Unless you’ve been living under a rock, you have heard the word “blockchain” a lot lately. But what exactly is it, and why should marketers care about it?
A blockchain is basically a shared online ledger.
The magic of blockchain is in its tracking system that records, processes, and verifies transactions in one place and then distributes the information across the entire network system. Various players within the transaction chain confirm each step.
Blockchains are made up of blocks (aka the records), hashes (the unique identification code), and chains (databases that house the information.) When a new transaction is created, it gets verified and stored as a block. The block gets encrypted and assigned a unique ID code (hash.) The blocks of information are secured together, encrypted, linked to the previous transaction (chains), and cannot be altered. The transaction information is available to blockchain users, but the identity of the users remains cloaked.
There’s a lot of buzz about blockchain technology eliminating all the middlemen. Because the blocks are interlinked with each other, two parties can transact with each other without the need for third-party verification. So far, this is proving to be very useful for marketing analytics and incredibly lucrative for marketers who do a lot of paid advertising.
What kinds of blockchains are there?
There are three main types of blockchains: Public, Private, and Consortium. As you can imagine, Public blockchains are open. Private are closed. Consortium blockchains are a combination of private and public. All blockchains provide a non-centralized, transparent series of checks and balances to verify each step.
What are the benefits of blockchain for consumers?
Data security. No matter how much they promise you otherwise, medical institutions, travel companies, credit bureaus, eCommerce companies, etc. get hacked. Your personal data gets compromised, and you become vulnerable to identity theft, phishing, fraud, and harassment.
Increased transparency, accessibility, and data protection.
Enables you to store and distribute digital information without the fear of data breaches.
More ownership/choices of your data.
Peace of mind. Less fraud. Proof of authenticity of items. Vital insight/information into a company’s integrity and standards. More corporate responsibility/accountability. (For example, if a company makes the supply chain an issue, they will have to back it up.)
Lower costs. This is touted often, and there are some solid examples. With that said, the premise is that sellers will pass on their savings (from reduced ad dollars and expenses) to the consumers. Perhaps this will happen in some industries, but I suspect most of the money will be cannibalized somewhere and not likely returned to the users.
What are the biggest negatives of blockchain from a marketing perspective?
Expensive. Right now, the costs are prohibitive.
Consumes too much energy. (The whole energy discussion would take up the rest of the space on the internet at this point. It’s a thing.)
Where can blockchains be used in Marketing?
Marketers can use blocks to securely store information like customer data, financial transactions, quotes & contracts. (Having direct access to the data is far more interesting than I am making it sound.)
SEO. Especially keyword tracking.
Reduce click fraud. (Ad impressions on the Blockchain are completely transparent.)
Improved monetization of data. (This will also help you determine proper incentives by user.)
Preventing payment fraud. (Yes, this is more of an Operations thing, but it does impact your orders.)
Combining all your data into one centralized, secure location (this is especially applicable for large companies with many brands, divisions, etc.)
Where do you see them most in Marketing?
Paid advertising. Eliminating click fraud. Improving keyword tracking. Decentralizing social media. Improving lead quality.
What’s the secret reason why marketers are scexcited (scared + excited) about the blockchain?
There are many reasons, but will they still be secret if I tell you?
Marketers are, as you say, scexcited because the more control individuals have over their information and the process, the more transparent you need to be.
Through blockchain, individuals can choose which of their data to share with whom. Consumers will no longer be the product.
Right now, a middleman owns the data. I go to REI to buy a new tent (clearly a hypothetical scenario); who owns that information? REI? Yes. Everyone else and their pet pig involved along the way? Yes. Me? Do I own my data? That’s a hard no. In our current situation, it seems like EVERYONE but me owns MY information.
You already know that your actions are tracked when you search, buy online, like or comment on a social post, watch a video on Tik Tok, and so on. Everything you do, watch, click, and buy is tracked and sold. Not only have individuals become commodities, but we also have no control over our data. We can’t delete it. We can’t change it. We can’t stop its distribution. (It’s so sweet when people tell me that they “delete” all their history – as if this isn’t the ultimate exercise in futility.)
Blockchain gives individuals more control over their data. As a company on the blockchain, you can’t just pull data from someone without asking for permission or reimbursing them for its value in some way, shape, or form. This latter part is what many groups are hoping for – if I want to send you a newsletter, I need to ask you how much (or what) I need to give/pay you to accept it.
Is blockchain bad or good for marketing?
At this point, you might be thinking… If you’ve ever taken advantage of Google, Bing, or Facebook advertising, why on earth would anyone think blockchain is good?
It’s a fair question.
Blockchain is good for consumer protection. Short-term, this might be a pain for marketers, but it will likely prevent us from a bunch of new (and even more stringent) laws and regulations. (That’s a VERY good thing.)
It’s also good for transparency. With blockchain, if you want to see exactly how the sausage is made, you can. Buy a new phone, and you’ll know where the phone was made, what kind of working conditions were in the factory, how much workers got paid, etc. You’ll also find out if your phone is authentic, if the version you’re ordering has issues, and so on. Transaction ledgers are open to public viewing. (In the interest of full disclosure… Some of these items are yapped about as “happening in practice right now” even though they’re mostly in the concept phase.)
I get it if you’re not terribly excited about either of those things from a business perspective. Chances are that you will be thrilled about how blockchain is changing how your ad dollars are spent, however. These days, approximately eleven bazillion middlemen are involved in every ad. Slight exaggeration? Perhaps. But if you’re spending money to get traffic, you know it’s just awful.
Blockchain eliminates all that drama by creating trusted and verified chains from the ad dollar to the end user. Companies already using this are seeing tremendous (no hyperbole) savings due to dramatic reductions in fraud and more bang-for-their-buck spend. With blockchain, you get more insight (and frankly oversight) into your keywords, tracking, and buying journeys. The blockchain also verifies that a REAL human – not an automated bot — saw your ad as agreed/specified in your media contract.
You get cold-hard facts about EXACTLY where your ads have been placed, what ad an individual clicked on, and how that individual engaged with the ad. No more of this huge “unknown” bucket that you’re just supposed to smile and accept – with blockchain, you FINALLY get the receipts. It’s important to mention that full-transparency placement also allows you to choose better where your ads are being shown. This is important to many companies now; even the biggest ones have trouble getting accurate details. Blockchain changes this.
For many marketers, getting data straight from the consumers and the improved data capture is worth the drawbacks of blockchain. Better information about customers and their propensity to buy leads to better targeting of your marketing efforts and increased conversion. Proper tracking leads to improved attribution and more efficient spend.
Are you using blockchain? Have any tips you’d like to share? Or perhaps you have questions about blockchain and Marketing? Tweet @amyafrica or write email@example.com.
A Down-and-Dirty Definition for Marketers (read more about these here.)