Web3 Product-Market Fit and Marketing Strategy For Blockchain Startups in 2024
Jan 1, 2024
Communicating with representatives of blockchain startups, from time to time, I see how irresponsible, chaotic, and sometimes even with distrust they approach marketing and brand building. You would think they only focus on development and don't need marketing... But!
If you ask a random founder, they will say that brand awareness, loyalty, the number of users, and partnerships are essential for the project's growth. Everyone wants their product to be recognizable and become a brand name. However, most founders have no idea how to hire a marketer, how to evaluate their effectiveness, and how much time is needed to implement specific activities.
My name is Daria Volkova. I'm a Product Marketing, Branding and Communications professional working with blockchain-powered products. I create Value Propositions and build brand awareness among users, developers, and VC funds.
What are the main problems with marketing in Web3 startups?
A founder with a coding/engineering background knows how to create a complex blockchain protocol or a decentralized crypto exchange down to the smallest detail. Still, when the question comes to choosing a color for the logo, a person begins to hesitate and lean almost on tarot cards to make a decision.
Problem 1. Exaggerated expectations
Web3 startups with good funding ($10M+) try to hire people from enterprise companies (overpaying heavily) to get some expertise from the big players like Kraken, Binance, Coinbase or Meta.
Sometimes, it ends with the fact that a person with experience in big corporations faces the processes inherent in a wild startup. Then, this person gets disappointed and leaves or is fired because expectations and results don’t match.
Problem 2. "Go with a flow" marketing approach
The other projects have a very infantile approach to working with the brand. They do something they like without considering the audience and solving specific business problems. Just for fun!
One of my dialogues with a representative of the project at the Ethereum-related event:
- Why did you choose a fox for the logo of your project?
- This is not an ordinary fox; this is a fennec!
- That’s great. Why fennec?
- Well... We wanted to create a mascot because everyone in the niche does that. Therefore, the choice fell on fennec. We recently redesigned it. Look, now it is more cute!
Is there any business logic or audience research involved? No. Will a fennec or some other creature help increase TVL or brand loyalty? Not either.
This happens because there is no marketing strategy and experience in evaluating the effectiveness of marketing. Tech startups don't have a basis to build on when choosing a person responsible for marketing.
Problem 3. Overhyped projects
The Blockchain and crypto projects with dubious reputations try to create hype, attracting lovers of easy money with high profits. In the bear market, memes "When Moon? When Lambo?" decreased significantly, but airdropers did not disappear.
And those projects that really strive to contribute to the Web3 industry often try to repeat hyped projects, forgetting that this is only a short-term surge and not a guarantee of long-term success.
The explosive launch of the Blast (an EVM-compatible L2 network on Optimistic rollups) has given it the reputation of one of the most promising, discussed and controversial projects of 2023. In less than a month, the total value of assets locked in protocol smart contracts soared from $30 million to $870 million.
The buzz around Blast isn't limited to a wave of positive anticipation. The protocol also became the object of sharp criticism:
This project has extremely scarce developed technical documentation. There are no user instructions for participating in the airdrop.
The dubious quality of TVL. Data and dynamics of depositing funds through a cross-chain bridge indicate elements of an artificial “pumping” of the hype around Blast.
The Blast source code has shortcomings regarding the decentralization model and the funds management scheme. The powers of the centralized operator belong to anonymous company employees.
The team's stated return model is based on volatile and highly volatile stock market debt instruments. Risks are also associated with using the Blast project as a “storage reservoir” of additional liquidity for the Blur NFT marketplace or other purposes.
What's next for Blast? We’ll see. But I bet the hype around the project will die down immediately after the airdrop. Of course, if there is one.
The L2 market is characterized by extremely high competition. In conditions where several projects are firmly entrenched in leading positions and new products appear regularly, there were no prerequisites for such a lightning-fast takeoff of some "next" network.
The strategy-first approach in Web3 product marketing and brand building
Everything goes from strategy to tactics. Winners in the Web3 space will be the ones that can clearly define:
Where in the spectrum of centralization vs decentralization will this product sit?
Is this a network-effect-driven business or not?
What does success look like? (User growth, TLV, developer activity, transaction volume, wallets connected, etc.)
There are 5 strategic questions that any Web3 founder must answer together with the technical team and marketers/business development managers. From my experience and the experience of my colleagues, it is worth focusing on the following:
Product-Market Fit: What problem are you solving? Whom does it solve for? And what are potential solutions?
Product-Channel Fit: What are one or two distribution and acquisition channels that your product fits?
Channel-Model Fit: Do these channels fit your business model?
Model-Market Fit: How big and profitable is the market for your business model?
Community-Market Fit: Who are the top 1% of the community contributors on your market?
If a product team clearly understands market needs, vision, mission, and principles, the product’s long-term development is more likely than hype projects done for fanfare, to make quick money or even a scam.
If we take examples from Web3, such projects/organizations as the Ethereum Foundation, zkSync, and Optimism Foundation have their missions and long-term visions, attracting a community of people who share values.
Examples from traditional businesses are Grammarly, Figma, Canva, the Scuderia Ferrari team in F1, and others.
We can talk about Community when the project creates conditions for members to interact with each other and receive some benefits (not necessarily in money equivalent).
In Web2, we used to use such structure:
Web2 = Market → Product → Channel → Model
In Web3, everything starts from community and transforms into market, product and other integral parts:
Web3 = Community → Market → Product → Channel → Model
To build a solid, reliable and loyal community, you must have a Big Idea that can unite many different people.
Which product marketing activities show a good result, and which ones are in doubt in Web3?
Occasionally, I am asked about the effectiveness of marketing channels and activities at offline and online events. Assessment and reassessment of marketing effectiveness take place regularly.
In the heyday of ICOs (2016-2018), the most popular were classic digital marketing activities such as the purchase of banners on CoinMarketCap (tens of thousands of dollars for a thousand impressions), paid PR articles in CoinTelegraph or PR NewsWire, as well as posting information about the token on CoinGecko.
At Devconnect Istanbul, I observed the marketing activities of the projects. Successful Web3 projects have a holistic vision of their marketing, even if they have to change tactics depending on the state of the market or local characteristics. Here is a link to a video with my best moments at Devconnect.
Discussing the tactical tools of product marketing in 2023, I can note the following that showed promising results:
Content marketing + SEO (Mirror, Medium, Substack, YouTube).
SMM (Twitter, Reddit, Discord, LinkedIn).
Event marketing + Thoughtful merch distribution.
DevRel + Hackathons and Grants for promising projects.
Quality advertising campaigns focused on increasing awareness and trust.
Employer branding to encourage people to be ambassadors of the company's brand.
The activities listed below raise doubts because their effectiveness is difficult to evaluate or they are questionable from an ethical point of view:
Airdrops and retrodrops. In most cases, interest in the project drops fast after the airdrop. People are not loyal, and many don’t even know about the project’s essence and roadmap.
Launchpads (the result depends on the project and platform).
Bots in followers. Well, it's just not serious. Any person with experience in the niche knows where the real activity is and where it is imitation.
Hiring a CMO, Head of Marketing or Brand Manager for your Web3 startup
Even at the end of 2023, not many people have experience working with blockchain projects, and even more so with projects created for Web3. Therefore, it is necessary to pay attention to a person's experience in marketing Web2 projects in general and to be interested in the Web3 niche, the ability to quickly get up to speed and learn.
I recommend hiring someone who can understand the product and offer a logical and clear strategy of what the project's brand should be and what activities are needed for it. If the person you're negotiating with about marketing doesn't know the market, doesn't have the relevant expertise, or thinks in tools instead of strategy, then this is not your option.
Also, it should be a person not because the niche is hype or because friends advise it but because the ideology is close to them. They understand how the blockchain works and the industry's prospects.
You can read an article on the a16z crypto blog by Andrea Simon, Brian Curran, David Belden and Stephanie Doppelt. The authors share their thoughts and recommendations about finding a perfect-fitting marketing person for any type of business or tech startup.
Marketers' KPIs can differ depending on your project's stage and the specifics. At the initial stages of project development, you need a person who can quickly test hypotheses and do market analysis and audience research. In more mature products, you must work with strategy, investing in and scaling the brand. Therefore, keep this in mind when hiring a marketing person.
Conclusion
As more competition comes into the Web3 space, current distribution channels will become less effective. Whether you are a centralized or decentralized Web3 company, there are four core concepts that your overall marketing and growth strategy should address:
Build trust
Remove friction
Accelerate the time-to-value
Product-led distribution
Growth is about building a compounding, repeatable, and sustainable system. Brands become successful only when the semantic, visual and technical execution is coordinated and receives due attention from the founders of the business and people responsible for marketing.
Marketing becomes effective only when you plan it in the long term and, in addition to profit, give people what they expect from you and even slightly exceed their expectations. This rule works and will work in all stages of the Web.
If you are a founder who lacks a marketing strategy and does not understand the tactics, drop me a line at daria.strategy@gmail.com, and I will help you.