The impact of tech giants’ advertising ban on the popularity of digital currencies

Following Facebook, Google announced that it will ban all digital currency ads on its platform starting in June 2018. This restriction applies to all Google-controlled platforms, including YouTube and all websites where Google sells advertising space. On Sunday, March 18, 2018, SkyNews reported that Twitter will ban a range of digital currency ads, including ICO ads, digital currency wallets and trading platform ads, starting in April 2018. Twitter did not publicly announce the ban, but did not deny the news.

As Matthew Frankel of investment advisory firm Motley Fool said, the main purpose of Google's ban is to protect investors without harming those who have already entered the industry, which will help the healthy development of the blockchain business ecosystem. However, the reasons and consequences of this ban deserve further investigation.

It may seem simple, but the announcement itself has far-reaching implications for advertisers in the digital currency space. The incident also provides an angle for people to observe the power and responsibility of Google in online communication.

The real source of this news is Google's annual AdWords report. As part of the new policy, the move aims to restrict "Contracts for Difference (CDFs), instant foreign exchange margin trading, spread betting" and other low-threshold speculative methods that can accumulate a large amount of high-risk returns in a short period of time.

Because digital currencies have always been associated with financial fluctuations and have recently become a hot topic in the financial and technology fields, we can understand the deeper rationale behind the ban from these other types of financial products banned by Google.

Specifically, the statement mentioned that "advertisements related to digital currencies (including but not limited to ICOs, trading platforms, digital wallets, and trading analysis) will no longer be accepted." Although the statement further clarified that advertisements for CFDs, instant foreign exchange margin trading, spread betting, etc. can be placed in specific countries and regions with permission, it did not further mention digital currencies. Finally, advertisers can apply to Google after the application form is published in March 2018.

Carpet cleaning

To better understand the situation, Bitcoin Magazine interviewed Rick Hanna, a strategist at BTC Inc. According to Hanna, setting this atypical ban in advance in June 2018 is a typical practice promoted by Google. This practice gives developers and end users valuable time to adjust and implement the new policy, while many digital currency advertisers will be able to continue using Google and Facebook until they are shut down.

Hanna judged based on past experience that the most surprising thing about this ban was Google and Facebook’s blanket cleanup of all digital currency advertisements: “This approach attracted attention because you realized that they acted as gatekeepers to a large extent. Using a comprehensive ban to deal with a small number of bad guys seemed a bit over the top.” Hanna pointed out that if other social media platforms such as LinkedIn, Medium and Reddit did not follow up with this policy, they would be exploited on a large scale.

Causes and consequences

Tatiana Moroz is the founder of Crypto Media Hub, a cryptocurrency consulting firm that has been specializing in cryptocurrency advertising, PR, marketing and communications since 2015. Well-known clients include vaultoro, blockfinity and zencash. Her company mainly targets publisher advertising, rather than distribution platforms such as Google or Facebook, in the form of everything from website banner ads to original content or events. Moroz helped analyze the logic behind the ban by the tech giants and the potential impact of this on companies that rely on advertising distribution platforms.

“Although this sounds like a conspiracy theory, I think that Facebook and Google are companies that are deeply embedded in a very large vested interest system, and they have gained huge benefits from this system. As we all know, they have arbitrarily censored and blocked users, leaked user personal information in various improper ways, and profited from it. I think they are worried that this disruptive technology will take away their jobs, so they use such policies to treat digital currency.”

On the other hand, Moroz also admitted that these large companies do have concerns about legal liability: "In the ever-changing environment, the US Securities and Exchange Commission's regulation of digital currencies has been erratic. If they allow digital currency advertisements, they will bear legal risks without knowing it."

Discard the dross and retain the essence

Even for media and marketing companies that specialize in serving the digital currency industry, to identify potential customers from numerous scam projects and hype projects, they need a constantly optimized screening and approval process. Relatively speaking, a comprehensive ban on all digital currency advertisements may be the most time-saving and effective method, while also distancing oneself from the relationship, reducing the responsibility of establishing an evaluation system, and avoiding accusations of collusion to hinder the development of the industry.

According to an article by eMarketer last year, Google and Facebook controlled 63.1% of online advertising in the United States at the end of 2017. In fact, the power and status of Google and Facebook in the digital world make them choose to completely ban unpredictable digital currencies even if they are able to take responsibility, thereby gaining the right to decide the life and death of the project.

Art, not science

"As a marketing company, it is very difficult for us to screen high-quality projects. It is a daunting process for anyone. Besides, we are not a venture capital institution or a law firm, and we do not have the ability to measure the feasibility of a project. But then again, we do need some way to determine the authenticity of a company." Moroz admitted: "We try to be selective in accepting projects, but we also know that so-called compliance and orthodoxy is actually an evolving process. We don't think Google will have a better eye in this regard. Therefore, there may be no better solution to the current problem."

It’s worth noting that things are often not black and white when it comes to distinguishing between legitimate and scam projects, and many companies fall into the gray area in the middle. Therefore, it’s not so easy to distinguish illegal activities from mediocrity and incompetence.

Advertising without Google and Facebook

The digital currency advertising ban by Google and Facebook is a fait accompli and cannot be changed. Without the help of Internet giants, blockchain technology companies will face new challenges when they want to promote their brands and reach users.

"I'm pretty sure there will be some backlash in the crypto community, as social media has become the primary communication channel for this emerging market," said Swan Burrus, global strategist at Ogilvy & Mather. Burrus also predicted that if these platforms further introduce restrictive policies, bounty programs could be used to stimulate the promotion of certain digital currencies.

Moroz considered it from another perspective, believing that the vacuum left by search engines and social platforms is more conducive to increasing community participation and interaction and building strong connections:

“I think interpersonal connections will become more important, and it will become more important to have trusted partners to lead the way, and to move forward together. If you can’t afford to hire an agency to do this, then it’s at least worth your time to research it, or communicate more with seniors in this field. Project parties can cooperate more with different communities and place advertisements in the cryptocurrency media they trust.”

Although using the advertising services of Internet giants will bring you maximum traffic and influence, some digital currency companies have also found that the effect is not necessarily the best. According to Shane Jordan, vice president of strategy at PR firm Spark, the role played by Google and Facebook is much less important than people think:

"Based on our statistical data and experience, there is no evidence that Google and Facebook's advertising networks have stronger conversion capabilities. Therefore, in past campaigns, we only used Google and Facebook ads as a small part of the media mix."

Jordan said that advertisers who are good at using data will always run campaigns in the places on the Internet where conversion rates are the highest, and his team often works directly with publishers: "We have found that the best performing channel is to advertise directly on the websites where cryptocurrency investors get news and market information, and this is where we continue to focus our efforts."

In the early stages of the industry, there is still a clear disconnect between where ads are placed and where they should appear. In an episode of the Cointalk podcast, writer Jay Kang teased the complexity and charm of the world of digital currency and blockchain, and he aptly summed up the ideal state of digital currency that everyone is looking forward to:

“What we really want is an environment where you can invest in a project when you believe for some reason that it has merit and potential, and it won’t be messed up by scammers, shady things won’t happen to you, and the exchange you use won’t be hacked. Eventually we’ll get there.”