Editor’s Note: Last year, during the Super Bowl, Coinbase grabbed attention by bouncing a QR code around our screens in what was probably the most click-bait commercial of all time.

At the time, we offered commentary on that commercial with our friend Phillip Jackson of Future Commerce. We’ve never shared that commentary in this space before, so we’re running it in its entirety today. And we’re doing so, in part, because of this piece, published yesterday in Fast Company by Chris Gadek of AdQuick.

For much of DTC, the relative success we’ve seen has been build on the backs of direct response marketing. And it’s a playbook many are having trouble relinquishing.

The question—and it’s one that gets revealed through our commentary on the Coinbase ad—is this: If the belief is that the precision offered by digit targeting is what makes direct response effective, is direct response still worth it when the targeting is less precise?

Bill Parcells, a two-time Super Bowl winning coach with the New York Giants once quipped that “if you have two quarterbacks, you have none.”

This framework of focus, it seems, is fairly uncontroversial in football (unless you’re Steve Spurrier), yet seems to be missed when talking about the big game’s biggest ad this year. Specifically, we’re referencing Coinbase and its QR code play. Is it a direct response ad with a branding fallback? A brand ad with a direct response cover?

The answer doesn’t matter so much as Parcell’s wisdom. If you have two, you have none.

While Coinbase gets points for doing something bold and unconventional, the spot falls short when viewed through either a direct response or brand building lens. The key question: was the ad a success?

Based on the two traditional routes to successful advertising: direct response and brand awareness, the Coinbase QR Code Super Bowl ad is a spectacular flop.

The Ad Fails To Deliver on Coinbase Brand Recognition

While the twittersphere lathers Coinbase in effusive praise, they do so praising the medium of the ad: a QR code bouncing around like a DVD screen saver. Clothed in anemoia, a form of faux-nostalgia experienced by those too young to have a lived experience, the ad is relevant to people of a generation who binged The Office reruns on repeat, rather than those who grew up with DVD players. At that intersection are younger millennials, 50% of whom are already amenable to the idea of investing in crypto. Missing from the conversation was the subject of the distinct asset in which Coinbase deals: the currencies themselves.

As an unintended consequence, competitors FTX and Crypto.com are receiving as much attention post-Super Bowl as Coinbase, because crypto itself has had a cultural moment.

This could have been Coinbase’s moment, to distinguish itself from the rest of the marketplace by providing an “ah ha” moment and one that it squandered on an ad that was inaccessible to visually impaired viewers and those lacking the technology to pause, timeshift, or otherwise scan the QR code.

Coinbase chose to double down on an audience that was already paying attention, rather than welcoming the rest of a curious public into the huddle.

Next, Coinbase was not prepared for its own success. By some estimates the landing page for the ad saw nearly 20 million hits within minutes of the debut. For a few minutes the site stalled as the servers scaled out to keep up with the increase in traffic. While Coinbase itself praises the resilience of its team to handle the increase and its own brilliance to drive such demand that they were overwhelmed, this is a failure of capacity planning at the highest level.

The failure to capture long-tail interest, though, is Coinbase’s biggest failing. The ad creative is easily copied and a quick search of YouTube or Google fails to return their ad. In a space that is rife with grifters, charlatans, and “rug-pulls,” it isn’t a stretch to imagine an opportunist using a lookalike ad to pose as Coinbase to guide an unwitting online search to a false landing page, potentially putting a consumer at-risk. For a company whose core business is based on trustless systems, Coinbase asks us to trust them an awful lot.

Finally, the ad medium — video — means that the QR code they have created must live on in perpetuity. They cannot alter the QR code in the future. They do not give a text-based URL with a human-readable online link. The landing page campaign must be maintained ad-infinitum for future generations to make sense of the brand and the offer. This could be powerful if in the future Coinbase may want to change the direction of the business to focus more on broad finance and less on crypto; but hyperlinks are not durable. One study found that 72% of links from 1998 were dead.

As a monocultural moment, a Super Bowl ad should at the very least be able to be appreciated by future generations or provide enough brand recognition to recontextualize the message of the ad in a new era. This ad provides neither.

As a Direct Response Campaign the Numbers Don’t Add Up

The counter argument to a flop on the brand awareness side is that the ad was hyper-targeted to a segment of the audience that is most likely to buy crypto, given the technology gate of a QR code. This would, then, mean the ad was intended to be direct response in nature: Get an audience to take a desired action.

While some may dismiss the above critiques as subjective, a direct response ad can, by its nature, only be viewed objectively. The success is binary: It either hit a desired return or it didn’t.

Given known data points and some industry benchmarks around unknown data points, it’s hard to make the math work such that you could call the ad a success.

Let’s run the math.

In order to install the app, a viewer would need to:

Scan the QR Code
Click the CTA on the landing page
Download the app
Create an account
Verify their identity
Transact

Multiple companies paid $7 million for 30-second spots, so it’s safe to assume Coinbase paid roughly $12 million for its 60-second ad. Coinbase, in public filings, has stated that an active user is worth about $90 annually. So, in order to even get to a point where a user can deliver value to the business, a viewer would need to go through the above five steps.

Leaving aside the additional cost of a $15 sign-up incentive, here’s the math on the funnel:

Coinbase reported 20 million hits in a minute. Let’s say the long tail adds another 5 million users. So, 25 million people hit the landing page.
Let’s be generous and say 10% (or 2.5 million people) click the call-to-action, incented by the promise of a free $15 in Bitcoin. (This would be considered exceptional, given all widely accepted benchmarks.)
Riding high on the idea of getting rich quick off crypto, 20% of those people who visit the App Store download the app. The conversion rate would be in line with industry benchmarks. We’re now at 500,000 app downloads.
The next step is creating an account and verifying identity, something required by Coinbase and something that they tell you will take 6 minutes. Let’s say 10% of users decide that this is still something they’re interested in. Coinbase now has 50,000 users.
The last step, though, is transacting. After all, Coinbase needs a user to be active to extract value. It’s widely accepted that only about 20% of new app users will ever use the app, so we’re left with just a fraction of that initial 25 million people: 10,000 new, active users.

For Coinbase, then, that means it paid roughly $12 million to acquire 10,000 new active users at an average revenue per user (ARPU) of $90. In other words, it paid $12 million to acquire $900,000 in revenue

The outcome here is pretty binary.

What Now, Then?

Talk to any mobile app marketer who has run a launch plan and you’ll hear stories of one-day surges and topping the App Store charts, only to be left with the disappointing reality that such a surge of users is rarely—if ever—sustainable.

That appears to be the case for Coinbase, as well.

While the app, which was sitting around #250 on the Top Apps chart in the App Store, peaked at #2 in the App Store on Sunday night, it gradually fell throughout the week. By Friday, it was sitting at #86. So, the bump was real but not sustained.

There are, of course, other levers at play here. Coinbase’s stock is down 44% since its IPO in April 2021 and it has a scheduled earnings call for February 24. Wall Street, thus far, seems unimpressed with the ad.

In this case, we’d be wise to follow Wall Street’s lead in our reaction. The ad wasn’t good enough to become a repeatable growth lever for the company.

Ironically, that’s good news. Because this play could never work to the same level again.

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