Bitcoin ETFs launch promotional blitz after Google allows ads

Asset managers from BlackRock to Grayscale have launched an online advertising blitz for their bitcoin exchange traded funds, taking advantage of a change to Google’s marketing rules on promoting cryptocurrency instruments.

Google’s new marketing rules allow ads touting “cryptocurrency coin trusts” to appear alongside search results for queries such as “bitcoin ETF”. They took effect on January 29, weeks after 10 asset managers launched bitcoin ETFs on January 11.

Ads have appeared from asset managers including BlackRock, Fidelity, Grayscale, Invesco and Bitwise touting spot bitcoin ETFs as the issuers try to get their products in front of as many potential clients as possible — retail investors in particular.

The firms have stepped up marketing and are engaged in a fierce fee war, as every spot bitcoin ETF issuer except Grayscale, which charges a fee of 1.5 per cent, has either waived or slashed fees as the fledgling products grow their asset bases.

“We believe Google — among other search engines — is an important piece of our larger marketing strategy,” said a spokesperson for Invesco, which recently reduced the management fee on its bitcoin ETF from 0.39 per cent to 0.25 per cent.

Bitwise has enlisted the pitchman from Dos Equis’s “The Most Interesting Man in the World” ad campaign, Franklin Templeton’s X account last month temporarily endowed its logo with laser eyes, a popular crypto meme, while BlackRock plans to project bitcoin ETF ads on buildings in major US cities.

Those may grab attention, but advertising on platforms such as Google are more efficient tools for asset managers trying to raise capital from investors, said Ben Johnson, head of client solutions for asset management at Morningstar.

Google declined to disclose ad spending figures for any of the bitcoin ETF spots, noting that costs are variable as advertisers bid to place ads through an auction process. The search giant also allows ads for cryptocurrency exchanges and wallets, but its rules prohibit ads for initial coin offerings and marketing efforts seen as “otherwise promoting the purchase, sale, or trade of cryptocurrencies or related products”.

The January 11 launch was a rare instance of 10 substantially similar ETFs debuting at the same time. While investors already have ploughed more than $7bn into the nine new products combined — mostly into ETFs from BlackRock, Fidelity, Bitwise, and Ark Investment Management — they have also pulled more than $5.6bn out of Grayscale’s product. At the end of January, total net inflows across all products were just below $1.5bn, with bitcoin trading at about $43,000, slightly down from $44,000 at the start of the year.

Zach Pandl, managing director of research for Grayscale, downplayed the rush out of the firm’s bitcoin ETF, which remains the largest by far. He pointed to investors taking gains after watching the price of bitcoin rise in the months since Grayscale won a lawsuit against the Securities and Exchange Commission, which had sought to block the conversion of its bitcoin trust into an ETF but lost a federal appellate court decision last year.

“These bitcoin products on net are receiving inflows, but you did see speculative positioning, whether that’s in futures or options, get to pretty high levels, indicating long positioning prior to the launch of the ETFs,” Pandl said.

“You’ve seen some of that turn around in a reduction of risk appetite.”