Bitcoin. Cryptocurrency. Initial Currency Offerings. Ethereum. It’s a frothy industry which has large amounts of money to spend, and plenty of PR agencies to spend it on. An exciting time for Public Relations to open their hearts and bank accounts to clients with big dreams.
Indiegogo. Kickstarter. Crowdfunding. It’s a frothy industry which has large amounts of money to spend, and plenty of PR agencies to spend it on. An exciting time for Public Relations to open their hearts and bank accounts to clients with big dreams.
“75% of European digital ecosystem is present at #TNW2018”
Are you doing business in Amsterdam in May?
Sure hope you can’t compare crowdfunding to ICO- oh. Oh no.
Public Relations is an industry that doesn’t do its research of the reporters it’s pitching, let alone its clients. It’s easy to skimread a few things and then say yes, client, I will take this on, I can make you a star, without the real knowledge backbone to say that you can confidently pitch it.
The reason I bring up the crowdfunding industry is that PR barely does any due diligence (or has the shame to admit something is crap) when it comes to a client, so when a reporter asks a question the answer is usually “uhhh.” Don’t argue with me PR people, I’ve seen it enough times.
Furthermore, they rarely (if ever) did or do due diligence over the likelihood of a crowdfunding project ever making it to reality. Heck, I do, and I’ve had a few that ended up surprising me. Volatility in anything that involves taking money for a potential physical object is part and parcel of crowdfunding, and in the end, you could be repping something totally non-existent (or in the end a total disappointment).
Due diligence involves seeing the thing work, understanding delivery plans, understanding the realistic chance of that thing making it to market… and then understanding it still may not and then not taking on the client. This can happen with startups too, but at least they’re up front that they’re “new” and their believe is backed by venture money. And even they fail.
The similarities between crypto, ICO and other blockchain-based clients and the crowdfunding industry are obvious. And the former is even more dangerous.
3 reasons why:
1) Your client may be holding a vast amount of money in a variable, volatile, and completely intangible fiscal element. Where crowdfunding was difficult was in what happened after a successful raise — were they prepared to do so? How does hardware work? Well, in the case of a successful ICO, they may have taken on 20,000 Ethereum as part of their funding. That’s $14,953,000 ($747 USD to ETH as of posting).
What if there’s another giant Ethereum heist? What if a massive trade on GDAX that sends the price crashing (though likely not to ten cents)? In essence, every day their actual capital — which is not liquid as it’s held in a cryptocurrency — fluctuates. If Ethereum faces a speedbump and drops to $700 (a realistic chance)? That fund just became worth $953,000 less. If it crashes further to $500, that’s now a $10 million fund.
Worse still, if they sell off their Ethereum fund even in a $200,000 chunk, without actually doing so to a party in private (IE: wallet to wallet/off an exchange), that will also send the value of Ethereum down. PR firms are fired when budgets get tight. Unless it’s a well-structured situation — backed by real cash, for example — someone could be left holding the hat.
2) Reporters are tired of ICOs, because they’re basically all the same. The substance may change, but the best way to understand (from my experience) is that you’re pitching them an Indiegogo campaign for something that most readers may not even care about. If there’s not a really, really good story, your ICO thing isn’t going to go down so well.
3) It’s really, really difficult to learn about this stuff, and thus it’s difficult to answer, even when well-read, the most basic questions. You’re going back and forth to clients. You’re then translating that into something compelling. It’s a bastard.
Now, I know what PR people are going to say
In the past I’ve said some things about PR people such as “they deserve to be sent to the carnival prison,” “they’re awful,” “they are incompetent,” “they actively hurt reporters,” and people have accused me of having a small ding dong or something or rather, to which I say “yes, most PR people are not that good at their jobs.” The problem is that in many industries you can kind of fake it ’til you make it.
The issue with crypto is that it’s so utterly confusing that while a few people are really, really getting it — and I mean very few — this is a case where a lot of clients will come in that are bad, will add to the garbage pile of pitches PR people send, and ruin this industry even further.
The next part of that is bad PR firms will continue to damage the reputation of good PR firms because they’ll convince every reporter that every single bloody product is tainted, because they once took on “the ICO that let you trade cryptocurrency for a product that literally didn’t exist” a hundred and fifty times. Oh, and they’ll probably cold call about it too.
This post is part of our contributor series. The views expressed are the author's own and not necessarily shared by TNW.