What is Blockchain and why should digital marketers be invested in this new technology? Blockchain today has often been compared to the Internet in the 1990s; in that its application is not fully understood, yet it has the potential to change our lives in radical ways.
In the same way that the Internet radically changed the way we share information, Blockchain is expected to radically change the way we exchange value. Blockchain acts as a transparent, immutable, peer-reviewed ledger; removing the need for any centralised mediator.
In short, the Blockchain is about trust. With Blockchain, there is no need for a third party to verify our actions, they are recorded reliably and safely on a decentralised ledger for all users to access.
How will this affect marketing in the next ten years? It may just open up a whole new world of personalised marketing, improve the way we measure our campaigns, better moderate fraudulent behaviour online and disrupt the existing digital advertising ecosystem.
Today we’re going to sort through the hype and find out the real reasons why everyone is so excited about Blockchain, and how it may transform digital marketing and advertising.
History of Blockchain
Firstly, to get a better conceptual understanding, let us discuss the origins of Blockchain. The first Blockchain was developed in 2009 by Satoshi Nakamoto to produce a decentralised digital currency known as Bitcoin. Since its inception, the tumultuous rise in value of Bitcoin has seen the currency valued from $1 in April 2011 to a peak of $17,900 in December 2017.
As interest in Bitcoin grew, investors and researchers around the world began to pay attention to the underlying value of the Blockchain technology itself. The application of Blockchain, it seemed, was not limited to digital currency, but could be used to do everything from decentralised cloud storage to identifying users online.
One of the most radical applications of this technology was the development of ‘smart contracts’ through the currency now known as Ethereum. Whereas each block on the chain was initially envisioned to represent simple tokens, this platform allowed miniature computer programs to be coded into the Blockchain, representing financial instruments such as loans and bonds.
Elite computer scientists, mathematicians, cryptographers and mathematicians are working to this day to develop Blockchain technology further.
Imagine the Blockchain as a shared spreadsheet that exists simultaneously on multiple computers. Everytime a new item is added to this digital ledger, each computer runs a cryptographic algorithm that agrees (or disagrees) the new item is a legitimate transaction.
It is as if there were a hundred or more people in the room with you witnessing your transaction. What makes this process so exciting is it removes the need to trust an independent third party to verify this information.
Not only is the process decentralised, it is also completely transparent and immutable. Meaning that each addition to the blockchain cannot be reversed and the chain’s entire history can be viewed by anyone.
Before this system there was no efficient way to verify the ownership of a digital asset, especially if there were identical copies. Digital money was impractical, as anybody could simply copy a coin a thousand times and earn a thousand dollars. Digital files could be pirated endlessly with no way of telling which was the original and which was the fake.
Blockchain provides a solution to this problem. It is now possible to stamp our digital assets. The implications of this are far-reaching beyond finance, and have the potential to change the very fabric of our digital world.
The Four Disruptive Attributes of Blockchain Technology
Blockchain provides an unparalleled level of trust. Given the scale of existing peer-to-peer networks, it is near impossible to hack or alter an existing block of information on the chain. The Internet has a fraudulent and shady history, Blockchain promises to help ensure trust in a digital world.
Without any third parties moderating our transactions, reviewing contracts or verifying information, there is less of a chance of corruption or human error. Blockchain may also potentially disrupt existing institutions that make money distributing and verifying online transactions. Various startups have experimented in the space of digital advertising for example, with the potential to derail existing networks such as Google’s Display Ad Network.
As the process is automated, Blockchain may significantly reduce administration costs. The reliability of the blockchain process also better protects users from falling victim to fraudulent transactions.
Transparency is a crucial component in building trust. Blockchain allows consumers open access to review transactions. For example, this technology is being used by food manufacturers and distributors to allow customers to review the complete supply chain; where their product was bought, shipped, and even grown or caught.
Why Marketers Should Pay Attention Today
“What do you think you can do if you and your stakeholders could operate from a single immutable place of truth?”
– Phil Gomes, Senior Vice President of Digital at Edelman
Trust is a very important thing in marketing. To build any relationship with a potential customer requires trust in the company and product.
Blockchain can be used as a tool by marketers to strengthen the relationships between brands and their stakeholders. It can also help improve the quality of targeted advertising by securely sharing non-personally identifiable information with advertisers.
For better or worse, Blockchain also promises to disrupt the existing digital advertising landscape. Browsers such as Brave use blockchain based tokens like the Basic Attention Token (BAT) to directly reward publishers and users; whilst removing the need for centralised advertising providers like Google.
Finally, Blockchain reduces the risk of fraud, and will vastly improve the accuracy of the measurement and verification of ad delivery. Better quality data, informs marketing decisions and leads to better marketing results.
Disadvantages of Modern Digital Advertising (And How Blockchain Might Help)
1. Poor User Experience
Digital advertisements rarely hit the mark. Despite a wealth of data, many targeted advertisements are hit or miss. Blockchain may potentially help improve the quality of targeted advertising by improving the accuracy of the tools we use to measure and identify users online.
2. Lack of Privacy
Privacy is a difficult subject to tackle in the digital world. Many consumers do not trust their privacy is being respected.
Blockchain has the potential to better secure personally identifiable information, whilst simultaneously giving advertisers more detailed information about their target markets. The question of privacy and personalised advertising is a tough one, but with these new tools, we might just be able to have our cake and eat it too.
3. No Transparency
Currently, there is little transparency behind how the big movers and shakers of the digital world work. Users have little control or understanding how their information is being used.
Blockchain may be able to give users greater control over their own personal information, and also make it possible for companies to be more transparent in their operations, hopefully leading to greater trust between brands and stakeholders.
4. High Administrative Costs
The cost of verifying, distributing and operating advertising networks such as the Google Display Ad Network and paid social media advertising like Facebook Ads can be expensive. These centralised advertising networks rake in significant profits, whilst the publishers of content and the users themselves don’t typically make much profit, if at all.
Blockchain may disrupt this centralised advertising ecosystem. Browsers such as Brave, mentioned earlier, are able to remove all advertising. Instead, advertisers are able to use tokens to purchase advertising space which is equitably distributed amongst the creators of creative content and the users themselves. This is only one of many ideas surfacing to improve the administration and efficiency of ad delivery online.
5. Fraudulent Traffic
Fake accounts, followers and views are far too common in digital advertising. As powerful as our digital measuring tools like Analytics are, the data can often be inaccurate due to fraudulent behaviour.
Blockchain powered technology may potentially make it incredibly difficult, if not impossible, to get away with this kind of fraudulent behaviour. The result is more accurate data, a level playing field and an all round better user experience for consumers.
The Impact on Digital Marketing and Advertising
Thanks to Blockchain the future of digital marketing is looking to be more efficient, transparent and trustworthy.
Below we discuss various areas of digital marketing and advertising and some contemporary case studies and examples where Blockchain technology is shaping it’s direction.
Last year online paid advertising finally overtook television advertising in terms of annual spend. Paid advertising on AdWords, Facebook, Bing and LinkedIn (to name a few), is big money. In 2017 the estimated global spend on digital advertising was 229.25 billion US dollars, and is expected to rise to 335.5 billion US dollars by 2020.
However, most marketers act on faith that their advertising is actually getting in front of the right people. The auditing of metrics by companies such as Deloitte Digital is expensive and not 100% reliable.
Blockchain startups like Adchain and ConsenSys have teamed together to experiment with a Blockchain powered auditing services for ad delivery verification.
The decentralisation of services like digital advertising may also radically derail existing behemoths such AdNexus and DoubleClick.
AdEx are an example of an blockchain-based advertising exchange. This company, operating out of Bulgaria (with offices in the UK and Canada), are determined to change the advertising landscape.
“Advertisers pour their marketing budgets into an array of different networks and platforms, with most of them measuring different KPIs”, says CMO Vanina Ivanova.
“If an advertiser wants to double−check the data, they must rely on internal systems. This creates a perfect environment for advertising fraud, such as click farms, paying for invalid clicks/impressions, and the industry is taking advantage of it.”
“Bringing the blockchain into the picture allows for unquestionable verification of ad delivery, traffic and achieved results.”
Email marketing is still one of the most effective channels for brands to generate leads and reach out to existing customers. However, the amount of spam that people receive in their inboxes, has had a negative impact of the effectiveness of email marketing.
In the interest of creating targeted advertising, some companies are experimenting with the idea of monetizing our attention. Instead of advertisers paying distributors to pay publishers to promote their content, users and publishers may be paid directly for viewing advertising content.
An example of this is Earn, a company that are monetizing the email marketing and influencer process. Essentially, influencers list themselves on Earn and are rewarded in cryptocurrency for taking time to receive messages.
This pay-per-view model is also being experimented with by other companies and may be the future model by which email marketing is conducted. Given the power of Blockchain to make all interactions transparent, marketers are assured quality engagement with their target audience and users are rewarded for their time.
Obviously this model has drawbacks. However, it is an example of how this new technology is being used to empower the consumer.
Good public relations is all about building trust. Therefore, you can imagine how important Blockchain may potentially be for public relations professionals.
Corporate social responsibility is important, especially for larger companies. A lot of industries have made significant changes to their businesses to make sure they are working within an acceptable ethical and social framework.
However, winning the trust of consumers is more difficult. Luckily, innovators in various industries are using a blockchain to document every aspect of their supply chain. This level of transparency is helping companies shift their company image.
Take the example of how tuna companies are using blockchain to combat illegal fishing and generate goodwill.
As industries catch up with technology, it may be increasingly common for consumers to expect transparent records of their products and services. Blockchain makes this possible.
We are in a transitional period in history where we are at risk of losing our privacy in the face of ubiquitous technology. Some have even posited that we have already lost the fight for our own privacy. However the tides may be changing.
One of the greatest things Blockchain offers is security. Blockchain can be used to securely anonymise vast amounts of personal data, meaning companies can personalise their marketing without compromising individual privacy.
ICOs such as the Internet-Of-Things Chain (IOT Chain), are using Blockchain to anonymise data being picked up by household appliances, vehicles and other devices in our day-to-day.
IOT Chain is only one of many development teams around the world working toward securing privacy with Blockchain technology. More secure data means better quality data to inform our marketing decisions.
As Dave Morgan, CEO of Simulmedia said, “Blockchain ultimately anticipates we are going to see the future of publicness.”
In the same way that Blockchain is protecting our privacy in regards to consumer data, it is also allowing market researchers better tools in developing market research.
Many market researchers rely on online surveys and feedback forms. Testing the validity and authenticity of this data is important to getting relevant results. Blockchain gives us a more secure way to record and monitor this data.
The key issue for most not-for-profit marketers is targeting the audiences that willing to donate to their charity’s cause.
The recent influx of Initial Coin Offerings (ICOs) has made news, and recently have been banned in China as well censored on Facebook’s advertising network. However, this model of raising money for a venture, by developing a currency for it, looks to be a popular fundraising option in future.
The benefits of creating an ICO over conventional fundraising is the ease and speed by which funds can be raised. However, it comes with risks to consumers as there are currently no formal ICO auditing organisations.
For the time being, however, it is a growth area for not-for-profit marketers, entrepreneurs and development teams to target.
Businesses have typically been centrally and hierarchically structured. However decentralised business models are increasing popular. And now, with Blockchain technology, we may see a shift in the future of business operations and the way that agencies work.
One example of this is the Sydney-based ICO Krios that have developed a platform for businesses to source their own marketing teams. Much like Upwork or Fiverr, this platform allows you to hire whoever you want for any project for any period of time.
However, unlike these other platforms, Krios is built on Blockchain technology, and all agreements are secured through smart contracts. This extra level of security and stability has excited a lot of investors, with the ICO selling over 200 million tokens as of February 2018.
Krios is only one example of how Blockchain is impacting organisational structures around the globe; making genuine decentralisation more realizable than ever before.
This article has been optimistic about the potential of Blockchain to improve the condition of modern digital advertising. Unfortunately, the reality is that a lot of these changes are only just on the horizon and there are plenty of roadblocks still before this type of technology becomes universally adopted.
Mass adoption of a Blockchain based advertising platform, for example, would be very hard to realise. However, many large institutions and startups are all eagerly embracing the power of Blockchain. How this technology will manifest is still uncertain.
We hope this article has been helpful in translating Blockchain from a buzzword into something a bit more tangible. As you can see, Blockchain is a powerful tool with the potential to make our online experience safer and more efficient; as well as strengthen the relationships between brands and stakeholders.
If you are interested in reading more about how new technology is expected to impact the world of marketing, why not read this article on the effect of machine learning on digital marketing – The Definitive Guide for Machine Learning for Marketers in 2017.
Alternatively, contact our marketing consultants today about getting advice on B2B Digital Marketing.