Could blockchain marketing practices disrupt the entire industry? Learn how blockchain technology works and the benefits and challenges it introduces for marketers.
Combining marketing technology with blockchain records could completely reinvent the advertising and media-buying industry, but challenges and volatility make it unclear where, exactly, this path would lead marketers.
Blockchain technology essentially operates as a complete and publicly viewable ledger that permanently tracks and records activities for a particular asset. Each block of data written on an event is a “link” in a chain that stretches back to when the asset was created. This data is 100% complete, transparent, auditable, and largely incapable of being tampered.
All of these capabilities could provide huge benefits to marketing, including:
– Supply chain transparency, both for ad inventory and physical goods
– Ad click verification and fraud prevention
– Complete (but anonymized) consumer behavior data
Through bitcoin, the first decentralized digital currency, blockchain has already introduced a radical way to transfer currency and verify its value without relying on centralized institutions of authority. That same transformative capability could upend current practices in the marketing world. A recent survey found that 88% of marketers see promise in blockchain to disrupt current practices in a positive way.
However, current challenges and the sheer unfamiliarity could make its adoption dicey. Just 15% of marketers felt that they could explain the technology to their clients. Additionally, large companies cultivating walled gardens of owned data might not be eager to see their current dominance disrupted.
So, while the technology for widespread adoption may be a few years off, blockchain could soon take marketing in new directions that inflict lasting changes on the martech landscape as we know it.
What exactly is blockchain?
Blockchain starts with an initial creation of an asset with a unique identity that has value. Blockchain records do not have to apply to just cryptocurrency, but it does track assets with a currency-like value that moves around, such as:
– A good created
– Bitcoins created by exchanging government-backed currency
– An advertisement created for a campaign
Every activity the asset takes is then added to an encrypted data “block,” e.g.:
– Coffee beans going to a distributor
– A purchase made using bitcoins
– An ad displaying on a website to a user
– A user then clicking on said advertisement
In this way, blocks of logged events form a chain that can let you track every activity concerning an asset. If U.S. currency used blockchain, this capability would be the equivalent of following a single dollar as it changed hands across the country.
Activity logs in a block are created by authors under an individually issued private encryption key. A public encryption key makes this log visible to all, and once an activity is logged, older ones cannot be edited or deleted. Public access allows people to confirm legitimacy of each log made through “mining,” and it can help weed out fraud, such as a single bitcoin being used multiple times for different purchases.
Since everyone has access to the blockchain and can complete this verification process, blockchain creates decentralized and distributed data sets. Everything is verifiable and transparent, and no data is “owned.”
How can blockchain be applied to marketing?
Blockchain’s ability to create a permanent, distributed record and circumvent institutions of authority could have profound positive effects on the marketing landscape. Some of the benefits marketers and the brands they represent could obtain include:
No Middlemen Needed for Media Exchanges
Studies show that middlemen in ad exchanges regularly take in around 25% of a transaction value in fees. When looking at certain walled garden publishers, the take can increase to as much as 70%.
Blockchain could enable direct ad exchange buys between publishers and advertisers, eliminating the need for middlemen in many instances. Rather than relying on a centralized third-party authority to be accountable, the blockchain record could verify media activations instead. This monitoring instills trust in the system without having to have each player necessarily trust each other.
Click Verification and Fraud Prevention
The same tools that simplify and add transparency to media buying can reduce the concerns and costs bad actors introduce to the system. Click bots wrought $7.2 billion in fraudulent ad costs last year.
Blockchain record-keeping and independent verification shines a light onto traditionally opaque media buying practices, where intermediaries can manipulate inventory and reporting to grift hundreds of thousands of dollars worth of ad impressions. The blockchain system could also potentially indicate when an ad wasn’t served because of ad-blocking.
Data Tracking, Monitoring, and Sharing
Marketing industry players could potentially monitor use and sharing of owned data through a blockchain registry. While the registry itself is publicly viewable, the data assets attached could feasibly remain private.
Comcast has already formed a coalition with NBCUniversal, Cox, and Disney to facilitate this type of sharing. The resulting collaboration could help achieve industry efficiencies while facilitating strategy, measurement, planning, and even consumer privacy.
A New Way of Managing Consumer IDs
With blockchain, consumers could be assigned an anonymized identity record to track their activity across the internet. This log could reveal customer journey data and identify individual impressions or conversions with absolute certainty.
Consumers could even be potentially paid for their engagement with ads. Their activities could generate currency, like one called the Basic Attention Token, anytime they willingly view an ad. This arrangement has the potential to disrupt the advertiser / publisher dynamic as we know it.
Brand Differentiation Through Blockchain Use
Not only can blockchain technology reconstruct martech, but its capabilities can also help companies achieve more transparency and trust from the public.
For instance, one premium designer handbag company is using blockchain to verify authenticity and track each item’s journey through the supply chain. Consumers gain peace of mind, and the brand builds strength and prestige with its customers.
Blockchain technology can confirm media impressions to ensure that only brand-safe white-listed sites are used as requested by cautious advertising brands.
What are the challenges to blockchain marketing?
Despite the promise of blockchain, it also introduces many challenges that will slow its ability to penetrate the marketing world and achieve the positive disruptions as promised or predicted by advocates.
– Technology still cannot keep up with the pace needed for verification, especially as blockchains get bigger. Confirming a transaction can take up to a few minutes, which makes it unsuitable for processing real-time advertising transactions at its current stage.
– Many large tech companies may not want to break down barriers to their walled gardens.
– Distributed nature of blockchain files could still open systems to vulnerabilities, potentially enabling identity theft or fraud as a result of persistent hackers.
– General inertia in the industry, combined with a lack of regulatory infrastructure, could mean fragmented adoption that can make the promised functionality deprecated — or even impossible.
No matter where the technology goes, bitcoin and other early adopters have broken the seal on blockchain use. Consumers, agencies, and disruptors will be keen to push forward with blockchain advancement to seize the opportunities they envision.
Marketers will need to stay alert as these disruptions come — including the possible challenges and drawbacks they introduce — to prepare themselves for a possible future where blockchain is a standard practice.