Airdrops are marketing • TWiF #20

Whenever there's an airdrop on Farcaster, that becomes the topic of the day. People who were ineligible for the airdrop get mad or find themselves befuddled. Sometimes people who were eligible also get mad, because the allocation wasn't big enough to please them, or because selling your airdrop immediately is discouraged.

Allow me to state the obvious. Actually, restate the obvious, because we discussed this not long ago:

Airdrops attract attention because people like free money, so airdrops can act as top-of-funnel marketing. “Project I’ve never heard of” becomes “project that generated buzz on the timeline,” potentially even “project that paid me for doing nothing.”

Airdrops are a form of advertising. From the perspective of the team doing the airdrop, you are not the customer, you are the product. They are buying your attention. The amount they want to pay for it is $5-10, not $100. (It's not like you're about to select an insurance policy!)

The thing is, teams don't want attention from just anyone. They want people who will use their app, preferably more than once; who will hold onto the token and ideally buy more. They want people who already have resources at their disposal, and specifically the ones who are inclined to devote some of those resources to the team's project.

Furthermore, nobody wants to give you a large amount of a token that is already valuable. The point of an airdrop is to make the token more valuable; if you ever get an airdrop that is worth a substantial amount, it's because the campaign worked. If the token were expected to sustain a substantial market cap irrespective of the airdrop, the team wouldn't do one.

As I wrote in March:

Airdropping creates a constituency for the token — a group of people who will benefit if number go up. In theory, they will devote their efforts to making that happen. It is easier and faster to manufacture this group by giving the token away versus hoping enough people will buy it.

(For example, creating a constituency was likely the primary motive behind Zora’s airdrop. I won’t get into the weeds on that, but airdrop dynamics are different for a well-known brand that is guaranteed to see some level of speculative run-up, versus an unestablished team.)

Anyway, Farcaster airdrops in particular are attractive to teams because they can vet the recipients of the airdrop more thoroughly, thus skipping the farmers. Farcaster has an attractive population of crypto-native early adopters. Even within that population, it's possible to narrow things down to the most desired audience. Teams routinely require that recipients take an action as a condition of receiving the airdrop.

Look, there's nothing wrong with any of this. But you should understand the dynamic when you participate:

• On traditional social media platforms, advertising payments go to the platform itself, in exchange for access to the users.
• Whereas on Farcaster, Merkle is facilitating user access for free, because making Farcaster a place where you earn money is a cornerstone of Merkle's growth strategy.
• That means the advertising payments (airdrops) go directly to end-users

When was the last time Twitter paid you to look at an ad?

Here's the tricky part. $5-10 is only enough to directly buy the attention of someone whose attention is worth buying in the context of crypto’s alchemical economy. The ideal airdrop recipient tends to be someone who would ignore a $10 rebate on Candy Crush's in-game currency.

But a crypto token includes the possibility of upside — maybe it'll turn into $50 or $500. That outcome is unlikely in any given case, but it does happen, and the possibility is tantalizing. So someone for whom $10 wouldn’t normally move the needle can be enticed by $10 of an app token.

Also, because most Farcaster users are both financially and ideologically invested in crypto writ large, they're more willing to try any random game or tool than they would be with a traditional app.

Some additional tidbits as Merkle continues refining this program:

• As a term, “airdrop” has the wrong connotation: “these are closer to quests/campaigns/rewards.”
• How about “little treats” instead? Cuuute.
• Interesting behind-the-scenes details on these campaigns:

• “there's been ~$140K distributed to 10K+ Farcaster users with $125K+ lined up and positive feedback from teams we've worked with”
• Key point that should surprise no one: “giving airdrops that seem likely to be insta-sold is less appealing.”
• Much of this discussion was sparked by the hilariously obscurantist @shl0ms airdrop, btw.

Builder bulletin#

Stuff you should know.

Wallet-related features that Farcaster is considering.

Dev rewards program has been embiggened.

Back navigation for mini apps is in progress.

Megapool is a clever new mini app that layers on top of another mini app:

- join or create pools to win the /megapot jackpot together
- contribute ETH or USDC
- ETH swapped for USDC via @aerodrome 
- winning pool uses @splits to distribute proportionally
- no fees (i get 10% of ticket cost as referrer)

Looking for collaborators? "open invite to any dev who wants to work on a miniapp together"

"We knew the NFT was going to drive subscriptions, but this is some of the first analysis of how intense the farming was." Data here, fascinating!

Update from the Intori mini app: “1,800+ $INTO holders with 31,000+ transactions on @base and 37,000+ friendships formed,” among other stats.

“Over 5.5k users reactivated their Farcaster accounts last Thursday,” nice.

The Percs team is winding down all current projects: "Onchain marketing tooling is a small market for a venture backed startup. We need to build something else that solves a bigger problem."

Does Rainbow charge too much for swaps? Hot debate.

The community-based retrofunding initiative has wrapped up.

“Onchain media won't win simply because you can monetize content better. It will win because of the power it has to deliver deeper insights to iterate content faster and grow your community more easily.”

Aaand that’s all for this week!

Cheers,
Sonya