Decrypting the customer acquisition cost of encrypted products: How "valuable" are encrypted users?

Original Title: The Numbers Behind Cost Per Wallet

Original Author: Asaf Nadler, COO of Addressable

Original Compiler: Luffy, Foresight News

About a month ago, I published an article on "Cost Per Wallet" (CPW), a growth metric unique to the Web3 space that measures the acquisition cost of website visitors who have installed a wallet in their browser.

The article received an enthusiastic response. Marketers, advertising agencies, and project founders joined the discussion, sharing their thoughts, challenges, and data points. One thing was very clear: CPW struck a chord with everyone. Among the many private messages and replies, one question stood out:

"Tell me about the costs—what's the situation like in specific time frames, regions, and platforms? Does success change the way costs are calculated?"

This article will answer that question with detailed data. I analyzed over 200 programmatic advertising campaigns initiated by more than 70 advertisers on the Addressable platform in 2024, targeting over 1.5 million users globally, to study CPW across different market cycles, regions, campaign executions, and audience segments.

2024 CPW Trends: How Market Cycles Affect Costs?

Bull and Bear Cycles: 2024 experienced two distinctly different market cycles. At the beginning of the year, the market performed strongly, with the first quarter in a bull market, and the total cryptocurrency market cap grew by 21% to $1.7 trillion. However, this momentum reversed in the second quarter, declining by 12%, and the situation worsened in the third quarter with a further 27% drop. By the fourth quarter, the market rebounded strongly, with a 109% increase, entering another bull market phase. These market changes naturally affected CPW, but the impact was not uniform.

The fluctuations in CPW across different market cycles reveal more than just the expected pattern of lower costs in bull markets and higher costs in bear markets. They also highlight the sensitivity of different regions to market fluctuations, the importance of timing, and the strategic advantages of targeting resilient markets.

Developed Markets: Developed markets like the U.S. and Western Europe often provide more predictable CPW during bull phases, but they also exhibit significant elasticity. In the first quarter, the CPW in the U.S. remained at $5.87, but as market sentiment shifted in the third quarter, costs skyrocketed nearly fourfold to $22.81. Western Europe showed a similar pattern, with fluctuations even more dramatic, soaring from $1.18 to $32.79—an increase of 27 times. While these markets can offer scale and quality during bull markets, costs significantly increase when market sentiment turns bearish, reducing their sustainability during downturns.

Emerging Markets: Emerging markets present a different risk-return profile. Under favorable conditions, their CPW is extremely low, but cost fluctuations can be extreme. For example, in Latin America, the CPW in the first quarter was nearly free at $0.56, but by the third quarter, costs surged 60 times to $34.38, reflecting sudden liquidity constraints and shifts in demand. Eastern Europe saw even more astonishing increases, with CPW skyrocketing from $0.21 to $20.79—an increase of 99 times—indicating that costs can rise sharply when market conditions deteriorate.

Southeast Asia: This region performed the most consistently across various market cycles, with CPW fluctuations within a factor of 5, from $3.73 in the first quarter to $16.61 in the third quarter. This stability suggests that local market factors, adoption curves, or advertiser demand may create a more predictable environment, making it an attractive region for brands looking to maintain cost stability under different macro conditions, especially for projects wanting to test product usage without being affected by market cycles.

The key takeaway is that market cycles not only affect CPW but also determine when and where it is feasible to attract wallet holders. While developed regions are highly efficient during bull markets, they become costly during downturns. Emerging markets have ultra-low costs but come with significant volatility. Southeast Asia, with its relative stability, may offer the best long-term potential for brands looking to mitigate risk across different market cycles.

Best and Worst Performing Campaigns' CPW

Market cycles are not the only factor. The best-performing campaigns consistently maintain lower CPW, even during market downturns. In fact, the top 25% of campaigns managed to keep their CPW at just $6 - $8 per wallet, even during bear market cycles, which is impressive. Meanwhile, poorly performing campaigns saw their CPW fluctuate between $4.68 and $44.79.

This performance gap can be attributed to product-market fit (PMF), community strength, market heat, incentives, and creative execution. Campaigns that resonate well with their audience and have optimized messaging can maintain an affordable CPW regardless of market conditions.

For campaigns struggling with high CPW, shifting to lower-cost regions is not the only solution. Optimizing target audience segmentation, messaging, incentives, and creative strategies can enhance efficiency, keeping CPW stable in any market.

CPW by Audience Segmentation

Decentralized Finance (DeFi) / Centralized Finance (CeFi) campaigns have the highest cost-effectiveness, with a median CPW of $2.79 and a lower quartile of just $0.10. L1/L2 projects follow closely, with a median CPW of $3.23, reflecting their higher adoption rates.

Gaming and gambling campaigns have the highest costs, with a median CPW of $8.74 and a lower quartile of $3.40, possibly due to high user churn, frequent speculative behavior, and intense competition. If Web3 gaming is indeed "unstoppable," we need to find a more robust user acquisition engine to make it sustainable like Web2 gaming.

Conclusion: Using CPW as a Framework for Web3 Growth

CPW is not solely determined by market cycles; it is also influenced by the effectiveness of campaign execution. The top 25% of campaigns can maintain CPW at $6 - $8 throughout the year, even during market downturns, while poorly performing campaigns see significant fluctuations from $4.68 to $44.79. This proves that market conditions are not an excuse; marketing teams that track data, optimize target audience segmentation, and refine messaging and incentives can outperform market cycles, maintaining efficient costs regardless of macro trends.

This also prompts us to shift strategies when launching products. Targeting large investors in the U.S. during a bear market is an extremely costly gamble, with CPW reaching unsustainable levels. Conversely, starting from more stable, cost-effective regions like Southeast Asia allows brands to optimize their product-market fit before expanding into developed markets. Teams that do not adopt this strategy risk exhausting their budgets too early before proving market demand and optimizing conversion rates.

Finally, the data derived from advertising-driven campaigns challenges the notion that Web3 advertising "doesn't work." In fact, these results indicate that advertising-driven Web3 growth is measurable and scalable, rather than a dead end.