Marketing Budget Re-allocation

[lusty flame]

This has been on my mind since its release a month ago, and I've finally had some time to articulate my thoughts and seek a solution.

Here's my concern:
In reviewing the budget report by Kieran, I couldn't help but notice how small the marketing budget is compared to our goals.

According to this document, the projections for the next 12 months (which will include the Open Beta Launch) amount to only 2.2% of our capital, which is merely double what we spend on Discord Moderators for the same time period. No offense is intended to any of our mods (apologies for the awkward timing, especially given one of them is departing soon).

After conducting a poll on my Twitter, I have confirmed that the majority of our community is eager for us to pursue mass adoption. I would like our reports to more accurately reflect this intention.

Here is some data to explain my concern:

• In my personal experience, most companies and startups I've worked with allocate between 5% to 20% of their total revenue to marketing.
• Some research on the gaming industry shows that GTA V spent over $128M on marketing, which represents 50% of their entire budget!
• Apparently, most other games allocate between 15% to 40% of their budget to marketing.

As I mentioned earlier, Illuvium is only investing 2.2% of our capital into marketing, which may explain our current conservative spending. However, what if we found a way to offer our Marketing team and sub-council more freedom in their decision-making?

This would allow the Marketing team to per example:

• Collaborate with bigger Influencers
• Hire more Marketing Professionals
• Diversify our campaigns across multiple medias
• Reach a broader audience ON OPEN BETA LAUNCH therefore further increasing the runway!

Where could we find the additional funds?

I don't claim to have the definitive solution, but I've experimented with the numbers to propose some possibilities that could put us in a better position to achieve our goals. Each suggestion is independent, and the objective of this discussion is to identify other potential solutions or receive feedback on my concerns.

1. If we were to reduce the runway by 15 days, the marketing budget for the next 12 months would increase from $342k to $796k

• A 113% increase
• Marketing would then represent 5.1% of our budget

2. If we extended the "illuvitars revenue to the safety pool" period to supplement the marketing budget, and assuming that Illuvitars continue generating at least 0.3 eth/hour (which has been the rate for the last month, with some peaks considerably higher), it would take us 23 days to double the current Marketing budget.

• A 100% increase
• Marketing would then represent 4.4% of our budget

If we implemented both of the proposals above, our marketing budget would be $1’139’143, which represents 7,4% of our budget.
This would cost us 23 days of Illuvitars revenues plus 15 days of runway.

Thank you for reading and considering my concerns. I believe this proposal would assist @wraith raft @lusty latch and the rest of the marketing team in their mission. I'm open to discussion and I'm willing to abandon this if proven unnecessary or to formalize it into a proposal once a solution is found and agreed on if there is sufficient support.

[sullen widget]

This is one of the items I requested to talk about with Danny. What is the budget allocated for the marketing campaign leading up to Open Beta. Obviously, I may not be able to share too much information on this but hopefully, I can confirm or deny that there will be a significant budget allocated for launch campaign.

Monthly allocation for marketing would be different from one of's campaign like our launch. I expect that there will be an increase for monthly allocation as well closer we get to launch or even after launch.

[sterile dock]

Yes breakdown for the budget would be a start

I still stand on my view that marketing effort and budget should be kept at the very minimum during this bear market. People who are interested in crypto gaming would have known ILV. Web3 only need to be informed of upcoming events/release.
Marketing to web2 gamers would be a huge waste of resources. Sentiment is really low for crypto/NFTs. You really have to wait for the bull market.
Google search interest on crypto and NFT is low. Don't fight the trend.

[untold zodiac]

I agree with Jaganite, not much of a point of upping marketing spend when we're still a ways away from launch. I would actually consider the marketing a big success given how efficient it has been with the resources provided up to this point!

[narrow jay]

Nothing is stopping the community, the marketing committee or any committee from coming up with ways to spend the safety pool IMO. If it passes an ICCP it can be used. The ICCP could include an increase to cover any costs which seems like a good idea to keep the spirit of the safety pool intact. I specifically fought for the council to have this "power of the purse" for the safety pool. The funds are to be used by the "DAO" not just Illuvium Labs (the team).

[wicked veldt]

Pretty sure Kieran said they're gonna crank up the marketing when the time is right.

[sterile dock]

yes, the Treasury is owned by the DAO, including the safety pool.

[sturdy tusk]

The 174k $ for moderator is from last year. This is reduced by a lot.
They changed a few things and they got a pay cut since the start of April.

[lusty flame]

Thank you for clarifying this point, it is not stated anywhere in the report so couldn't know. btw it was just an example to show how low the marketing budget is, what we do or not pay for Moderators isn't even the topic 🙂

@sterile dock and @untold zodiac , what market we're on only matters if you plan to advertise to a web3 audience. In this case we are talking about allocating funds to the marketing team to better be able to access the Web2 audience.

[glossy karma]

This is very relevant. Marketing ROI is much lower atm in the bear market. I would expect the marketing budget increase to be campaign driven (i.e. spikes of spending), so more spent when it's time to roll out things like open beta and PVP.

It is a reasonable expectation that marketing spending would increase for that campaign to adequately promote the launch of the DAO's primary product offering and later as the bull market returns.

Not sure if Zeptyles solutions would be needed or not, but nice to have these kind of ideas lined up if needed.

[sturdy tusk]

Ya it was last year's marketing budget. I guess it's much more for public beta planned.

[sterile dock]

i don't how it works with web3, but generally in web2, spending on google ads and facebook ads is the most effective. maybe this is why 40% of startups money went to google and facebook

or maybe tiktok now

just need brycent to do some dancing. wagmi

[lusty flame]

according to what Kieran said in the report, this is the budget allocated to marketing for the NEXT 12 months based on the last 3. that's all we know

[sturdy tusk]

Based on the last 3 yes. But i guess they will change it because of product launches like merch store or public launch.

[untold zodiac]

My point is that, for the time being, there isn't an effective call to action available because of the products still being in private beta.

It builds brand awareness which is good, and could help with runway if enough people are convinced to buy the token prior to an additional capital raise, but it would be silly to spend a large amount of runway to direct the masses to a private beta sign-up sheet instead of the actual revenue generating product.

[sterile dock]

so basically the budget document is unreliable?

[lusty flame]

Yes a lot of people already raised the timing point in the past, what we're discussing here is for the Open Beta Launch.

If Open Beta Launch is not delayed and released in Q4 this year, it is very likely that the Marketing team is planning their marketing campaign for launch right now or at the very least in the next few months, therefore what budget will they have to do the said campaign is a topic for now.

So that hopefully this doesn't force them to re-plan and map everything.

[sturdy tusk]

Idk for sure. But personally i guess it's more like a what the budget could be if we run like the last few months.
We didn't had a product launch, only updates. So i guess we see a lot of changes in the budget next time. They reduced mods, reduced CC's, marketing is going up for product launches.... That's my personal opinion.

[river saddle]

Isn't it better to establish dominance in web3 market first? Take 6-12 months after open beta to add more content and polish for the spoiled web2 brats and then do the massive web2 marketing?

I mean axie went parabolic just from web3, yes yes it was a ponzi but it was also a terrible game. We should be able to reach similar success based on web3. And then we have the advantage of being marketable to web2 aswell, unlike them. So the potential is bigger

[untold zodiac]

Sorry my mistake, one more thing to mention is that a decent amount of marketing spend might be included in the core contributor spend with the marketing category being more closely related to marketing OpEx, if the open beta launch ends up being in December of Q4, there could be a situation where something like ~$250k is spent in the final month of the year on marketing campaigns which could be much more impactful than it appears.

[sturdy tusk]

I would say we wait a bit to see what the marketing sub council are doing and maybe we get more Infos from them in the next month or two.
Right now it's only guessing because we don't know what is planned and how much money they want to use.

[lusty flame]

Yeah you're right and I indeed also read the report as: Marketing Core Contributors salaries belong in the CC section of the budget.
so yeah i expect the 343'727$ to be for OpEx. It is still very low, specially in the gaming industry and compared to Illuvium's goals.

Like i said, remember that the average startup spends 5 to 20% of their budget into marketing and that the trend in gaming specifically goes up 50% (because there is so much offer and competition that it is expensive to stand out and be seen) In comparison, this doc shows a 2,2% of our budget allocated to marketing including Open Beta Launch and the following months.

[sterile dock]

zep, those startups are doing round after round of capital raise

they are burning fund to acquire users

startups have 2 exit goals, being acquired by a bigger fish or IPO

ILV main objective right now is to finish the game and stay afloat for 2 years

[mighty idol]

I believe your right Jag, especially on your last statement. Current team are here for the long haul. We don’t need to do a massive marketing push for OB. There will be many crucial tweaks added 12 months after the launch.

Other startups may be allocating 5-20% capital on marketing though Illuvium is in a unique position and needs to act accordingly.

[viscid valve]

Question is what do you want to market and to WHO ? Game is on beta stage, and it would hurt it more then help to market it now, we are also in bear market and nft are still passe. I think we are a long way before we should even put 5.0 percent of budget there. We aint GTA 5.

[sterile dock]

🤝

[lime lodge]

It's always been my personal understanding and expectation that marketing would ramp up prior to launch - This would be something the <@&1107754344499122206> could confirm or deny for us. There's a relatively high likelihood that nothing complicated needs to be done in this scenario, as this may already be planned.

[lusty flame]

If this is already planned, great perfect. As i say in the Original Post, i'll happily back off this if proven unnecessary, was just raising a concern of mine.

[turbid aspen]

@lusty flame current marketing spend is in no way indicative of future marketing spend. Obviously it will shift as public beta launch is closer. Also you talk a lot about % of revenues being allocated to marketing. Currently for the most part, Illuvium is not generating revenue. I am not sure if these arguments apply. Although the marketing budget is relatively conservative the team is currently leveraging 10x more with their marketing spend than companies spending significantly more money on marketing than Illuvium. At this point working smarter not harder (where harder is burning money) very much applies and is the perfect fit for the current state of Illuvium as a brand, game and IP.

The relationships and partnerships they are building behind the scenes will mean that future spend on marketing will be significantly lower and reach far wider.

[grim sierra]

You think that 2% of the budget being spent on marketing on a brand new game that nobody in gaming has heard of is enough because we work smarter not harder?

imo he asks a very fair question

but you are right that past spend doesnt indicate future spend and the hopefully the info Kieran provided on budget allocation is based on past spend

I'm pretty sure that marketing spending will pick up a good bit surrounding the marketing of game Launch which as you know will be a key point in Illuviums Success

[lusty flame]

Cool, only 2 points i take from this is you didn't read my concern, otherwise you'd notice i use the words budget or capital over revenue... which then perfectly applies to the actual situation Or you would've noticed that in the doc it states that 342'727$ is the marketing spends for the NEXT 12 months.

second, we're building relationships and partnerships useful for long term, and that's great. Specially if it lowers or future marketing spends for when it matters.

My point and concerns remain valid.

[turbid aspen]

Yes I think its enough. I have spoken to the marketing team about what is happening behind the scenes and in my opinion the 2% we are spending is plenty

[grim sierra]

even around the Launch event?

[lusty flame]

👀 👀 👀 This is very concerning to hear!

Let me repeat just in case... Did you read my concern and the data that backs it up?

[turbid aspen]

I think making an assumption it will stay around 2% soon before the launch doesn't make any sense. Obviously it will ramp up....

[lusty flame]

Why is it obvious when the report literally states "Budget for the NEXT 12 months" and that within those 12 months there's something like Open Beta launch happening?

[turbid aspen]

I will speak to Danny and return

I think it should be noted that currently runway is x. As we generate further runway through things like illuvitars. Capital raises and so on. Financial reports and projections can shift. That should all be considered.

[oak storm]

A few things to note:

1. Cinematic and trailers are not being included in marketing budget as far as I am aware due to staff primarily being in art department. Typically they would be. @wraith raft to confirm.

2. From a tech perspective we would be better served by a ramp up period as we acquire new users steadily over time rather than a big bang.

3. From a game designers perspective (purely my own) we are better served by ensuring things are balanced and fun with a captive audience who likely won't depart at the first sign of friction. i.e. make sure the game is right with the web3 audience and then hit the wider player base.

TLDR: Basically I think the marketing spend increase should come, but not until we are confident we are best able to make use of it.

[lusty flame]

Thank you for the insights!

1. Yeah i never expected Cinematics and trailers production costs to be included in the marketing section, as like you say we have an amazing art department in-house.

2. This is a very fair point, attracting hundreds of thousands of players is one thing, having the infrastructure required ready to welcome them is another. A steady playerbase increase makes the tech side easier to plan month after month and avoids us getting overwhelmed. Fair point.

3. I have a few concerns about this approach though, hopefully you can bring some light to this. If we do market our game only to web3 users (which is sort of a closed and small circle) on launch, and market it to web2 let's say 6 months later... Can it still be considered a "fair launch"? The other thing is that marketing a 6 months old product is in fact just harder than on launch. Launch events generate hype, network effect etc. I fear that with that approach we miss on a lot of momentum. Also people are not stupid they know what the word beta means, so i don't think balance specifically is that much of a concern.

[lusty flame]

Thank you, looking forward!

[oak storm]

3. Regarding 'fair' ... if its free and open for anyone to join then its fair, taken to absurdity we would have to 'equally market' to literally every person on the planet or there is something not fair about it. Whatever marketing we do we will target someone (gamers, youtubers, social users, web3 users, lovers of TFT, desktop owners, etc).

Regarding "Beta" I disagree, but not strongly. To me it seems beta has lost its meaning, and although people might not be stupid, they are also not invested mentally (or financially). We got enough of their interest to get them to download something... but that can quickly turn in to negative sentiment (and reviews) if they don't get paid back for that in a way they appreciate (i.e. by having a smooth and enjoyable gaming experience).

---

In any case this is @wraith raft's domain, I don't think I can add much to this conversation other than talking about my feelings 🙂

[turbid aspen]

Firstly I'd mention that the safety pool is intended just as that. A safety pool. It's intent is as a last resort. Your data is quite compelling for this option specifically I must admit but I'd be hesitant given the precedent you then set for future use of this pool. The priority is still to distribute these funds to stakers given the promise of the original Illuvium whitepaper.

I don't love the idea of reducing the runway by 15 days and in the current economic climate every day is undoubtedly important.

Lastly I'd have to ask what u suggest spending this extra 300k on? Imo there are many priorities above marketing currently such as getting the game built. Although we can all agree marketing is important I wouldn't place marketing as a top priority until we are closer to launch. By extension if you managed to manifest more funds via your suggestions that money is better spent elsewhere.

[zenith lava]

mhhh... i want to become a moderator 😄

[sturdy tusk]

Why do you want that?

[zenith lava]

to be more closer to community and also to increase my incomes 😄

[wraith raft]

Our current strategy focuses on minimising marketing expenses until we are confident that our product is of sufficient quality to be showcased to mainstream audiences. However, we do have exceptions to this approach, as we have planned partnerships with influential companies, esports organisations, and large-scale influencers who have overlapping interests with the mainstream market. We aim to leverage these partnerships without incurring direct costs, such as through our upcoming Illuvitars collaboration with (Sorry not leaking here), where we have a revenue-sharing agreement rather than upfront expenses. This allows us to gain exposure without taking on significant financial risks. While there are minimum guaranteed targets to be met, they are set at manageable levels and do not pose a major concern.

We'll employ similar strategies when partnering with esports companies, adding an Illuvitar collection and physical merchandise to tap into their networks and providing them with a revenue return without requiring direct marketing expenditure.

By employing these tactics, we'll generate substantial hype while keeping marketing expenses to a minimum. Of course, having a superior product compared to others in the market will play a significant role in achieving this. However, our ability to network and form partnerships within relevant communities has been and will continue to be instrumental. One example of a successful campaign was the giveaway of Cos-play NFTs, which attracted 80,000 new Discord users and nearly 200,000 registrations, despite not revealing much about the game itself. Another would be our relationship with Coin Telegraph the largest publication in the space which has written over 20 unique articles for us without costing us anything.

As we progress and receive positive feedback on the game, we will gradually increase our marketing spending. However, we anticipate that the ratios will differ from those seen in traditional games. In the context of an NFT-based video game, viral loops have greater potential and power than in a standard video game. We have already witnessed this phenomenon with basic games in 2021, where players who earn rewards are more likely to share their experiences with friends. When combined with an exceptional game, this power of word-of-mouth recommendation becomes even more amplified. Additionally, features like ownership and interoperability further enhance the game's internal viral loops, making a substantial portion of traditional marketing spend unnecessary.

Sorry if this is longwinded... to summarise: our strategy revolves around minimising marketing costs until we reach a certain stage of game development and receive positive feedback. Rely heavily on viral loops, leveraging partnerships, and unique features inherent in NFT-based video games to generate organic growth and hype. And as we progress, gradually increasing our marketing spend but again, not to the levels you would traditionally see in mainstream gaming

[sterile dock]

interested in the revenue-sharing deal, is this like affiliate marketing kind of deal? no doubt this is very effecient marketing.
how much % are you giving the influencer or BA?

viral loops, "where players who earn rewards are more likely to share their experiences"
are you referring to axie's P2E success?
people making insane gains and posting them on social media?

[wraith raft]

We can’t share those details yet as we are under NDA.

More the ownership. In our case “I just caught something and I can sell it” not so much the insane gains, although there is the potential for that in some cases.

Think about Pokémon, and how viral it would be if they announced the introduction of a market place which used real world currency. It would go viral

[lusty flame]

Thank you for the valuable time in giving such a detailed answer. If you'll allow me to just re-phrase and summarize all of this in my own way to make sure just i processed all of it, here's what i understand:

1. The 342'727$ indicated in the report were a rough estimation and/or based on old data. Don't actually translate what we are actually planning to spend on marketing.

2. As we approach from launch the marketing expenses and efforts will keep ramping up gradually over the next months after launch with an intent to gradually expand our reach and player base. (In a coordinated effort with our Tech team to make sure we don't over-market and that our infrastructure is able to keep up with the growth rate ensuring a smooth and enjoyable experience for everyone)

3. With that said, the overall marketing spendings will still not reflect the "Gaming Industry Standards" as we are going for more innovative ways to bring value to our partners than just an upfront payment, hopefully building long-term connections with key actors across multiple sectors within the process.

4. We believe that the blockchain benefits of ownership etc will help creating a network effect promoted by word of mouth, increasing the potential for viral "news and content".

Overall we are aiming more towards a Snowball rather than Big Bang effect.

Is this correct?

[wraith raft]

Yes, fairly accurate