Binance remains the partner of the Alpine team and OKX and Tezos are still with McLaren Racing, according to reports earlier this month.

Meanwhile, the Red Bull racing team has retained its crypto sponsor Bybit and OpenSea is still with Haas.

Kraken’s deal with Williams Racing could be the beginning of a return to racing and sports for crypto companies in 2023 as markets recover.

South Africa adds new cryptocurrency standards to advertising code

Cryptocurrency products and services feature in a new clause in South Africa’s code of advertising practice introduced by the Advertising Regulatory Board.

South Africa’s Advertising Regulatory Board (ARB) has included a new clause for the cryptocurrency industry aimed at protecting consumers from unethical advertising.

Companies and individuals in South Africa must abide by certain advertising standards pertaining to the provision of cryptocurrency products and services in a new clause introduced to Section III of the country’s advertising code.

The first clause requires that adverts, including cryptocurrency offerings, must ‘expressly and clearly’ state that investments may result in the loss of capital ‘as the value is variable and can go up as well as down.’ Furthermore, adverts must not contradict warnings about potential investment losses.

Advertising for particular services and products must be explained in an ‘easily understandable’ manner for intended audiences. Adverts must also give balanced messages around returns, features, benefits and risks associated with the associated product or service.

Rates of returns, projections or forecasts must also be adequately substantiated, including how these are calculated and what conditions apply to touted returns. Any information relating to past performance cannot be used to promise future performance or returns, and should not be presented in a way that creates ‘a favourable impression of the advertised product or service.’

Adverts from cryptocurrency service providers that are not registered credit providers should not encourage the acquisition of cryptocurrencies using credit. However this does not preclude the advertising of associated payment methods provided by service providers.

Social media influencers and brand ambassadors will also be expected to comply with certain advertising standards. This includes being required to share factual information while being prohibited from offering advice on trading or investing in crypto assets and the prohibition of promises of benefits or returns.

Cryptocurrency exchange Luno, a prominent service provider in South Africa, spearheaded the project with the ARB. Luno’s GM for Africa Marius Reitz told Cointelegraph the exchange approached the regulatory body to develop new rules alongside major players in the local crypto industry.

Reitz said that the industry is looking to take a self-regulatory approach and that consumers should be cognisant of risks involved in cryptocurrency investing. Scams and frauds have preyed on unsuspecting investors in the country, necessitating an effort to ‘clean up the industry’ by making it more difficult for scammers to operate:

“Media platforms are understandably looking for advertisers, but we were concerned that they weren’t doing sufficient due diligence on whether advertisers were above board.”

A statement shared with Cointelegraph from ARB CEO Gail Schimmel highlighted her belief that the project would result in better protections for ‘vulnerable consumers’ in South Africa:

“This is a wonderful example of an industry that sees the harm that could be done in its name, and steps up to self-regulate the issues without being forced to do so by government.”

Cryptocurrency investors globally have fallen prey to some major scams in recent years. In South Africa, Mirror Trading International grabbed headlines through 2020 and 2021 as its CEO Johan Steynberg fled the country with sole control of wallets containing around 23,000 Bitcoin (BTC) belonging to thousands of investors.

Africrypt was another South African investment scheme that turned sour on investors in 2021, with brothers Raees and Ameer Cajee claiming that a hacking incident had led to the loss of some $200 million worth of cryptocurrencies being managed by the fund.

Google feels the bear market as crypto ad revenues slip since July

Alphabet’s revenue from Google advertising was down in Q3 2022, with decreased search spending from financial services and cryptocurrency subcategories highlighted.

The latest earnings call from Google’s parent company, Alphabet, highlighted decreased search advertising spending from financial services and cryptocurrency subcategories.

Alphabet released its earnings report for Q3 on Oct. 25, outlining a 6% increase in revenue totaling $69.1 billion in comparison to Q3 last year. Revenues were down slightly from Q2 2022, dropping from $69.7 billion.

However, the breakdown of revenues from Google Services, which includes its advertising earnings, showed that this segment increased from $58.8 billion to $61.3 billion over the past year.

Philipp Schindler, chief business officer of Google, noted particular strife in the financial and the cryptocurrency sectors, in particular, with notable drops in advertising spending quarter-on-quarter during Alphabet’s earnings call on Oct. 25:

“We did see a pullback in spending by some advertisers in certain areas in search ads. For example, in financial services, we saw a pullback in insurance, loan, mortgage and crypto subcategories.”

Google updated its financial products and services policy in July 2022 to clarify the scope and requirement for adverts relating to cryptocurrency businesses, services and products. This set out rules for advertisers of exchanges and wallet services targeting countries, including France, Germany, South Korea, the Philippines, the United Arab Emirates, Hong Kong and Thailand.

Given that they met certain regulatory requirements within these jurisdictions, advertisers could continue to promote their crypto-related products and services through Google’s advertising platform.

The change came several months after Google gave crypto-related advertising the green light in August 2021. The multinational tech giant had previously banned crypto- and initial coin offering-related advertisements back in June 2018.

Global markets and cryptocurrency markets continue to weather difficult times, with the latter enduring what analytics firms like Glassnode have dubbed as the worst bear market on record.

Nevertheless, the decreased advertising spending from the cryptocurrency sector does not reflect Google’s attitude toward the space. Google announced a partnership with American cryptocurrency exchange Coinbase in October to allow payments for cloud services with Bitcoin (BTC) and Ether (ETH) in 2023.

Thailand SEC to apply strict guidelines for crypto ads

Cryptocurrency-related adverts in Thailand will have to meet strict rules as the Securities and Exchange Commission looks to emulate foreign standards.

Thailand’s Securities and Exchange Commission (SEC) will implement stringent advertising rules for cryptocurrency firms operating in the country by October 2022.

The Thai SEC informed cryptocurrency-related businesses operating in the country via email that adverts concerning digital currencies must have clear investment warnings to consumers on Sep. 1. The statement was later posted on the SEC website.

The SEC regulator has instituted the new standards for cryptocurrency-related adverts in response to a number of marketing campaigns that have neglected to include investment risk warnings.

The new standards will require adverts to refrain from featuring false, misleading or exaggerated claims and include investment risks warnings. The correspondence from the SEC also calls for balanced advertising, which would entail including potential positive and negative factors of the products or services being promoted.

Firms will have to limit advertising directly promoting cryptocurrency to “official channels” like their own websites and will be required to hand over details of adverts and spending, including the use of social media influencers and bloggers and their terms, to the SEC.

Prominent cryptocurrency exchanges like Bitkub and Zipmex have adverts on large street billboards and in public transport hubs, promoting their mobile applications and services to prospective users in the country. Advertising services is still permitted in public spaces, according to the SEC’s directive.

Companies have been given a month to comply with the new requirements as the SEC continues to establish frameworks that are positioned to protect the country’s retail investors . This would include updating or amending existing adverts across print, online and real-world platforms.

The SEC further noted that the move was in line with regulatory standards set in other countries like the United Kingdom, Singapore and Spain, which had previously instituted stricter guidelines for cryptocurrency-related advertising.

August 2022 was a busy month for the Thai SEC as it granted licenses to four new cryptocurrency-related businesses. The regulator also put Bitkub under the microscope, fining the firm’s chief technology officer Samret Wajanasathian for the alleged insider trading of its KUB token ahead of a lucrative investment deal with Thailand’s Siam Commercial Bank.

South African rugby icon Siya Kolisi headlines new crypto advertising campaign

The Springbok captain features in a new advertising campaign promoting a long-term attitude towards cryptocurrency investing in South Africa.

National rugby captain Siya Kolisi will spearhead a two-year educational cryptocurrency advertising campaign in South Africa.

The Springbok skipper has partnered with global cryptocurrency exchange Luno in the campaign’s rollout, which will feature a series of television adverts promoting a long-term investment attitude towards cryptocurrencies.

Kolisi was front and center of the first advert of the new campaign, which was aired during the Springboks’ third match of the Rugby Championship against Australia on Saturd.

The light-hearted commercial features the brawny flank being put through his paces by a personal trainer while drawing parallels between his long-term game plan for his rugby career and financial planning.

A statement from the Springbok captain highlighted the appeal of Luno’s efforts to make cryptocurrency investing accessible to new users that are unfamiliar with the space:

“Like many South Africans, I am new to crypto investment, so I had to do some research before deciding to partner with Luno. I love that Luno focuses on providing education for new crypto investors like me so we can make better, long-term financial decisions.”

Marius Reitz, Luno’s general manager for Africa, highlighted the current downturn across cryptocurrencies markets as a prime example for investors to zoom out and focus on long-term investing in the space:

“When you zoom out, the ups and downs do not change the fundamental potential of crypto to improve the world’s financial system, which is what its long-term value is based on. The long game in crypto means holding, rather than trading.”

Reitz added that investors can better handle short-term price changes by considering the long-term outlook, given the space is still in its infancy.

Luno, a known cryptocurrency exchange and trading platform in South Africa, previously worked with Rassie Erasmus, Springbok’s rugby director, in another advertising campaign that taught users how to “tackle” Bitcoin (BTC).

The firm also announced a lucrative and potential industry-first sponsorship of the African Sunshine Tour golf’s Order of Merit in May 202. The top three golfers in the standings at the end of the season will receive significant prize money paid out in BTC.

Zuckerberg unfazed about $2.8B metaverse division loss in Q2

“This is obviously a very expensive undertaking over the next several years,” said Mark Zuckerberg.

Meta’s virtual reality (VR) and metaverse division Reality Labs has posted its seventh straight quarter of losses, but CEO Mark Zuckerberg remains steadfast in investing in the technology, which he calls a “massive opportunity.”

During Meta’s Q2 earnings call on Wednesday, Zuckerberg acknowledged that such losses could continue for several more years until VR applications and its metaverse platform are mature enough to tap into the “massive opportunity” worth “hundreds of billions of dollars:”

“The Metaverse is a massive opportunity for a number of reasons. I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not, trillions over time.”

“This is obviously a very expensive undertaking over the next several years,” Zuckerberg added, “I’m confident that we’re going to be glad that we played an important role in building this.”

The extended stretch of operating losses for Reality Labs was revealed in Meta’s Q2 earnings report earlier in the day. Such losses are not unusual for divisions in a research and development phase.

Reality Labs builds VR and augmented reality (AR) applications to help Meta users connect over its various social platforms, including the Metaverse, with the Oculus line of VR headsets.

In addition to the losses, Reality Lab’s revenue has been trending down since 2021 and its operating margin has been trending down since 2020. The $11.1 billion in revenue and 29% margin posted in Q2 2022 are the lowest over the past seven quarters.

Reality Labs posted $2.9 billion in losses for Q1.

Zuckerberg also noted that a “challenging macro environment” could be exacerbating the losses.

He said that the economic situation now is worse than it was a quarter ago, and his opinion is corroborated by the fact that the Federal Reserve raised interest rates by 0.75 percentage points for the second time in a row on Wednesday before the Meta earnings call took place, adding:

“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business. In this environment, we’re focused on making a long term investment that will position us to come out stronger.”

Despite the economic troubles, Zuckerberg is confident that his company and its subsidiaries will come out of the current economic downturn as “a stronger and more disciplined organization.”

He attributed this confidence to the investments his company is making now to ensure it is able to remain a leader in an industry that may be undergoing a shift to accommodate more metaverse platforms.

Meanwhile, the United States Federal Trade Commission (FTC) has filed a lawsuit against Meta, alleging that the firm is aiming to monopolize the entire Metaverse market. The complaint states that Meta’s moves within the space hinder innovation and “competitive rivalry” among U.S.-based companies looking to build Metaverse platforms and applications.