Kim Kardashian. Jay Z. Matt Damon. Spike Lee. Messi.
These are just a few of the A-listers that have been touting Fintech products and services.
The explosion of celebrity endorsements was instrumental in making cryptocurrency go mainstream.
There is excitement for the latest money-making instruments, but a lot of it is speculative – as the recent scandal involving FTX’s founder, Sam Bankman-Fried, underlines. He was charged with defrauding FTX investors, with 1 million of them now standing to lose their investments as the company files for bankruptcy. Some are attempting to recover their losses by suing the celebrities who promoted FTX, arguing that their star status deceived customers into investing.
And they stand a good chance to win.
It is well-documented how FTX leveraged the world of entertainment and celebrity to portray the company as a safe place to invest money. Former FTX U.S. Executive Sina Nader described the company’s aggressive marketing strategy in The Hollywood Reporter shortly before the scandal broke.
“People generally hesitate when it comes to the unknown. Working with trusted people and institutions, people will look and say, oh, if Stephen Curry, or Tom Brady, or Gisele, or Trevor Lawrence, or the entire MLB are comfortable with crypto and FTX, then maybe I can get comfortable with it too.”
Celebrities were at the centre of the crypto hype. They pushed virtual currencies without highlighting the risks to vulnerable investors. They have often played on feelings of FOMO (fear of missing out), have a poor understanding of the financial instruments they advertise as well as failing to disclose that they are being paid for their endorsements.
So how did we get here, and what does the future of Fintech marketing look like? How can marketers attract consumers to emerging markets in a socially and ethically responsible way?
To answer this, we’ll explore the past, present and future of Fintech advertising.
Now and then
Celebrities have long used their limelight to promote brands.
But the face of celebrity endorsements is changing.
Now, famous spokespeople aren’t simply appearing for money. They’re often taking a stake in the business itself. Celebrity endorsement has, in short, become celebrity collaboration – as reflected in their their frequent titles of “Creative Directors” and as board members.
Why is this happening?
Firstly, because our perception of authority has been turned upside down. You do not need to have expertise anymore to have authority. Today, it’s popularity. The size of your social media following is your authority.
Secondly, branding is more and more important in the financial technology sector as the space is becoming increasingly crowded. All challenger banks now seem to be offering the same services with a lack of USP.
This dual cocktail raises the stakes for both brands and consumers who choose to get involved with Fintech influencers.
As brands target advocates with a big social media following (rather than industry experts), they may struggle to create the longstanding customer relationship they need. Once something has finished trending, the consumer moves on to the next brand endorsement – sometimes within seconds.
Worse still for consumers, the blurred line between a celebrity who is known for entertainment talent and their business acumen may create misplaced trust, making it difficult for vulnerable investors to distinguish between a good and a bad investment.
The movers and the shakers
Who’s who in today’s jungle of Fintech influencers? Here are some of the top stars promoting and investing in Fintech companies right now:
- Gwyneth Paltrow
Gwyneth Paltrow has recently invested in the fintech start-up MoonPay. As a cashless payment alternative, MoonPay allows users to buy cryptocurrencies using bank transfers, credit cards and mobile wallets.
- Andy Murray
Andy Murray has a long investment background in fintech. He started by joining the board at Seedrs, a crowdfunding platform in 2015. Since then, he’s gone on to invest in Landbay – a property lending platform – and Revolut and Investly, two popular fintech brands. The latter is a European marketplace that supports businesses with invoice financing and the former is a UK fintech company that offers digital banking services.
- Jay Z
The rapper launched MVP (Marcy Venture Partners) in 2019. The venture capital firm aims to invest in innovative businesses and brands. He’s also invested in Robinhood, which offers cryptocurrency, trading, equity services and cash management products, with a mission of democratising finance for all.
- Charli D’Amelio
The TikTok star invested in the teen banking app Step alongside stars like Jared Leto and Justin Timberlake. D’Amelio was not just an investor as she promoted the product and had discussions about financial literacy across her TikTok and Instagram accounts, which have 101.9 million and 34.4 million followers. Step specifically targets teen users ages 13 to 18 by offering them an FDIC-insured bank account without fees, and a secured Visa card that helps them establish credit before they turn 18.
- Snoop Dogg
Snoop Dogg was revealed as the new celebrity face and shareholder of Klarna in a new advertising campaign. Thanks to it, Klarna became the trending app on Google Play and achieved 16 million new customers and a 140% increase in sign-ups. Specialising in pre-payment, direct and post-payment services, Klarna has frequently been described as one of Europe’s most valuable start-ups. Snoop Dogg has also invested in Reddit and trading app Robinhood.
Trust me, I’m a celebrity
The sheer number of celebrities that have leant on their star power to generate awareness and convert sceptical consumers has raised concern among regulators.
In 2017, the US Securities and Exchange Commission (SEC) published an investor alert, warning that investments should not be made “just because someone famous says a product or service is a good investment”. The SEC then took the position that most cryptocurrencies are, in fact, securities, and just like stock promoters, celebrities must disclose to the public when and how much they are paid if they want to promote a token to their fans.
Various celebrities ended up in legal hot water after the regulation was enforced.
- Paris Hilton famously endorsed – in a deleted tweet – crypto start-up LydianCoin, whose founder was later jailed.
- Steven Seagal was fined $314,000 by the SEC for acting as a brand ambassador for a controversial coin offering held by a company known as “Bitcoiin2Gen”.
- Kim Kardashian is the latest name to be burned by the regulators. She recently agreed to pay a $1.26 million penalty for failing to report that she got paid to endorse EMAX tokens in an Instagram story. She promoted the crypto to her 200 million followers; it lost 97% of its value seven months later.
But there is hope for concerned consumers.
Besides regulators wising up to the dangers of celebrity Fintech endorsements, some stars interested in this space are also taking a different approach. Some are trying to use their fame as a source of information and education, instead of promoting different cryptocurrencies. For instance, in the YouTube post below, we see Ashton Kutcher and Mila Kunis explain how digital assets work.
Meaning the Fintech wild west might just soon be a thing of the past.
A bumpy road ahead
So, what will Fintech marketing look like in the future? It will likely become more selective with brand representatives and tout more established brands as a response to regulatory crackdowns and a rocky global economy.
Not that the stock market is the sole marker of economic health, but things aren’t looking great on Wall Street. The S&P 500 is riding its longest losing streak in over a decade. Inflation remains high, and consumer confidence is low. As investors search for steadier and more promising venues to make money, celebrity endorsements are sure to follow.
In crypto, for example, retail investor interest has decreased in the past few months, but money from institutional investors keep flowing. We might see more ad and marketing spend go into B2B segments, affecting both the kinds of celebrities being tapped for partnerships – thought leaders in finance, for example, instead of actors – as well as the content of their endorsements.
Whereas the economic situation will likely be murky throughout 2023 and 2024, regulatory hazards associated with celebrity endorsements are clearer. Influencers have been the subject of serious legal scrutiny since the SEC warning came out and regulators are facing growing public and governmental pressure to figure out how best to regulate new technologies in finance.
Given these high risks, we expect celebrities to become more careful in what kinds of financial projects they decide to associate with. They are likely to endorse more mainstream financial brands, as companies like State Street and Goldman Sachs have greater resources to conduct extensive compliance checks before marketing their products – making a celebrity less likely to become embroiled in lawsuits.
Expect, in short, a move from the loud, niche and disrupting, to the safe-rather-than-sorry.
So, what have we learned? Mainly two things.
The tide of public opinion has turned against large-scale celebrity endorsements. Consumers will likely be on their guard in the near-term, prizing ‘authenticity’ higher than ever before. Many were warned – in the funniest way possible – by the plot of the latest South Park movie, “The Streaming Wars. It plays like a prolonged crypto roast, targeting celebrities who made fools of themselves by hyping up cryptocurrencies and NFTs. In the cartoon movie, they are greedy con-artists who prey on their fans to exacerbate an environmental crisis. Many will accordingly stay away from snake-oil in all it’s digital forms for some time.
The second thing we’ve learned from the celebrity crypto endorsement implosion is that online creators have emerged as powerful independent news sources, cataloguing and exposing some of the biggest instances of alleged fraud in the crypto industry. A group of social media influencers has skyrocketed to fame by covering every aspect of the FTX meltdown, outshining traditional media in the process. All this coverage of the FTX implosion is the most prominent example of how so-called “citizen journalism” is battling legacy publishers for online attention – and how it will only grow in the future.
So look out for greater consumer appetite for authenticity and citizen journalism in this space. Corporate brands need to regain trust for the demand for both to dwindle.