What is blockchain and what does it mean for marketing?
Have you seen the term blockchain floating around in discussions of new technology, data and speculation about cryptocurrencies like Bitcoin? You might have thought that, since you don’t work in any of these fields, it wasn’t relevant to you. Yet the development of blockchain technology is beginning to have repercussions for marketers, and can no longer be simply ignored. Here are some definitions to get you started. We also give a roundup of the discussions about how blockchain is becoming important to a marketing strategy.
What is blockchain?
According to Investopedia, a blockchain is a ‘digitized, decentralized, public ledger of all cryptocurrency transactions.’ Transactions are recorded as ‘completed blocks’ and added to the chain in chronological order, thereby ‘allow[ing] market participants to keep track of digital currency transactions without central recordkeeping.’ Each computer connected to the network then receives an automatically downloaded copy of the blockchain.
An important element of this is that ‘the blockchain was designed so these transactions are immutable, meaning they cannot be deleted.’ Blockchain therefore acts as a permanent database. It ‘has complete information about different user addresses and their balances’ from start to finish, which can be distributed but not copied or edited.
Outside of the Bitcoin environment, this means that because blockchain is ‘a distributed database system, serving as an open electronic ledger, [it] can simplify business operations for all parties.’ This has resulted in interest from a diverse range of markets like music, Internet of Things (IoT) devices and even social services like medical records and vehicle registration.
The World Economic Forum (WEF) has also published a video helping to explain the rise and potential uses of blockchain. Highlighting the fact that blockchain ‘creates a record whose authenticity can be verified by the entire community,’ the WEF explains that many third party organisations that rely on transactions of trust may not be necessary in the future. Direct networks will be available to bypass these traditional regulations and procedures.
How could it impact marketing?
While the technology is well-established in a financial context due to the exponential rise of Bitcoin, commentators are only just beginning to explore what this could mean for marketing.
It could increase transparency and direct relationships
An article by Econsultancy interviewed three marketing experts who use blockchain to explore its potential uses. One of those interviewed was Barbara Soltysinska, CEO of indaHash, a platform which connects social media influencers with brands looking for user-generated content.
Soltysinska explained to Econsultancy that ‘we believe in a decentralized vision of the influencer space where brands and influencers can cooperate in a transparent and secure way [and so we have] decided to move to a blockchain based approach to achieve this goal.’ By connecting an influencer with a brand directly, any third party organisation such as a marketing agency is rendered obsolete in this transaction and replaced with a ‘user-friendly interface and technology’ built using blockchain technology.
While acknowledging that ‘people need time to understand the benefits of blockchain and implement them via good and easy tech solutions and to be comfortable with the process,’ Soltysinska believes that in time ‘the advertising and marketing world will observe a huge change in terms of transparency’ because rates and the cost of items will always be visible.
Measurement and ROI will become more accurate
For Forbes contributor Amahl Williams, Vice President at Boston-based Pluris Marketing, ‘blockchain will really hold ad delivery’s feet to the fire because there can be no fuzzy logic when it comes to confirming that a targeted person saw the designated ad for the defined duration.’ He argues that by using blockchain technologies, engagement and ad performance could be verified. This would allow marketers to ensure optimal frequency of viewing and avoid overserving individuals with their advertising.
While this level of measurement may sound daunting, Williams believes ‘the potential for truth and accuracy is huge and marketers should be excited about the potential for that level of targeting.’
Giving an example of how this could work, he explains: ‘a brand could identify ad deliveries from an ad server and release them to mining machines in the blockchain for analysis and fraud scrubbing. This will help identify ads that were delivered to non-live browsers that reported as active.’
At the moment, digital advertising is effectively controlled by giants such as Facebook, Google and Amazon. But blockchain could produce processes and marketing strategies that challenge this dominance. It can put control in the hands of brands, clients and agencies.
Sam Goldberg is the co-founder of blockchain marketing analytics agency KR8OS. Sam told The Drum that ‘with an accurate record of data, it is foreseeable that a day will come when all marketing resembles a fine-tuned machine rather than throwing a lot at the wall and seeing what sticks.’
Is anyone still clinging on to the notion that blockchain will not have an impact on marketing? It is becoming increasingly clear that this is not the case! Like all new technologies, the potential for disruption to the industry is huge. The full repercussions of which are not likely to be known for several years. Taking these changes into consideration now will help you to future-proof your strategy. Prepare your team to spot new opportunities for development going forwards.