Coinbase’s ROI on Its Super Bowl Ad; BlockFi Settles with SEC

How big a deal are Super Bowl ads, really? Sunday night, cryptocurrency exchanges were the talk of the town as many companies flaunted star-studded commercials during the big game. Thirty second slots were reportedly sold for $7 million, according to The Wall Street Journal, meaning Coinbase may have spent approximately $14 million on a dancing QR code. It also spent more on prize money featured in the ad and offered free bitcoin for every new user who signed up. What’s important to remember, though: Super Bowl ads cost these companies pennies on the dollar.

As context, Coinbase spent more than $105 million on sales and marketing in its last reported quarter. That puts them on track to spend roughly $420 million on marketing expenses annually. But ads like these cost very little in the grand scheme of things. As ad strategist Taylor Holiday pointed out on Twitter, Coinbase needed to convert only a small number of viewers to make the investment worthwhile.

Coinbase earns $34 to $45 a month per customer who uses the service, according to company filings. Assuming revenue hovers in the middle of the range, that means each user is worth $480 in annual revenue. After applying its cost of 16% per transaction, that equals about $400 in annual gross profit per user, not including fixed costs like software development. Some back-of-the-envelope math estimates how many users would need to sign up for Coinbase to break even on the Super Bowl marketing blitz.