Polkadot marketing spend highlights issues with web3 ecosystem, marketing

Polkadot, a blockchain platform that has largely remained in the background, is now drawing significant attention due to its substantial marketing spend. As the platform steps into the spotlight, its marketing strategies and expenditure have sparked both interest and criticism within the Web3 community.

Chapters

• 00:00 – Cold open
• 00:42 – Polkadot’s quarterly marketing spend report
• 02:17 – Polkadot KOL spending vs. suggested spend
• 04:08 – Insanely high metrics vs. normal metrics
• 08:08 – The problem with DAOs in web3 marketing
• 09:50 – Comments from Upptic’s web3 experts
• 11:30 – Sponsor plug

The Marketing Spend

In the first half of 2024, Polkadot’s treasury report reveals a total expenditure of $87 million, with a significant portion — $37 million (42% of the total) — allocated to marketing. This investment breakdown includes:

• Sponsorships: $21 million
• Marketing and PR: $10 million
• Digital Advertising: $4 million
• Events: $790,000

Key Opinion Leader (KOL) Promotion Issues

A considerable chunk of the budget has been directed towards KOLs, with approximately $480,000 per month spent on around 17 KOLs. However, this strategy has faced scrutiny due to:

• Evidence of fake followers, content inflation, and bot accounts
• Some KOL accounts being deactivated or changing names
• Promotions targeting non-crypto audiences on YouTube, resulting in questionable metrics despite high engagement numbers (e.g., $2.46 per impression, $616 per comment)

Marketing and Money Management Concerns

Polkadot’s high marketing expenditure has not gone unnoticed. The community has raised several concerns:

• High Spending with Low Returns: Despite the substantial outlay, the returns on investment have been questioned, particularly the effectiveness of influencer marketing.
• Treasury Depletion: At the current spending rate, there are fears that Polkadot’s reserves could be exhausted within two years, although some argue it might last up to five years.
• Discrimination Allegations: There have been allegations of discrimination against Asian projects within the community.

Treasury and Token Economics

As of July 1, 2024, Polkadot’s treasury is valued at $245 million. Despite continuous inflows from newly issued DOT, discussions about reducing the inflation rate are ongoing. Other promotional spending included:

• $138,000 to The Block for research reports and articles
• $530,000 on logo displays on Coingecko and Coinmarketcap
• $1.9 million to sponsor race car driver Conor Daly
• $180,000 for their logo on a private jet

Ecosystem Development

Polkadot has invested heavily in ecosystem development, with expenditures including:

• $23 million on network features and upgrades
• $15 million on liquidity incentives
• $5.5 million on talent and education

However, the ecosystem has faced a 57% decline in revenue compared to the second half of 2023, primarily due to a significant drop in network fees. The DOT token price stands at $6.36, a stark contrast to its all-time high of $55 in 2021.

Community Insights and Criticisms

Polkadot user Endes noted that “marketing is useless without good UX,” pointing out issues with wallets and onboarding. They highlighted that many marketing proposals were passed due to a single voter – emphasizing the flaws in DAO voting and ownership.

Twitter user DefiIgnas suggested that Polkadot should focus on promoting via KOL content on platforms like X and reduce spending on less effective advertising channels like airplane ads and F1 sponsorships. They also emphasized the need for Polkadot to invest in infrastructure improvements that will attract developers creating cool dapps – which KOLs will actually want to talk about.

Future Outlook and Recommendations

To address these concerns and ensure long-term viability, several recommendations have been proposed:

• Call for Reduced Inflation Rate: Reducing the inflation rate of the DOT token to ease selling pressure.
• Proposed Restructuring: Implementing changes to secure the platform’s long-term sustainability.

Impact and Implications

Polkadot’s marketing spend highlights the importance of effective marketing management in the Web3 space. Marketers need to create and track key performance indicators (KPIs) just like in any other industry. Polkadot’s experience underscores the need for skilled marketers to lead campaigns, rather than relying on community-approved initiatives that may lack professional marketing expertise.

As Polkadot navigates its marketing challenges, its approach will serve as a critical case study for other Web3 projects aiming to scale through paid advertising and community-driven strategies.