Many people instantly think bitcoin when they hear blockchain or, more recently, Ethereum. But blockchain has an ability to disrupt that extends much further than the financial realm, and we are likely to see ripples of the effects of this technology in a broad range of applications including marketing.
What is blockchain?
It’s true that one of the more notable purposes of blockchain in the present day lies in cryptocurrency which is gaining more momentum and notoriety among banks and governments across the world. At the time of this writing, Microsoft has just announced the first blockchain consortium which is set to be held in Taiwan.
Blockchain, itself, however, is not strictly a financial technology, although that was the purpose of its creation. Blockchain is a “shared, immutable ledger to record transactions” according to IBM. The basis of blockchain is its peer-to-peer (P2P, just like BitTorrent) nature where everyone stores a copy of the information/transaction so that it can be checked against the other copies such that data which doesn’t match is considered invalid and is subsequently thrown out, making it very difficult to cheat the system.
In addition to everyone having a record, blockchain is made more secure by the fact that each block is timestamped and also sports serious encryption that is widely touted as unhackable.
This is where the name blockchain comes from, because whenever a transaction (money or otherwise) occurs, a block is added and distributed to everyone so their copy can be updated, creating a chain of blocks, or a blockchain.
Security Intelligence has proposed several novel uses for blockchain technology including photographers and other content creators ability to implement it in order to verify who has paid for the rights to use their photos or other work.
Since we’re clear on what blockchain really is, how will it affect marketing?
Take out the middleman.
One reason blockchain has been considered so disruptive in terms of financial technology is because it takes out the need for a trusted third party in transactions, a role banks traditionally serve.
The same can be said for marketing and advertising which usually employees a middleman to verify data.
Robert Allen at SmartInsights proposes that blockchain could cause serious losses for major advertising middlemen such as Google who marketers currently trust to verify the validity of ad clicks. (His article also contains a neat thought on pay-to-access content using miniscule transactions.) Of course, as he mentions, this leaves more money in the hands of those who are directly involved in advertising–the advertisers and site owners.
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There are also companies who work specifically in crypto-advertising such as HubDSP, a new offering from the company behind Bitteaser.
Brand Loyalty Rewards
Andrew Frank on the Gartner blog explains that blockchain could be a game-changer on the front of loyalty reward currencies because it can reduce costs and open it up to new markets for which the costs would have otherwise been prohibitive.
Marketers know the vital importance of customer loyalty, and being able to offer reward currency is a great way to keep customers in hand. It costs significantly more to gain a new customer than to keep an existing one, and returning customers also often spend more. According to Penefit which sells their own form of rewards program, it’s 5-10 times more costly to find a new customer, and a pre-existing customers spend 67% more on average.
For more information on worthwhile loyalty offerings, check out this post on the Hubspot blog.
Greater Personalization, Tailoring, Targeting
Just as marketing has always been moving toward greater personalization for the user, a value trade that is now a customer expectation for trusting us with their personal data, blockchain will push this trend even further.
With blockchain, huge amounts of data can be stored and verified about any given customer, and, of that data, the relevant portions could be shared with trusted brands to take tailoring and targeting to whole new levels according to Jean-Paul Edwards at Digital Marketing Magazine.
Data Verification & Protection
With great power comes great responsibility. As I mentioned earlier, users expect personalization for sharing their information, and marketers should not ask for information they don’t intend to use, because it increases the cost-of-entry and reluctance of potential leads and for no pay-off.
And, as above, our tailoring and targeting as marketers will be able to grow exponentially with blockchain, but a key to that sentence is that relevant information will be shared with trusted brands.
Trust. It’s a marketer’s best friend.
Trust, authenticity, and authority are things all brands strive for, and these values will become more relevant than ever with blockchain. Because blockchain involves a cryptographic system, users may choose to share their data anonymously or not at all if they find that your brand is not relevant to them or trustworthy enough. According to Dave Morgan at MediaPost, blockchain could make choosing the companies with whom we choose to share our buyer profiles and allow to show us ads “as simply as [we] order an Uber car.”
How else do you suppose marketing will change as blockchain becomes more mainstream? What will your company do to account for these changes?
Let me know in the comments below.