We’re heads down building and fundraising for our NFT promotions ad network, so here’s another quick weekcap. But first a brief intro in case you’re new here:
AlphaBack is a browser extension that pays users to look at NFTs (ads), with the goal of building a DAO-owned ad network.
Also, we’re experimenting with a new section on these Retros called, Food for Thought. Review that (at the bottom of this note) if you want to go deeper.
- Fundraising. We closed three more angel investors on our SAFE!
- Allocations. We’re now up to $965,000 in written commitments from investors. This is a 10% increase over last week.
- Upgradeable Contracts. We‘re laying the foundation for faster iterations and future flexibility via upgradeable contracts. We estimate releasing that code within 2 weeks.
- HackFS Hackathon. We had planned on participating in this hackathon, but prioritizing the release of the payments code meant that we didn’t have enough time for a meaningful submission.
How You Can Help
- What do you think about DevCon in Bogotá? We’re considering whether to sponsor a small booth there given the amount of foot traffic we can convert – like we did at NFT NYC. Hit reply and send me your thoughts.
- Here’s an updated list of investors who’d be interested in meeting us given their web3 thesis and portfolio. LMK if you have any connections with:
Food for Thought: NFT Promotions are hard.
NFT projects continue to sprout. There are now approximately 80,300 NFT collections on the Ethereum blockchain, up from 15,540 in 2021. And that doesn’t include the growing number of NFT projects on Solana. Importantly, marketing is a top expense for any NFT project.
A web3 marketing agency, Coinbound, says that “NFT marketing ranges from $10,000 to over $200,000 for a successful NFT marketing campaign.” According to another agency, “established NFT brands can spend upwards of €100,000+ monthly on their marketing to constantly reach out to new investors and broaden their reach. Start-up projects are recommended to have between €10,000 and €25,000 if they are really looking to expose their project to as many of the right eyes as possible.” Given the lack of better promotional alternatives, we believe this market is ripe and can produce meaningful revenue. This (partially) explains why we’re starting with promoting NFTs as a wedge into the broader advertising opportunity.
Below is a bottom-up calculation that illustrates the potential of the market. First, let’s determine the potential ad spend per year per project. Marketing budgets for traditional B2C companies typically range from 5 to 25 percent of a company’s revenue or revenue targets, depending on company size, stage of growth. One survey of SMBs suggests that companies earning less than $2M in revenue spend $14K in online marketing. While a 2019 survey suggests that SMB companies spend $10K–$50K in online advertising. Let’s assume that NFT projects have similar marketing spend, approximately $1.2K per month. That amount aligns with the marketing budgets suggested by web3 agencies for NFT projects (above).
Assuming there are 80,300 NFT collections, and they grow 30% YoY, then there may be 104K NFT projects by 2023. NFT collections follow power law distributions, so most of the projects will be small $1.2K/mo advertisers, while a few (1%) will be power users with larger budgets (e.g., 10x higher, as per the web3 agency example ranges above). Therefore, we calculate:
(99% * 104K projects * 1.2K/mo * 12 months) +
(1% * 104K projects * 10.2K/mo * 12 months) = $1,609,920,000.
In the future, NFT projects will turn to trusted sources of quality advertising to reach broader yet targeted audiences, because the current alternatives are depressing – from con artists, Discord shillers, to Twitter feeds littered with these giveaways:
Our goal is to attract enough users to download our extension, such that we can provide a welcome alternative to NFT collections who need to promote their projects.