Are Crypto Airdrops Broken?

The concept of airdrops has been around as a marketing tool just about forever. Both upstart companies and well-established brands use the airdrop approach to drive awareness and engagement, encourage trial and purchase, and target likely buyers. In the non-crypto world, it appears as free trials, direct mail offers, bundled package inserts, or even Costco aisle samples. I vividly remember as a child how excited I got when the March of Dimes would include a dime in their direct mail as an incentive to open the envelope and hopefully donate. (Hey, a dime was a lot back when I was a kid!) 

Crypto Took Airdrops to New Heights

As the Initial Coin Offering (ICO) craze hit, crypto projects quickly started using airdrops as a way to market their project and attract an audience. Airdrops have become especially common in crypto precisely because of the network effects that so many of these projects are trying to jumpstart, so that seeding token into an existing community of Bitcoin, Ethereum or other token holders marked an easy way to piggyback on an existing network.Crypto airdrops can largely be characterized by three approaches:

1. Curiosity Builder: In this type of airdrop, free tokens are sent to wallets holding other specific tokens (usually Bitcoin or Ethereum) in the hope that the user will see the previously unknown tokens, check out the project, and then further engage as an investor or user.
2. Guerrilla Marketer: This airdrop approach uses the promise of free token to create a flurry of marketing activity. To receive free token, the recipient has to join the project’s Telegram group, follow the project on Twitter and Facebook, and upvote their blog posts. Many projects have further gamified this approach with more free token for more substantial marketing efforts on behalf of the project -- like videos, original blog articles, and forum posts.
3. Utility Driver: For this kind of airdrop, the goal is to incentivize usage from a specific audience that is responsible for creating and establishing the utility of the token. Often, this audience is developers that projects are trying to encourage to build applications using their blockchain or protocol. It is inherently project-specific, though, and can target any audience, such as traders, content creators, and miners to name a few.

Do Airdrops Work?

The impact of the “Guerrilla Marketer” type of airdrops is usually obvious and undeniable. With a little bit of marketing to spread the word about a project’s airdrop via Telegram, crypto forums, and airdrop-specific sites, projects can frequently see a quick boost of thousands of Telegram group members or Twitter followers. As the requirements for the airdrop get more complex, engagement naturally decreases but most projects can get some content traction (and the associated SEO juice) as part of the airdrop.So, if the project’s goal is to build the community numbers and drive social and online interactions, airdrops are clearly effective. People like free money and are willing to do something small to get it. However, what if the project’s goal is to build longer-term engagement and usage? I’d say that the jury is still very much out on the effectiveness of traditional airdrops for that goal.Certainly, the typical marketing engagement funnel is at play. Some of the people who receive the airdrop will look at the project a little closer and like what they see. They’ll become more engaged as fans and turn into the investors, early adopters, and advocates that crypto projects need to succeed. However, the current airdrop approach creates a very low-conversion funnel, populated more by airdrop and bounty hunters than an engaged audience. Indeed, the very existence of airdrop communities like , , , and hundreds of other formal and informal groups, highlights the giant industry that airdrops have become. An airdrop can be great as a top-of-funnel marketing tool but has thus far proven ineffective at creating long-term project loyalty and advocacy.And that’s ok...it’s natural that different tools have different effectiveness at various points in the marketing funnel. But it does lead to the question about whether airdrops can also be an effective conversion, loyalty and advocacy tool as well. Like all things crypto, the airdrops space is evolving...

stay tuned to 

 as we share more info about the future of effective airdrops as a part of the next era of commerce.