The web3 marketing playbook

Silvio Busonero
August 30, 2023

The web3 marketing playbook

What you will learn

  • What is web3 marketing and the fundamental differences with web2 marketing
  • How does the web3 funnel look like
  • What is community marketing and why is important to include it in your web3 marketing
  • Practical steps to community marketing building
  • How do you set the correct rewards in web3 marketing
  • How to get a community program live quickly

What is web3 marketing and why is important

To understand web3 marketing is necessary to go back to basics and clearly articulate what is radically new about it.

Web2 is about exchange of information between users and businesses. The traditional internet businesses provide services as they can leverage users data. Blogs, behavioural and searches.

The premises of web3 are different:

  • Transparent Tracking. Every time a user interacts with a web3 application, she leaves on-chain imprints that can be analyzed and leveraged by third parties. The common language used by web3 application makes it easy to see and track in real time conversion events.
  • Value Exchange. The major innovation that web3 brings to the table is facilitating exchange of value between users and businesses. Web3 can give value and ownership to otherwise abstract and siloed things users tiers and levels, Users behaviour and personal data. As user activity is saved on public registry. According to Multicoin article on web3 growth
“of the biggest opportunities in the Web3 Growth Stack is to tightly couple the relationship between in-app events with programmatic, on-chain payments.”
  • Privacy and identity. The user is in control of his identity and can see exactly what how it looks like. This is very different from the traditional digital marketing world, where identities are fragmented across devices and applications.
  • Interoperability. Interoperability in this context being able to use the same credentials across applications. This means that web3 services can have a distributed nature by design.

These aspects of web3 have profound impact on how companies can evolve their marketing strategies. The applications we will see in this article are nascent, but here are some new use cases that are being worked on:

  • New advertising business models. The transparent nature of web3 makes it easy to track conversion events to a very granular level — which makes traditional digital marketing business models (e.g. paying for impression) obsolete
  • User incentivization models. The efficient value exchange between businesses and users makes it easy to drive behaviour inside apps. Imagine, for instance, a loyalty program for blogs — that reward every reader with some tokens or NFTs. The easier user incentivization makes it easier to transition to a community led model, where projects and customers have mutual incentives. More on this later.

Web3 applications need retention

The most popular business models of web3 application usually imply some form of repeated engagement for platforms to be successful. This is inherent in how the crypto applications work:

  • Let’s consider for instance a Decentralized Exchange. There will be no or low commissions — the target is to get as much volume and repeated swaps as possible. The same goes for bridges, most derivative protocols and chains (L1 / L2)
  • Staking, investment and vault protocols follow a slightly different dynamic. Usually fees are accrued over time, so it is really important for the wallets to keep invested in the position over time
  • Web3 games have a slightly different business models — there’s variety but usually the model is connected to tokens and in game assets.

The need for repeated retention is felt even more when we consider the low switching costs that users incur. On the business development side, this translates into an increased focus on getting to the right distribution channels and turn on the fees with revenue sharing agreement.

Leveraging web3 incentivization can help build retention loops into your product in a cost efficient way.

The web3 marketing funnel or flywheel

The mission of web3 marketing is turning strangers into ambassadors. Ambassadors are users that promote your product and add value to the ecosystem (e.g. try your beta app and support your token dynamics).

  • Discovery. At this stage your user does not know anything about your product or service. The main objective here is to cater as many eyeballs as possible. Mostly, discovery happens in crypto native social platforms:
    - X is still the main channel of discovery. There are several kind of persona that you could target in this platforms:
    - Retail users. 80% of twitter population right now. Retail users are particularly engaged by the speculative elements inherited with crypto
    - Builders
    - Investors
    - Educators and thought leaders
    - Debank HI. Debank hi is rapidly emerging as a discovery channel in crypto. The advantage of Debank is a crypto native audience. Debank makes it possible to run incentivized posts and even DM relevant wallet.
    - Blog. The blog is needed for describing your project and making users comfortable by showing team track record and trust when it comes to security practices and use cases.
    - Quest platforms. Quest platforms match users looking for rewards and projects looking to sponsor them. At tide we have analyzed a lot of quest campaigns and saw that most of the time these activities have a transient impact on protocol KPIs — but they can be used to generate the initial buzz
  • Engagement stage: Users start get familiar with your product and services. They may subscribe to discord and follow on twitter. At this stage, setting up a machine with traditional content.
    - Community platforms. Community platforms like Tide helps you identify the best contributors by distributing incentives based on proof of work.
    - Discord. Discord is where the community hangs out and gets to know more about your vision and your product.

We asked a sample of advanced crypto users some questions about discovery steps: Twitter and discord are still the main channels among the heavy web3 users.

  • Usage stage. Users logs into your platform by connecting the wallet and convert in a users. As we’ve seen, one of the issue in the usage stage is that most product in web3 won’t produce much fees unless the users continuously uses the platform.
  • Retention stage. Retention depends on the product, but marketers can build loops that incentivize retention over time leveraging web3 incentives and involving users in the community loops.
  • Ambassadors stage. The repeated interaction with community and product over time turns users into ambassadors. Once users are deeply involved, they might become advocates for the project. In Web3, this often means becoming a part of the governance through DAOs, creating content, or actively promoting. These are the best users and will help the projects growth and drive the narrative. Example: the Chainlink “link marines” community that drove platform usage and price during the 2021 bull market.

In practice, after the discovery users jumps non linearly between funnel steps — A more accurate version of the funnel would be more fluid and interconnected. During his path to the on-chain conversion event, users will produce on-chain and off-chain data.

Establishing clear growth loops between all the steps in fundamental in driving web3 engagement and revenues.

Like we’ll see, turning users in ambassadors is related to a Status as a Service strategy — people are status craving monkeys. Organizations that can incentivize the right behaviour with social capital and status can win the web3 go to market game.

The web3 marketer job description

The web3 marketer has a very different job than web2 marketer.

  • Web2 Marketer: Knows a great deal about paid advertising, audiences, CPC. Spends his time optimizing campaign in ad managers, optimizing and crafting messages. Obsesses over ROI.
  • Web3 Marketer: Experienced in crafting community campaigns, using community platform, knows a bit about on-chain data, understands twitter Key Opinion Leaders, master hype creation, understand the various airdrop models and has a great meme game. Obsesses over ROI and reaching market-community fit

The web3 native marketing tools to acquire, retain and measure

We are going now to see some popular web3 marketing tools under the job-to-be-done lenses.

The Safary web3 map. Source

In the discovery phase

Job to be done: acquire users

  • Web3 native ads marketplaces. Companies like Hypelab and Slise match web3 native advertisers and publishers
  • Quests / Community. Quest provides like Tide, Galxe, Layer3 put your project in front of an audience of web3 users

Job to be done: reach out to users

  • Debank hi
  • Addressable. Addressable matches wallet with social identities in order to run ads that reach the right kind of users

In the engagement / use and retention phase

Job to be done: Grow a community around product

  • Quests / Community layer applications (Discord, Guild, Tide)
  • NFT and airdrop distribution

Job to be done: Optimizing airdrop allocation

  • Tide can help you targeting and optimize quests over time rather than doing a single airdrop event

Job to be done: Understand the ROI of marketing efforts

  • Tokenguard helps DeFi protocol grow via analyses new users and funds from other DeFi protocols, tracking on-chain actions between blockchains through bridges
  • Safary is the google analytics for web3 — offering attribution services for the end
  • Spindl is an attribution platform connecting web2 and web3 funnel for an holistic view of growth activities

We understand this is a partial and ever evolving map of the web3 marketing ecosystem. Feel free to reach out if you have new companies to include.

The problems in web3 marketing

When working with teams, we usually notice a set of problems that are constant.

  • Inefficient airdrops. Recent analysis have show a major fork between airdrop CAC and Customer Lifetime Value.
  • Low retention in quests. Quests are the fundamental advertising elements in the web3 space. While these quest platforms are promising for initial growth measures, they primarily act as temporary solutions and promotional aids, contributing minimally to the long-term development and ongoing client engagement for a protocol or project. These platforms often prioritize superficial social metrics, urging users to engage in social media or become part of a community. The incentives offered are trivial, offering little financial benefit and almost no social or reputational gain. Moreover, the gap between the quest objectives and the user’s interests grows due to the lack of tracking for subsequent blockchain transactions, rendering it impossible for customers to assess the Lifetime Value (LTV) of their lead generation efforts. Tide wants to solve this problem, by making data driven, distributed quests accessible to the web3 market.
  • Wasted development time. Multiple teams are hacking in house solution for data collection, point systems and campaigns.

What is the customer lifetime value (CLV) of a web3 user?

The Customer Lifetime Value (CLV) represents the total amount of money a customer is expected to spend on a company’s products or services over the course of their relationship with the company.

CLV is a useful tool for protocols to manage their marketing budgets effectively and put an upper limit on customer acquisition costs (CAC).

As there is little clarity on these numbers for web3 applications, let’s compute it on Stargate data.

This is a very rough measure to help protocols manage their marketing budget efficiently and put an upper bound to the CAC (Customer Acquisition Cost).
‍There are two main considerations here:

  • CLV is rather low — it’ll likely increase in the next years as the average transaction on chain increases.
  • The most important variable under the control of protocols is retention. CLV is exponentially increasing with retention

If you found this section interesting you can find more details in this article.

Quests — the web3 native ad unit

Quests are campaigns where users complete on-chain and off-chain tasks in order to get eligible for rewards.

Quests currently serve a variety of purposes:

  • Onboarding new users with incentives. Most web3 products have some sort of learning curve and incentivized quests can help get familiar with the product
  • Make the users progress through advanced stages of the funnel
  • Build tiered communities leveraging NFTs and badges to build retention
  • Recognize and reward ambassadors
  • Boost social media presence

Our surveys results show that users are more likely to use a product again after a quests.

Where does community led growth fit in the picture

The beauty of community-led growth is that it is mutually beneficial to both brand and customer. For the brand, it creates a network of enthusiastic customers that will influence others considering making a purchase, driving acquisition and growth.

What is community led growth and how it matters for you

What are communities

The idea of a community in Web3 might seem overly idealistic or vague to those not involved, yet it has a precise meaning. It’s about merging the roles of investor, builder, and user into one unified group within a Web3 initiative. This alignment creates a space where participants engage with the project in various ways. They might work on the project’s coding, respond to specific challenges, take part in bug bounty programs for rewards, or invest financially in the project. Or they might just use the product recurringly. The motivations of these members vary widely, ranging from external rewards to internal, personal satisfaction.

Why do they matter

One of the best thing about community is having people organized around a vision and contributing actively to it. Bug bounties, contents, social media awareness can be dramatically boosted by a community approach. Building with an army of aligned people is better than do it alone.

The best users in the product and community area

The best community growth strategy is identifying the most valuable users in the product (best users) and community category.

  • Product. Top users of your application
  • Community. Best contributors, proof of works, most relevant twitter account
  • Everyone else is just a casual users
The first two sets of users have an exponentially higher value to your product or service. The job of community managers is nurturing them and convert casual users into power users.

Understanding the status games and the Status as a service model

There is a simple principle underlying the community based go to market strategy, which is:

People are status-seeking monkeys.
People seek out the most efficient path to maximizing social capital

These ideas are drawn from the insightful article about social capital by Eugene Wei.

The status seeking monkey

All people crave status within communities. Status can be obtained in various way — like posting interesting content on social media, sharing videos and getting followers. All these dynamics create hierarchies inside the most used social networks in the word. Social wealth is then measured in likes, impression and followers.

Your community plan really is a Status as a Service game. Web3 makes this concept helpful even if you are running a non social app.

This is the process to build a status as a service machine:

  • Identify levels and criteria. Select the best proof of works for your community. Have users progress through entertaining and educational challenges
  • Choose rewards to incentivize participation
  • Implement, coordinate and manage. NFTs and tokens can shape your community structure

It is very effective to streamline the community activity with leader-boards that give clarity about users status and create additional competition among them.

At tide, we’ve ran dozens of campaigns for our community, for several purposes:

  • Bug bounties
  • Product feedbacks
  • Referrals from new projects
  • Social media boosting (blog, twitter, discord)
  • Content production
  • Campaign traction

How to start building a community with web3 marketing

  • Start with the campaign plan. It should include many elements such as timeline and growth, levels, rewards, leader-boards
  • Evaluate the campaign distribution options. Campaign can be hosted on third party quest websites or on your application. Learn more about these two options here
  • Announce and link campaign in discord and twitter. Focus on clear messaging that delivers value to your user. Your prompt should clearly communicate the value exchange that is about to occur.

Measuring your community led efforts

What is your end goal as a web3 marketing manager?

Stacking receipts.

Community managers have to know that each time a user interacts with a Dapp, a receipt is generated. Users places an order through your app. If the order is successful the app writes the receipt on the blockchain. The receipt contains the details of the order.

It is similar to a restaurant. The receipts are a bit different however: “a steak and a bottle of wine” sounds more like “bridge 100k$ to OP” These receipts are called “events” in technical jargon. It is then important to understand:

  • What are the events that matter for my product
  • How do I use quests and airdrops in a efficient way to drive these events
The blockchain generates events that are relevant for your product

Tide analytics suite offer an analytics section to help you understanding the ROI of your quests and community activities.

Why will be web3 marketing a trend in the next years?

There are some key problem in the traditional advertising world that can be improved with the help of web3.

  • The demise of cookies. As new privacy friendly regulation are challenges big tech’s data and management practices, it is clear that advertisers will have to deal with new restriction on the cookies front. This trend could shift the attention toward zero and first party data — a perfect use case for web3 campaigns where users get compensate for sharing his data.
  • Stagnant Engagement. The recent rise of CAC makes engagement very costly, while some campaigns like loyalty are still stagnant and not gamified enough
  • Scattered identities. Online identities are scattered across devices and applications. Often, they are completed with lookalike audiences and statistical inferences. The data collection processes and relative inferences are not very transparent. Web3 simplifies this. The transition to wallet centric identities will make web3 native tools a must have for companies

How Tide can help you developing and effective community led growth

Tide helps you build your own “Status as a service” by rewarding users actions in your app or in social media with digital assets.

Tide no-code campaign builder can help you acquire and retain new users by distributing incentives in a data-driven, sybil resistant way.

Get started today by signing up for free and create a community.