Blockchain — Upcoming Applications in Marketing
Blockchain refers to a distributed ledger that allows for data to be tracked in a way that is decentralized and continuously updated. Commonly associated with payment system applications such as Bitcoin, blockchain technology actually has a myriad of practical applications, grounded in its key benefits of providing transparency and the removal of centralized administrators or in some cases, intermediaries, for transactions. With smart contracts based on a decentralized network, and the ability to facilitate a token-based ecosystem for incentives, blockchain technology is on the cusp of drastically disrupting the current digital marketing landscape. Key areas to look for change will be a revolution in reward sharing, the way customer data is collected/used, changes in the processes involved with advertising spend, and more!
I. Blockchain Payment — Rewards & Direct Transactions
Many businesses currently use loyalty point programs or offer gift cards to customers that can then be redeemed for future purchases. This can incentivize consumers to complete transactions in the future and can also be used to build brand loyalty. Blockchain technology can be used to automate payments at any time to customers, by having a constantly updated and regulated distributed ledger that bypasses the need for third party intermediaries such as banks and credit card companies.
This could be used to create online wallets, where any identified brand interaction can be rewarded with a monetary incentive. Take for example, makeup retailer Sephora. The current loyalty program allows customers to collect points for each purchase and earn rankings as Beauty Insiders, VIBs, or Rouge members. Accordingly, customers get access to birthday gifts, makeovers, free shipping, early access to products etc. Sephora successfully built a strong loyalty program, where at any given time, customers could have hundreds of dollars worth of points that they have yet to “cash in”. Blockchain tech could move the tracking and reward process completely online, making it easier for immediate account updates and individual milestone “rewards”.
Similarly, e-commerce and card-less payment can be grounded in blockchain based payment methods — a concept already in action with Radpay, a start-up that allows for direct transactions from consumer to merchant and vice versa. Convenience and security are key elements of blockchain based payment — and could one day be implemented at all levels of B2B and B2C commerce. For marketers, this can have large implications for everything from advertising spend to interaction with end consumers via loyalty/rewards program.
II. Customer Data Collection
Hyper-personalization, customized experiences, and data-driven marketing revolutionized the way that marketers work — often at the expense of customer privacy, but with the promise of curated content for specific audience segments, as based on their personal data. Blockchain technology can be leveraged to gather, store, and automatically update consumer data. This can then be used to develop segmented, and more accurate consumer insights.
From a consumer perspective, blockchain is the solution to privacy infringement. Customers regain control of their personal data and who has access to it. Currently, we often willingly hand over key information such as our email, phone number, address etc, to make purchases, create online accounts or otherwise engage with a company whether online or in-person. Once this data is relinquished, we might be personally marketed to (a whole other debate that can be discussed), but this personal information is also then often available to be resold.
One network called Blockstack pushes for a “user owned internet” that gives “users direct ownership of their internet assets and protect(s) user privacy”. The network uses blockchain-verified digital signatures so that consumers “own” their personal data, rather than releasing it to various servers. Visiting a website or using an app becomes a user-controlled experience, where upon leaving, the site/app cannot keep a record of who visited the website and when. The digital ID becomes a key that the user has control over, and that they then remove when they leave the digital platform. Rather than a permanent log, user information becomes a key for digital entry, with the lock re-locking once the user leaves.
For consumers, this is a breakthrough in privacy. For marketers, it is almost like being brought back to square one because the un-regulated data grab would now be restricted. Terrifying, perhaps, but very, very close to reality. Without access to extensive user data, our current process of customer data collection will have to be completely redesigned. Rather than broad information about all users, data would have to be directly provided by customers.
How to mitigate this?
An application of blockchain technology that could be used to both collect customer data for marketers, while protecting user privacy, is the proposal of a value exchange model where users can provide data in response for control over the type of content/ads they would like to see.
The Brave browser does just that — through the use of Basic Attention Tokens (BATs). Through this model, advertising spend is based on a token that monetizes the value of online attention, rather than ad space. Users opt into viewing ads and receive BATs for the ads that they interact with. Brave and BAT combats the current monopoly over digital ads by big names like Google and Facebook, by allowing advertisers, publishers, and even users to trade on the actual value of attention rather than the potential for attention and interaction in a given ad space. By bringing users into the fold, and working with a tangible measure for attention, the digital marketing landscape would be revolutionized, and perhaps in doing so, become a more accurate reflection of the targeted audience’s interest and campaign performance than ever before.
So, who does this benefit and how would it work?
1) Advertisers — Get better and more accurate data on ad performance and audience targeting. Transparency limits the potential for publisher-based fraud, where overspend is falsely “rationalized” based on overestimates for user interaction in a specific ad space.
2) Publishers — Have more control over the ads they display, publishers are compensated by both users and advertisers, and there is potential for charging users BAT premiums for further opt-in and subscription-based content. Publishers continue to receive ad spend (via BAT) from their advertiser clients, but this is now partially split with the end users.
3) Users — Receive fewer, more personally relevant ads without relinquishing extensive amounts of personal data. Think hyper-personalization without the invasion of privacy on personal data. Users’ BAT compensation is a portion of the advertiser’s spend, in exchange for the now monetized value of the users’ attention.
III. Transparency within the Advertising Supply Chain
The distributed ledger structure through blockchain allows for a transparent, verified history of all transactions. For marketers and advertisers, this can have multiple purposes along the advertising supply chain.
Customers can receive verified information about the manufacturing or distribution products of products.
Was sweat-shop labour used to make that cute denim jacket? Are those coffee beans really fair-trade?
When companies are increasingly being held accountable for their actions, and corporate social responsibility is becoming more commonplace as an expected practice rather than a trendy buzzword, this verification can check off boxes for the eco-conscious consumer. Now, both the tangible quality of products and the behind-the-scenes processes can factor into purchase decisions. For advertisers, blockchain can also simplify the ad buying/selling process, can help get more specific audience targeting, and can mitigate risks of fraud in the ad supply chain.
Ad Buying/Selling — Currently, major advertising platforms such as Google Ads, Facebook Ads, and third-party publishers monopolize access to digital advertising space. Advertisers and publishers are restricted to the metric equivalencies in ad spend that are provided by the major ad space vendors when making a digital ad-spend decision. Blockchain makes it easier to track genuine clicks, impressions, views etc, with a transparent record of all interactions. This allows advertisers and publishers to see for themselves what the “going rate” would be in terms of expected metrics for a specific amount of ad spend.
Audience Targeting — Blockchain tech can be used as a filter for automated campaigns, to ensure that only audience members that meet certain criteria will be able to see an ad. This could potentially allow for ad spend to be allocated towards people that are further along the purchase decision funnel, or those who based on certain activity and behaviour characteristics, are more likely to qualify as leads for future purchases. The associated metrics for audience engagement would then also be more valuable, because they would be indicative of actual potential customers.
Fraud Mitigation — The importance of blockchain tech for fraud mitigation can be seen when considering how such technology could have prevented the 2015–2016 data inflation scandal based around fake bot traffic and inflation of video metrics. After a class-action lawsuit, social media giant Facebook admitted to overstating video-viewing metrics on their platform over an 18 month period from 2015–2016.
Advertisers accused the platform of overcharging them for Facebook ads based on inaccurate data. The basis of the suit arose from Facebook removing video views that lasted less than 3 seconds, which accordingly skewed data to reflect higher average watch times. The class action lawsuit argued that Facebook inflated average watch metrics by up to 900%. This would have impacted advertisers’ perception of campaign performance. The transparency and verified authenticity of using blockchain would have mitigated such a risk, by providing open-access data to the advertisers about the actual performance of video campaigns on Facebook — i.e, there would have been no way that average watch times could have been inflated so extensively, and that performance could have then been skewed so much.
Blockchain: The Future of Marketing & Advertising
While blockchain is often associated with financial-based applications, the potential for marketing applications is bound to completely change the marketing and advertising landscape. The core benefits of transparency, advances in customer data collection, and the potential for changes in rewards-based systems all make blockchain a unique and potential-laden technology that will be sure the disrupt digital marketing as we know it.
