Brave & Basic Attention Tokens #2 : Crypto value can only be created with scale

I had written previously about the basic attention token and how Brave, as a browser, is commercialising Ad-blocking. We discussed how using BATs as an underlying currency helps Brave commoditise attention, turn it into ad capital to reward readers and fund publishers in a controlled environment.

Brave started trading on the 1st of June 2017, opening at an exchange rate of USD 0.168230. With a historic peak of USD 0.327033 4 days into its IPO, as of yesterday 20th Oct 2017, BATs closed at USD 0.152958. Unlike its token peers like Golem and Bitquence, Brave has offered no growth to the USD 35 mn that investors put into its ICO hoping to sell them to advertisers interested in experimenting with the Brave platform. The same capital invested in Bitquence for e.g. would have led to a 10x increase as of yesterday.

What ‘s happening in the back of the machine? Is degrowth / stagnation a sign of imminent failure? Is buying early in an ICO not really the awesome thing that early TBC investors make it out to be? Brave brought bitcoin to digital advertising, but was that story coupled with the “sole middleman” responsibility and the Brendan Eich / Mozilla lineage not strong enough to bring in the brands?

Those that read BATs #1 would remember that even in its simplicity and the advertising experts that QD reaches to, BATs were hard to understand. Every Brave browser user has a wallet, every time the users consume content on the browser, they pay either with enabling ads or with BATs. Whenever a user view ads, a part of what advertiser is paying for the ads goes to the user in BATs. And this circle continues infinitely.

Problem #1 : Scale
Brave is a standing conversation piece in marketing circles whenever anyone talks about crypto currency and advertising together. But it is not reaching out to the masses it intends to serve. With under 10 mn users, it touches a miniscule fraction of the internet population vs its biggest competitor, Google Chrome that stands at 47% internet penetration (Wikimedia as on Jan 17). For BATs to become valuable for its investors, it is important that Brave seeks rapid adoption. However, a tepid marketing campaign and the engineering-minded promoter / investor set is bringing in attention ONLY from the US advertising industry and no one else.

Problem #2 : Capital & Time
UCWeb, Opera and other browser scale success stories are built over years and with country specific focus and budgets. UC had to hammer Indians and Indonesians with performance ads for nearly 2 years, employing every tactic in the low cost performance marketing handbook to get scale. Brave’s USD 6 mn in seed capital and ICO funding of USD 35 mn isn’t still giving it the muscle it needs for a sustained promotion campaign to acquire users that will set them up against Chrome.

Problem #3: Industry skepticism
While BATs and Brave have a superb promise, the “sole middleman” responsibility is a double edged sword. On one hand, industry skeptics question whether they can manage the huge billing and payout responsibility that comes with being the sole middleman. On the other hand, if they do pull it off, that much control in the hands of a single private company exposes the industry to the same my-platform-my-rules problem they already face with Google and Facebook. Not to mention the millions of existing middlemen becoming disenfranchised by ad-blocking and an alternate ad currency.

These problems really boil down to this being a marketing problem to solve. Brave has a beautiful proposition - the founder has the credibility to pull off large scale projects and as a company, they have their heart in the right place. They’re just not getting the right word out to the right people, from the right channels. Let’s explore some immediate marketing strategies. While these strategies should have been in place pre-ICO and probably not recommended for a currency on the downswing, it’s not too late to start considering these while Brave is still even for investors.

Solutions for Scale
First off, while consumer messaging can be perfected through testing, there has to be intent to court consumers in the first place. Browsers have a very positive P&L business — acquire a user once, monetise the user several times over a period of time. The only job they have to do right is NOT lose the user or get slotted in a bad role (Dolphin is the world’s default incognito browser). From here to 200 mn users, Brave needs to start thinking like an app — user acquisition and user retention. This means that the data collected from the browser itself AND the USD 35 mn available to them post ICO can be combined to create lookalikes of their best quality participating users on frenemy platform Facebook (and Google?) to acquire new and high consumption browser users.

Brendan Eich is a strong industry influencer. Brendan uses his brand to get featured in every top industry publication out there. Brendan however is not a mass influencer. Brave needs to turn influencers into spokespersons using what the company already owns — BATs. Trade BATs for support from public influencers (read Beyonce and Beiber for their coveted fans) to use either for their own needs (BATs spent on the platform buy more ads) or to trade on exchanges for other cryptos.

Solutions for capital and time
The biggest beneficiaries of Brave are advertisers — advertisers lost 20% (USD 16 bn) to ad fraud last year. Brave can create capital by simply finding the right allies in advertisers. The key to success is making a joint business plan with advertisers versus sponsorship relationship which might be expected right now. A possible disruptive growth hack would be a brand support program — Advertisers buy huge audiences, all pointing to some internet destination (website, landing page, social channel) where a bright yellow bar on the top inviting users to try Brave would create free users at a massive scale in exchange for BATs or just as an industry initiative. This brand support program on the other end can be turned into a publisher support program. Some publishers are miffed that Brave is eliminating paying ads. But the SME publishing sector that is bleeding revenue to opaque revenue share deals will happily embrace Brave (coupled with some product mods that whitelist safe ads). Simple strategies like these create both capital and time with top line contributors to scale.

Solutions for industry skepticism
Any form of reputation is built, broken and rebuilt by word of mouth and gospel of action. Right now, there’s not much word of mouth and there’s no roadmap for gospel of action For e.g., Brave has no position on viewability or how Brave+BATs can solve for it. Another e.g. Brave carries a message of fairness. But while transparency is built in, it is not spoken of at all. For Brave, Brendan Eich is the most valuable B2B asset and for Brendan, trust will be built through recruiting believers. Whenever Brendan uses any speaking opportunity, he sounds more like the engineer he used to be (he invented Javascript !!!), than the business leader he has become years ago. In talking to developers and consumers, Brendan is unknowingly (or knowingly?) ignoring the incumbents. There will of course be naysayers — but the fear of bad conversations cannot stop conversations from happening at all. Losing the industry’s attention at this stage is equivalent to losing the industry’s trust.

Given Eich’s reach to industry voices, Brave needs to start holding strong opinions and own solutions to problems plaguing the industry. Their order of problem solving priority seems like user -> publisher -> advertiser. This may be right for them as a business, but for B2B communications, it needs to be the other way around.

Finally, Brave, BATs and Eich need to start thinking global versus the US alone. While the largest spends and eCPMs are still and will always be in the US, and thus, impact is largest in the US, digital ads are a global business and the problems that Brave is solving are more pronounced in some regions where cost of media is high and cost of user acquisition is relatively low. Like South Korea, Australia and NZ, Canada and non-English Europe.

Marketing problems are easiest to solve when you put the consumer at the forefront, however, when you have multiple stakeholders and gigantic incumbents, the shortest path to success is marketing led alliances. With the right marketing actions, Brave should scale enough to improve in valuation, offer investors strong value and realise its business objective.