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Want to raise millions for ICO - get ready for high expenses

01 March 2018   |  in ICO   |  in ICO   |   1725
Want to raise millions for ICO - get ready for high expenses
By Margaret NAIL, Emilia ROMAGNA, Helen SMART
Investors attraction within tokens distribution costs projects about 2-3% of all raised funds. These data were received during the study “ICO projects promotion” held by Bitnewstoday in January-February 2018.

Where to find investors

During the interview organized by Bitnewstoday, 55% representatives of ICO sphere noted that the most effective direction of ICO promotion is IR (Investor Relations) - personal meetings with large potential token holders and foundations. 36% of experts think that publication of information about ICO in dedicated mass media helps to attract investors’ attention, as well as project leader’s active commenting on relevant topics, etc. The lowest returns, according to specialists, give YouTube reviews and partnership programmes. These channels were indicated as the least effective for investors’ attraction and they received 37% and 27% respectively.

It is worth noting that the majority of ICO sphere representatives that took part in the poll are sure that engagement of a high-level expert into the team improves the chances to attract strong investments. Thus, for example, Felipe Vorobey, CMO Blackmoon, believes that the efficiency of funds raising within ICO in 60% depends on the presence of the crypto world “star” in the team. However, the majority of experts that took part in the poll do not consider attraction of crypto celebrity to the team as the most important factor that determines the success of ICO.

Besides that, more than 70% of experts believe that rating in specialized agencies increases the chances to attract funding. The rest (little less than one third) think that rating is necessary only in some cases.

Bradley Rotter, Vice-chairman of Rivetz Corp., supposes that in the future strong investors will pay attention to ICO ratings which eventually can become more objective.

Pic. 1 Experts answers to the question: “Is it worth for an ICO project to get a rating in specialized agencies?”

Aziz Bin Zainuddin, Founder and Chief Crypto Officer of Master The Crypto, advises focussing on particular groups of investors within ICO promotion. “Would be preferable, if at the initial stage ICO will be supported by such institutional investors as prominent venture capitalists and seed investors. ICO projects supported by such investors are usually more popular. Besides that, professional investors who are more skilled in regulatory intricacies and have high investment level (at least $100,000), are more preferable”, the expert advises.

The specialist also noted that additional hype around the project forms the pre-sale. It is also worth noting that 81% of interviewed participants stated that the majority of funds are raised during pre-sale, while 45% consider a closed pre-sale as the most effective one.

“I’d say this: 70% of efforts/resources should be made BEFORE an ICO start, 20% - during it (or rather, in the first days AFTER the start) and 10% - after it ends. Why is it so? The logic is simple: practice shows that the first days (even the first day or first hour) - are the most important with respect to intensifying the interest in your project. Investors psychology is that they want that thing that is already skyrocketing and the best prove to it is that others already “grabbed the pie” which means that they have evaluated it, that they know something more and etc. That’s why if tokens sale starts well, the community will appreciate that and support your project”, Alexander Lobanov, an executive partner and board member of USP Capital and Vanhealthing CryptoFund of Biotech innovations, comments.

How much does the attention of investors cost?

The majority of experts is sure that ICO promotion is not a cheap thrill. Raising of millions of dollars requires hundreds of thousands of investments. Almost a half of experts (45%) believe that to attract $15-20mn, a project must spend more than $250,000 on PR. 36% have less ambitious evaluations - $50-250,000.

Pic. 2 Experts answers to the question: “What size of the marketing budget should plan a project to raise $15-20mn during ICO?”

Notably, that all experts that have already had ICO projects declared that they spend just enough money on PR.

What comes to money distribution, here experts opinions differ and depend on PR-strategy of a particular project. On average, according to expert estimates, 30% of marketing budget should be used on publications about the project in mass media, 24% - conferences and business events, 20% - project promotion in social media and web channels, 9% - referral programmes.

“If we talk about company promotion during ICO, a big part of the marketing budget is taken by target advertisement which brings the main traffic to the website. But this is not necessarily followed by a decision to invest. The next tool that brings a potential investor back to the website is retargeting and emails. Then PR forms the main touch points, through which a company reveals its competitive advantage and describes characteristics of its product. Under PR we mean ICO calendars, ads in Telegram-channels, posts in relevant resources”, - Anastasia Taved, PR Coordinator of the project Storiqa, explains.

From where do the ICO websites visitors come?

An attraction of traffic to ICO website and familiarization of the increasing number of potential investors with the information about the project is a key objective of PR. That’s why Bitnewstoday have analyzed the sources of visitors of projects websites, which drew funds through tokens placement.

It was discovered that 40% of ICO website visitors come from direct-traffic, 30% come to the website through referral links, 15% - from search engines, 9% - from social networks.

Pic. 3 Traffic structure of ICO projects websites
Source: Bitnewstoday.com according to Similarweb

Among referral sources of traffic the largest share (19%) is taken by icodrops.com, 13% of visitors came to ICO websites from Сoinmarketcap.com and 12% of visitors went to the websites of ICOs from icoalert.com.

ICO aggregator Share
icodrops.com 19%
icoalert.com 12%
coinmarketcap.com   13%
bitcointalk.org 6%
cointelegraph.com 4%
Others 51%

Table – Referral sources of traffic

Regarding social media, the largest share (39,5%) of ICO websites traffic in January came from Youtube. A significant amount was reserved for Facebook and Twitter - 22,8% and 22,7% respectively.

Pic. 4 Structure of traffic from social media
Source: Bitnewstoday.com according to Similarweb

Seek professionals

73% of experts noted that the project promotion must be conducted by themselves, but it is worth seeking a professional advice. 18% of participants think that it is more effective to give this function (promotion) to PR-agencies, which provide services “on a turnkey basis”. And only 9% is sure that they can do it all on their own.

Pic. 5 Experts answers to the question: “What way of promotion of your project you (would) choose?”

Linura Valitova, PR-manager, specialized on ICO, also supports an idea to promote the project by oneself while engaging professional agencies: “ICO is still a new concept, only a few PR specialists fully understand the technology of tokens sale. This is particularly true for agencies, that demonstrate their willingness to take these projects but later cannot show the needed results. Nevertheless, it is impossible to make it without specialists, because of tight deadlines and literally endless amount of work. It is better to apply an integrated approach - trust general questions monitoring to a PR-specialist “in-house”, who is completely immersed in the project and shares the views and opinions of the team; and attract agencies/freelancers when required”.

“PR agencies and individual professionals who promoted ICOs earlier showed rather good results, the amount of raised funds speaks for itself. But in connection with regulatory tightening it appears questionable - will these companies and specialists be as successful in new conditions?”, Christopher Miglino, chairman and CEO of SRAX and founding member of the BIG Platform, argues. Under “new conditions” the expert means Facebook’s ban on ICO and cryptocurrencies advertising.

Making a hype around one’s project it is worth first of all care that behind it there will be a truly working proposal, needed at the market and able to solve particular issues. The majority of experts is sure that viable idea and high-quality project description along with smart PR-strategy underlie the success of an ICO.

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