The power of a distributed ledger. There are many reasons to invest the time now to understand the technology and begin exploring specific marketing applications for your industry.
Like digital platforms, social media, martech, fintech, and numerous other innovations, the spoils of blockchain may go to early adopters who commit mind blowing innovation.
Its transmission model reduces the costs of transactions, enables verification and efficient exchange of ownership, and opens the door to real-time micropayments. It may make it possible for payment frictions to shrink, intermediaries to fade away, and consumers to own and control their personal information. Here, we see the disruptive potential of blockchain in marketing.
The Marketing Impact of Near-Zero Transaction Costs
Today, financial transactions have considerable costs. Retailers routinely pay credit card companies 3% payment processing fees. Vendors using eBay and Shopify pay listing and sales fees, and consumers pay transaction fees on payment portals like PayPal. These fees increase the cost of goods and are generally passed on to consumers.
Blockchain technology allows for near-zero transaction costs—even on microtransactions. Financial corporations like Mastercard and Visa already offer the ability to send money in any local currency over a blockchain rather than swiping a credit card, taking advantage of the technology’s additional layers of security and transparency. On top of that, cutting intermediaries and connecting directly to the banks of both ends of each transaction can avoid most cross-border fees.
There are implications for marketers and advertisers as well. Today, marketers often try to access customer data by paying third parties (like Facebook) to share information. But blockchain could allow merchants to use micropayments to motivate consumers to share personal information — directly, without going through an intermediary.
For example, a grocery store chain with a mobile app can pay users $1 for installing the app on their phones, plus an extra $1 if they allow it to enable location tracking. Every time they open the app and spend at least a minute on it, the retailer can pay them a few cents or loyalty points’ worth of store credit, up to a maximum per day. During that time, they push deals and special offers to the user.
Ending the Google-Facebook Advertising Duopoly
A similar model could be used with website ads by compensating consumers for each page view. In 2016, HubSpot published a research study showing that most Internet users dislike pop-ups and mobile ads and see online advertisements as intrusive and negatively disruptive. An increasingly common response is to install ad blockers, a trend that is having a major negative effect on the industry. By 2020, it is estimated that ad-blocking adoption will cost publishers $35 billion.
Blockchain-enabled technology potentially allows marketers to recapture some of that revenue with a different model type: marketers pay consumers directly for their attention—and cut out the Google-Facebook layer.
According to Harvard Business Research, Blockchain technology will soon threaten the Google-Facebook duopoly in digital advertising. While keyword-based search will not disappear completely, it will become much less prominent.
Ending Marketing Fraud and Spam
Fraud verification via blockchain will also help verify the origin and methodology of marketers. Micropayments will also effectively destroy the current concept of mass phishing spam that dilutes marketing effectiveness for everyone.
Some 135 billion spam emails are sent daily, accounting for 48% of all emails. Spammers receive only one reply for every 12.5 million emails sent.
Blockchain could make it difficult for bots to set up fake social media accounts, flood users with deceptive messages, and steal online advertising dollars from big brands. Online authenticity is baked into blockchain technology. It will make the impact of marketing easier to track and marketing expenditures easier to justify — both are big wins for the profession.
As of 2016, $7.6B (or 56% of total display ad dollars) was lost to fraudulent or deceptive activity, which is expected to grow to $10.9B in the next few years. By using blockchain technology to track their ads, marketing teams can retain control over all their automation practices, ensure that marketing spend is focused on ROI-generating activities, and directly measure the impact of marketing down to a per-user, per-mail metric.
Remonetizing Media Consumption
Blockchain-enabled editorial content will likely allow companies to enhance quality control and copyright protection. Online content theft is a pervasive problem, and creators have little recourse to recoup lost monies other than expensive lawsuits.They will automatically and easily receive payments for content usage in the future.
In addition, the average person who creates viral content, such as much-watched videos or social posts, could receive compensation for every click. (Currently, they receive little or no money unless their work is shown on online channels with subscribers.) Content creators are empowered to produce relevant work valued proportionally to its success in these scenarios.
Better Results for Companies and Consumers
As blockchain goes mainstream, all intermediaries will need to adapt their business models. The decision chain will be structurally altered: Individuals will have more control over how they share personal information and spend their time interacting with advertisers. Their nature will stop spam and phishing scams—the more spam spammers, the more unsustainable they become from an economic standpoint. For companies, this could mean higher control over the quality of inbound traffic for all their marketing efforts and a much-needed improved understanding of customers’ behavior.
Blockchain technology holds the potential for societies to become more trustworthy and empowered, increasing visibility, connecting parties, and rewarding individuals for their contributions to transactions. These changes fundamentally impact marketing and advertising. Finding ways to design and implement measures to make blockchain-related transformations should be a priority for CMOs and all strategic, financial, and technological decision-makers. Operationally, companies may be able to build new levels of trust with individuals and ultimately connect their products and services with consumers in a manner and scale impossible to achieve without blockchain.
Marketing and technology leaders have the potential to leverage blockchain to reinvent their customer relationships. Early action on this far-reaching technology will put companies in the best position to benefit from what we think will be widespread adoption.
If you’re a business looking to leverage blockchain to scale your solution and make it market-ready, contact our Blockchain experts today.