Crypto Marketing Myopia

By Craig Bromberg,
Mar 12th, 2019 | 16 min read

American business, said Levitt, was suffering from what he called “marketing myopia.” Firms were so pumped up on post-war optimism and the certainty they were going to kill it — for no other reason than that they were in “growth industries” — that they were instead “killing growth from within.” To get a grip on their “marketing myopia,” American business needed a prescription for what Levitt called “marketing imagination,” by which he did not mean more or better advertising, but rather the recognition that if growth was a priority, markets and customers could not be an afterthought.

Sixty years later, in the grip of yet another moment of American unrest, a very different kind of business bubble is grabbing us — not (thankfully) military expansion, but rather crypto, including Bitcoin, its programmatic sibling Ethereum, and the entire system of altcoins and companies aiming to crack wide the remnants of centralized capitalism through self-organizing decentralized networks. Nearly all of these so-called projects believe that their efforts to create decentralized, tokenized networks and securities are not only safer and more secure than mainstream digital products, but represent a historic shift in the way we think about money, markets, the internet, identity, and the future of capitalism itself.

That is no mean feat, and it is a project that despite recent rockiness, is proving to be resilient. Trade volume and fundraising may have plummeted in recent months, but even discounting the many scams, hacks, and nutty projects that popped up in 2018, more blockchains are still coming to market. The idea that cryptologically secured blockchains and the trustless currencies they power are creating superior transactional security, more financial accountability and governance for stakeholders, and more innovative and (perhaps) egalitarian investment and business opportunities than offered by traditional fiat currencies and financial institutions, is less and less of a boast.

As a result, crypto is starting to penetrate and permeate mainstream digital. Last summer, Microsoft and Starbucks announced Bakkt, a new crypto venture to facilitate crypto payments, McDonalds launched a non-crypto coin, Lolli enlisted merchants from Sephora to Ulta and Everlane. Fidelity has announced plans to handle custody and execute trades on multiple exchanges for hedge funds and family offices and even a crypto credit card starting next month. Digital wallets from Square and Robinhood to Metal are trickling into mainstream banking. And most critically, regulators, broker/dealers, and institutional investors have begun talking with each other about how to securitize tokens legally, innovating new ways tokens can be used for fundraising and trade. Crypto fundamentalists may gag on what’s coming, but within the next decade, whatever can be tokenized will be tokenized. One day crypto will just be money, and every brand and government will have a coin that is safely and securely administered like any other security.

To say that however is to drive a stake through the heart of crypto marketing today: the notion that the decentralization of capital is the brand of crypto. For crypto enthusiasts, blockchain is not just another database. It is a protocol, more akin to dial tone, http, or TCP/IP, than SQL. And what is a protocol? It’s a set of agreed upon rules, informal at first, but increasingly bound by formal contracts and designed to bring the essence of transaction into legible and accountable formats. In crypto’s case, that is the blockchain, an immutable digital ledger that can never be hacked, never yields to censorship, and represents a culture of decentralized participation where the needs of both network participants and owners are seen as having stakes in their investment. It is a system of digital transaction and recordkeeping that fundamentally guides the agency of its actors to align themselves with other stakeholders.

However even a protocol doesn’t go far enough to describe blockchain’s sweep. A protocol is a technology based on a consensus but crypto (and blockchain) are cultures, with vast explanatory and viral power, more like design strategy or lean startups. It’s not for nothing that crypto fans (especially new ones) describe their initiation as being akin to falling through the rabbit hole or drinking the Kool-Aid. In this brave new world, whatever can be decentralized must be decentralized. It may start with a whitepaper and a technical protocol, but it very quickly spills into marketing, organization, and the disbursement of profits. As Chris Dixon wrote in a seminal essay on decentralization, “Token networks remove… friction by aligning network participants to work together toward a common goal — the growth of the network and the appreciation of the token.”

This is why, when companies such as Facebook or Fidelity or Goldman (let alone the world’s governments) get involved with crypto, the collective skin of cypherpunks crawls. Because, contrary to the bad press created over the past year — the criminality, the volatility, the speculation — basically just what you’d expect in a permissionless financial ecosystem — the original cypherpunk imperative was to maximize transactional privacy, not speculative growth. Along the way, one outlaw creed of hackers was joined by another (digital cash advocates) who were determined to crack the network power of FANGA — Facebook, Amazon, Netflix, Google, Apple and half a dozen other companies that have developed core competencies in extracting network effects.

Even if you don’t believe FANGA’s brawn is the result of some nefarious conspiracy to build competitive moats of lock-in power and monopolize markets, it seems clear that the exploitation of network effects to satisfy advertisers’ infinite hunger for ever more customers was bound to kill market heterogeneity. The bigger FANGA gets, the fewer alternatives we have that can compete on such core benefits of convenience, price, and promotion. The more advertisers drive to capture new customer data, the more content gets squeezed into clickbait and humans turned into data points.

It is precisely this creeping monopolization and homogeneity — this depersonalization of identity — that created the lasting conditions for crypto. Broadly speaking, over time, FANGA developed a supply problem (oversupply verging on commoditization). It began to manipulate markets through lock-in, competitive moats, and smart marketing. Crypto, on the other hand, has developed a demand problem (underdemand verging on scarcity). It aims for self-governance of markets through the use of programmatic rules of reward and punishment to radically re-align the work of network creators and network participants, bringing them together so that identity is returned to participants who are given new freedom to participate — not preemptively caught up in the funnel dynamics of social conversions.

These are grand, historical ambitions, a technological teleology that dares to stare into the abyss of late capitalism. But who needs it? Who wants it? Just because there is a thorough economic analysis and/or technological solution to a problem does not mean crypto has found a market solution. Which brings us back to Ted Levitt: “People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”

This is what the marketing imagination demands an answer to.

2018 was the year all our hopes and dreams of crypto dominance were dashed by a volatile year of rampant speculation and legal chaos. ICOs that started as a healthy alternative to traditional startup fundraising were exploited by crooks and clever code slingers. Even if many started with legitimate projects, they were quickly surrounded by others who saw opportunities to arbitrage coins and collect a king’s ransom. Nothing scaled. Minor Condé Nast print magazines have more circulation than most cryptos.

In crypto, marketing is the word that dare not speak its name.

In most industries, such minuscule penetration would lead to the desk of the chief marketing officer, whose budget would be immediately scrutinized or slashed. In crypto, however, marketing is the word that dare not speak its name. Instead, crypto’s scale problems — note: scale, not demand, because there are so few experienced marketers in crypto — have mostly been attributed to technological faults. Crypto may not have a Moore’s Law of blockchain, but it does have an army of engineers targeting scaling solutions in search of unique network effects, so that, as the journalist and author Michael Casey says, “many more transactions can be processed without raising security risks or overly trusting specific record-keeping entities, [paving] the way for other improvements, including lower costs, more application-layer software products, and improved user experience.”

No doubt, these are necessary and valuable innovations, but as we’ve seen throughout the history of technological innovation, network effects are by no means guarantors of virality or even diffusion. Diffusion is much more than just ability to scale. True diffusion — what Geoffrey Moore calls “crossing the chasm” to technology adoption by early majority users — requires a sense of how one product is better than another, how much awareness it can generate, how easy it is to use and to try, and how compatible it is with all the systems around it. Even then, superior products fail. (VHS over Betamax.)

To most crypto-purists, the answer to crypto’s demand problem is built into the foundations of Bitcoin itself. You hear it every day. Just this week, Anthony Pompliano (aka Pomp) the typically terrific crypto pundit, pooh-poohed marketing in crypto because “if the product works, it sells itself.” But there is more than the usual techno-determinism at work here. The behavioral dynamics of decentralized growth are baked directly into crypto’s origins, right from the production of Satoshi Nakamoto’s “genesis block,” the first mined block ever. In Nakamoto’s now famous white paper, Nakamoto wrote, “The first transaction in a block is a special transaction that starts a new coin owned by the creator of the block. This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation, since there is no central authority to issue them. The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.”

Nakamoto’s audacious, ghostly genius begins not so much with technology as with economic insights into the governance mechanisms that allow user behavior to be programmatically contrived in order to drive economic growth. With Bitcoin and later with Ethereum, the crypto thought leadership (Nakamoto, Chaum, Wright, Finney, Szabo, et al and then Buterin, Lubin, et al) proposed digital currencies that would exist entirely in a universe of decentralized nodes that can transform transactional decision making (aka purchase behavior) into a trustless, programmatic computer. “Trustless” because all behavior in the system is to be governed by code and controlling incentives baked into code; a computer because the blockchain is essentially a cloud based P2P drive (a digital ledger in the cloud) that stores where all the accounts and smart contracts live, and processes transactions based on a set of rules.

In this progworld of what Szabo calls “dry code,” code distills, captures, and perhaps even transforms human behavior from heuristic to algorithm; in so doing it becomes the driver of digital economics. Game theory, used to set behavioral boundaries, becomes the master of focal points that incent honesty and accountability. But the system does not work without the building blocks of governance and incentive to drive the engine forward.

This is not just theoretical: The more one plunges down the rabbit hole of crypto, from Nakamoto’s genesis block to the lowliest shitcoin, the more one sees that promotion plays the leading role in reward systems that maximize network ownership effects from the outset. Here is Vitalik Buterin, co-founder of Ethereum: “Cryptoeconomics is about trying to reduce social trust assumptions by creating systems where we introduce explicit economic incentives for good behavior and economic penalties for bad behavior, and making mathematical proofs of the form ‘in order for guarantee X to be violated, at least these people need to misbehave in this way, which means the minimum amount of penalties or foregone revenue that the participants suffer is Y.’”

In crypto circles, the design of these incentives forms the core of what is called governance. On-chain governance informs the behaviors of miners — a simple example being the inventory cap of 21 million Bitcoin, baking principles of supply and demand directly into Bitcoin’s inventory and pricing. Instead of free markets, on-chain governance programs incentive into every transaction. Instead of allowing us shaky, unsteady humans to move through the funnel, to exercise what has sometimes been called the double coincidence of wants at work in a market, this whizbang supercomputer can make purchase decisions for you based on reading the supply and demand of your needs. Instead of a customer journey, your money will algorithmically select the best path to the best incentives. Instead of a meandering path from awareness to a marketer’s “moment of truth,” the robotic journey to the best incentive will guide your money to the best transaction, not just for you but for all agents who are part of the class of buyers. That is the premise and promise of on-chain governance.

But let’s not forget the off-chain behaviors of the entrepreneurs who program this computer and all the wished-for, decentralized, trustless behaviors of the humans who would use these coins. This governance is not only code but protocols, which are in essence cultural agreements. The particulars of how system participants close the gap between current states and emergent outcomes is the culture of decentralization. And in nearly every case, it is weighted to incentive promotion and growth. As is increasingly being pointed out by smart pundits such as Meltem Demirors, crypto’s brand may promise decentralization, but the reality of crypto is rampant centralization.

The crucial point is this: Through on-chain and off-chain governance, crypto stands the role of incentive in traditional marketing on its head. Unlike traditional, human marketing, in which incentive is buried deep inside a sales funnel, in crypto, incentive precedes transaction. Vendors ask to be paid for assessments before they take you as a client. You pay in full for services before a single lick of work is done. Bounty campaigns pay completely unknown actors with “stakes” and coins ( for content or just bringing their friends to a new project without ever knowing that the project can or will ever work in practice. And of course, most critically, ICOs (Initial Coin Offering) structured fundraising before the integrity or users of a currency could even be identified much less proved. You invest (pay) before anything is funded. Until very recently, the crypto entrepreneur’s dream was not the victory of a startup seeking traction, but a successful ICO based on a slick whitepaper hypothesizing the creation of an original blockchain — sans product, sans market proof, sans customer validation.

The crucial point is this: Through on-chain and off-chain governance, crypto stands the role of incentive in traditional marketing on its head. Unlike traditional, human marketing, in which incentive is buried deep inside a sales funnel, in crypto, incentive precedes transaction.

As Chris Burniske and Jack Tartar write in Cryptoassets, “Since ICOs use the crowdfunding model to raise money to build a network, there often is no existing network up and running, thus no blockchain, hash rate, user base, or companies built on it. Everything is an idea at this stage. As a result, the integrity and prior history of the founding and advisory team are all the more important, as is the thematic investigation of whether this ICO is filling a marketplace and business need.”

This is especially true in altcoin-land, where the contingencies of human behavior have been treated as variables that can be programmed away in game theoretic arcs that start with the foundational notion that incentives, rewards and even punishment precede customers and engagement. Theoretically there is no funnel here. No net 90. No equity. Transactions clear in milliseconds and the more coins you hold, the louder is your voice. There is no customer journey for the same reason there is no customer journey when you turn on your computer. It’s a machine, not a journey. Program the behavior and you run the machine at scale. With the exception of the small group of customers who are investors or developers, the customer journey starts and ends with bounties and airdrops — with mechanisms of building scale by simply moving people onto the machine, and then, for the most part, just leaving them there until (one day, per Pomp, at any rate) you have a product and the market is ready to receive it.

Although I have been a bit scornful in describing this belief in the scaffolding of programmatic governance as a marketing scheme, it was pretty darned successful until those pesky regulators came around and noticed that some 86% of all ICOs never even produced a product. All was copasetic until the first research floated to the surface showing that this version of crypto marketing doesn’t actually seem to be working that well. According to a 2018 report from a team of economists at Boston College, only 8% of all cryptos advertised actually reach an exchange and 56% of all startup cryptos die within three months of their ICO. Without exaggeration, there are well over a thousand shitcoins (priced under $1USD) of the 2000+ coins listed on exchanges today. There are also those who say that this culling is merely evidence of the meritocratic victory of a decentralized market where the customers have been fired because they never participated in the token economy; they were designed away in a new programmatic order that begins with the taming of human behavior in favor of computer code. If you can’t afford pay-to-play, just stay home.

But more and more of us are asking when the bloodletting will stop and what we can do to create sustainable, scalable businesses built on blockchains and cryptoassets. Some say that in order for crypto to scale, it needs infrastructure; others say it needs a killer app. But absolutely no one (except perhaps Jeremy Epstein) is speaking about the market — the humans — and the needs of humans today (vs future humans). The regulators say (or at least imply) that the future of crypto is the tokenization of securities, but by this point, entrepreneurs are reasonably skittish about the SEC’s oracular hints. As Simon Morris wrote recently, when the mission of decentralization is disruption and rule-breaking, legal jeopary is not far behind. Should you “simply not promote what you’re doing?” asks Morris. “Or do so with a veil of anonymity so no-one can join the dots? Or just get lucky and succeed by accident like Bittorrent did? And what will we discover of the future legal liability of those who flagrantly break rules (even very unpopular ones), or those who have leading roles in a blockchain system that makes it possible?”

It’s easy to declare that a thousand flowers should and will bloom. But the trillion (or billion) dollar question still remains: What role can humble marketing, human marketing, hundreds-of-years-in-the-making marketing, marketing born of simple strategic requirements for concise product development, pricing, place, and promotion — what role can this old fashioned marketing play in this newfangled, cutthroat meritocracy of digital money?

To traditional marketers, the notion that promotional incentives should come before customer journeys simply smacks of desperation. Incentive first is the tactic of the carny coupon dealer, the buy-one-get-one-free sideboard screaming FREE BEER. From a traditional marketing perspective, purchase behavior (aka sales), is a journey, with touch points, funnel dynamics, an entire narrative of getting, catching, and keeping a customer, especially for complex and/or simply expensive products. Behavioral nudges and incentives might be used at the front of a campaign (FREE BEER), the end (a 5% sweetener to close the deal), or anywhere in between (coupons and reward points), but experienced marketers know that promotional incentives are merely one of several variables that lead to closing sales. Marketing is a science, and perhaps a poor one; it is also psychology, which is both its weakness and its strength. John Wanamaker never could decide which half of his marketing was wasted.

Of course, sales did not start with the existence of money. You don’t need government fiat to make a sale. Markets are free, simple exchanges between two parties, sellers and buyers. Sellers come to market with offerings of determinate value and offer it at more or less determinate prices, whether they are shells or gold or dollars or options; when buyers become aware of these offerings, they decide whether or not to make a purchase, depending on whether what’s for sale matches buyers’ expectations of price and utility. If buyers and sellers needs coincide, and they agree to the terms of the transaction, they make an exchange: something of value (money) is exchanged for the offering — value for value — and they make the transaction.

For traditional marketers, there are only a certain number of levers that can be pushed to change these outcomes. These are the strategic set pieces of marketing, summed up in nearly every marketing class as the 4Ps: product, price, promotion, place. Together, they constitute a heuristic that guides marketers to strategic positionings that dictate differentiation and value exchange.

The 4Ps might stand some updating, but the central idea is and always has been solid: If you can properly define the mix of product, price, and place (channel), promotion (advertising and incentive) will get people to buy. The trick is making sure that the cost of acquiring customers doesn’t exceed the average lifetime value of customers as they progress through the funnel (from awareness to revenue). Promotional signals — advertising, samples, coupons, premiums, contests, rebates, incentives of all kinds — make or break sales but when promotion becomes so frothy it becomes FREE BEER, customer journey is disrupted for short term gain. Which increases churn, forces changes in price and channel, and eventually destroys brand.

Marketing in other words is a latticework of mental models, not unlike Charlie Munger’s famed latticework for picking stocks. You can add various elements to the 4P’s (and many have), but in the end — and the end can be very off because price is no longer the amount of money someone pays to acquire a product but rather the lifetime costs associated with acquiring, using, and ultimately disposing the benefits attained during a certain period of time using a product — the heuristic must shift to meet the market. Which is why lean startup culture is a religion of product-market fit. Winning startups don’t win because they have great products or great teams; as Marc Andreessen pointed out in a blog post a decade ago (, startups succeed because they have great markets. Every good marketing decision is based on this knowledge of markets and what they will buy. That’s why it’s called product-market fit.

Understanding the guts of product-market fit is what Levitt meant by “marketing imagination” — and why his evisceration of American companies as being blind to the real businesses they were in was considered so lacerating. It’s only when the receipts are tallied up that we ultimately know whether we are wasting our spend and need to pivot. To put this another way: Sales and marketing are ultimately wooly disciplines prone to contingency and failure because they are finally based on the fundamental tautological market reality that free markets are composed of human beings who just don’t or won’t do what we want them to.

Maybe one day the autonomous, AI-based march of business rules to the drumbeat of algorithms will be entirely victorious, automating economic decisions into the very fabric of token economics. Maybe one day “dry code,” as Nick Szabo has called it — “computer code and computer-readable files (to the extent a computer deals meaningfully with them”) — will simply overwhelm wet code (“human-read media”). But until that day, cryptos need to find ways of hybridizing governance structures that place incentive above engagement with the realities of bringing product innovation to markets. If done right, cryptos will become co-creative exchanges of value between companies and users. Decentralization will be preserved and measured through metrics of participation instead of ad-based engagement. The inherent conflict between marketing and the culture of decentralization will be won not by who has the best technology or who has the best brand, but by who can learn to drive agency with human beings. This not only means understanding the fundamentals of the complete customer lifecycle, but the inevitability of churn, customers who burn out, cash out, or just forget that they own a coin because they own so little of it (an increasingly common situation).

My hypothesis is that finding the fulcrum between centralized and decentralized marketing to create participative system design and bottoms-up co-creation designed to build agency may be as effective and perhaps even more sustainable than pure incentive design. As William Mougyar has written, “ICOs cannot escape startup evolution characteristics. [Their] growth will be hard fought, hard earned, and hardly a walk in the park. Success will not be immediate, nor will it have a straight line trajectory to the top.”

For cryptos to be truly antifragile, they need more than programmatic vision. Progworld needs preventive medicine — a checkup for marketing myopia that can remedy the fantasies of engineers and re-imagine the needs of real customers taking real customer journeys in real markets through marketing that drives those actors to agency on behalf of their favored brands. It is time for crypto’s marketing checkup.

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