We’ve all heard about blockchain in the context of cryptocurrency. But Bitcoin, Ethereum and Whoppercoin (yes, Whoppercoin) aside, how will this emerging technology affect the world of marketing?
Recently, I was contacted by a startup that needed help marketing their ICO (internal coin offering) for a personalized healthcare platform built on blockchain. I was more than intrigued by this venture and dug in to learn more about the underlying technology. In doing so, I began to understand that the benefits of blockchain go far beyond crytocurrency. In fact, I discovered a whole new world of emerging technology, start-ups and social benefits. I have to believe those who say blockchain may be the most disruptive technology since the advent of the internet.
Looking to my own field of expertise, I started to wonder – how will blockchain affect marketing and martech?
What exactly is blockchain? Why should I care?
While I’m sure that a number of blockchain definitions exist, perhaps my favorite is that by is that by Don & Alex Tapscott, authors of Blockchain Revolution (2016).
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but virtually every thing of value.”
Still confused? Imagine a shared spreadsheet, not unlike any the ones you may collaborate on with colleagues in Google Docs or Office 365. Now imagine that this spreadsheet is shared and maintained across thousands of millions of computers. There is no central data storage and everyone using the spreadsheet keeps it up to date. What’s more the change history is stored in blocks and cannot be changed, only built upon. If someone wanted to alter (i.e. hack) the change history, it would have to be altered on the majority of computers with access to the spreadsheet. This, in short, is the blockchain.
PwC also has a great infographic explaining how blockchain works:
Why should you care about this? Because it has three key advantages that are likely to revolutionize not only marketing, but a whole variety of disciplines.
First, decentralization. Because there is no central point of storage, everything is the same. Data is the same regardless of what computer is it accessed from and transactions clear in the same amount of time regardless of where they were initiated.
Second, permanence. Because blockchain technology is by nature unchangeable, it offers greater security. If one machine is compromised, it will not affect the rest of the computers accessing the blockchain. Also, as previous explained, if someone wants to change data, they would have to be able to change it in the majority of computers attached to the blockchain.
Lastly, equality. Because nobody owns or is in charge of the global blockchain as a whole, all participants have equal access to and are equally responsible for the blockchain. (The emphasis here is on the global blockchain – local blockchains can be run by a single entity who can select participants).
But how will blockchain disrupt marketing?
Given the relative newness of blockchain technology, the logistics of how this technology will impact marketing and the martech space are only now starting to be understood. However, the underlying principle of blockchain technology – that everything “operate from a single, immutable place of truth” points to three key fundamental disruptions.
- Improved transparency (and consequently trust): The level at which everything is documented and verified with blockchain should enhance trust not only between consumers and businesses, but also businesses and their marketing and advertising partners.
- The elimination of the Digital Marketing middleman: Blockchain technology will remove the need for an actor such as Facebook or Google to mediate between advertisers and websites.
- Stronger consumer control over their own data: Consumers will be the gatekeepers of their personal data; choosing what and what not to share with advertisers.
The applications of blockchain technology in marketing
The above sounds all well and good, but how can blockchain technology be applied to marketing in a tangible way? Again, given the relative newness of this technology this is something we are only starting to understand. While it has grown tremendously in the past year, the blockchain marketing technology landscape is still fairly empty.
However, there is one area in particular where the impact of this technology is more concrete and is being explored and furthered by groundbreaking startups and forward-looking companies – digital advertising.
Currently, the digital advertisement model is dominated by middlemen such as Facebook and Google. These middlemen control the vetting process, ad placement, transaction processing, and reporting, among other things. Advertisers and websites alike must trust that these middleman are acting fairly and upholding their end of the bargain.
What’s more, in this model users are completely at the mercy of these middlemen. Not only in terms of the ads that they see, but also in terms of the data that is collected about them and how this data is treated.
However, with blockchain technology this model is ripe for change. The Papryus Project and Brave are just three players who are making great strides in this area.
The Papyrus Project
The Papyrus Project is an open source platform that connects advertisers, ad agencies, ad platforms, verification vendors, publishers and end users via a token based system. In doing so, they aim to remove the ineffiency and cost associated with dealing with the middleman and ensure fairness in exchanges between all participants.
For example, the platform aims to give users control over their digital experience by allowing them to specificy the information they want to share with advertisers and the types of ads that they want to see. With no middleman to collect the profits, the users instead will benefit – getting compensation for their views of and engagement with ads.
The platform also aims to benefit advertisers and publishers by making the advertising process more transparent. No longer will advertisers need to worry about their ad spend being wasted on bots, theirs ads being served to the wrong audience or the accuracy of their performance data.
Brave and the Basic Attention Token
The Brave Broswer and the Basic Attention Token (BAT) aim to bring drastic change to the digital advertising marketplace. According to them, users, publishers and advertisers are all suffering. More specifically:
- Ads and trackers cost users as much as 50% of their mobile data
- Google and Facebook take 73% of all ad dollars – leaving publishers with only a small cut
- Poor targeting accuarcy, murky reporting, and fraudelnt traffic are all costing advertisers money
How does it work? In short, the Brave broweser blocks trackers while anonymously collecting user attention and engagement data. This data is used to determine the utility of Basic Attention Tokens. These tokens are used to reward users and publishers and can be used for premium content or services on the Brave platform.
The above graphic details the relationship between users, advertisers and publishers. As indicated, each actor receives benefits from this model. Specifically:
- Users: Attention is privatley monitored, ensuring data privacy. They receive fewer but better targeted ads and are rewarded with BATs for thier attention
- Publishers: Receive BATs based on attention. Because fraud (i.e bot traffic) is reduced, they receive more revenue.
- Advertisers: Better understand where their ad spend is going and can harness better targeting.
Digital advertising is not the only area where the use of blockchain technology is being experimented with; it just happens to be the most developed area. If you are interested in seeing other examples, you should check out Earn (email marketing) and fashion company BabyGhost’s use of VeChain (Brand storytelling and building).
What is the future for blockchain technology and marketing?
With trust in governments, businesses and NGO’s all dropping significantly in 2017, blockchain’s promise of transparency, fairness and privacy is certainly very attractive. Consequently, its use is being explored in a variety of industries, from banking and healthcare to manufacturing and more. This is reflected in the explosion of startups and platforms utilizing this technology. The blockchain marketing technology landscape alone has grown by 400% in less than a year.
While the future certainly looks bright for blockchain and blockchain marketing, there are some caveats to keep in mind. For one, while blockchain technology definitely makes it harder to commit fraud, blockchains are not truth machines. As Martha Bennet of Forrester research explains, “just because it’s on a blockchain doesn’t mean it’s true. If somebody makes a false declaration or . . . enters [data] into a blockchain-based system, it’s still fraud.” Secondly, the vast majority of these applications exist somewhere between the states of ‘currently undergoing alpha testing’ and ‘theoretically possible’. Without mainstream applications (and mainstream funding) it may take some time before the benefits of blockchain make it to the world of digital marketing.
That being said, I am choosing to keep a watchful eye on this emergent technology and the road it could potentially lead us down. While we can’t see over the horizon, we can make ourselves familiar with the various routes available to us. And just in case you’re thinking of keeping those blinders on and hitting the gas hard, I’ll leave you with a quote from Clifford Stoll, as a reminder that we’re surrounded by cliff edges.
“The truth is no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.”
— Clifford Stoll