Digital marketing can be a complex business, especially when it comes to advertising. Convoluted processes, a lack of transparency, numerous intermediaries between advertisers and consumers, and advertising fraud all combine to make marketing an expensive and sometimes wasteful effort.
Against this backdrop then, it’s not surprising that companies turn to new technologies and protocols like blockchain to simplify the landscape, improve consumer trust, and bring down advertising costs.
This article assumes that you know a little about blockchain and are interested in how it might be used in digital marketing. If they materialize, the following three possibilities can certainly prove transformative. They can potentially usher in new revenue and operating models for advertisers and publishers, and perhaps rekindle the interest of consumers who turned indifferent to online advertising.
Buyer personas can be pretty accurate these days, but they are still like composites constructed from snippets of data gleaned from disparate sources. Furthermore, the methods of gathering data for persona creation are questionable, since centralized data storages can be compromised, whether through hacking or unintentional data leakage.
Blockchain removes the need for data-collection intermediaries between brand owners and consumers by holding the data encrypted in a distributed ledger. This way, it eliminates all the major security and privacy concerns that are currently troubling marketers and consumers.
With security worries minimized, marketers will be free to incentivize consumers to provide personal details directly. Meanwhile, consumers will have control over how much or how little data they provide. With these incentives creating a win-win process of data collection, many consumers will be happy to provide detailed information about their buying habits and preferences.
Once that data is gathered, marketers will be able to create truly accurate buyer personas based on the data collected directly from the source, while consumers will have complete visibility of the process. It’s a perfect formula for laser-targeted marketing, considering that the cost of consumer incentives will be offset, at least to some extent, by removing the need to buy data from vendors.
Does your company run pay-per-action digital advertising? If so, you probably know there are a number of intermediaries between your ad publishers and consumers. Of course, you can’t remove publishers from the equation, but by establishing blockchain consortium networks and using smart contracts to manage transactions, it will be possible to remove intermediaries that currently sit between your company and the publishers.
For example, the typical role of organizations like Google is to build trust between advertisers and publishers. In return for “service”, these organizations take a slice of the revenue from every ad you serve through their networks.
A blockchain network enables trust between ad buying participants without any intermediaries. For instance, smart contracts can be implemented to ensure publishers will serve an agreed number of impressions, and that you as the advertiser pay the appropriate sum when the obligations are met.
A further advantage of blockchain-based advertising systems is the absence of vulnerability to fraud. About 20% of all digital advertising expenditure is lost to fraudulently represented results. Given this fact, security will surely be a major contributor to ROI for companies implementing decentralized digital marketing.
If digital advertising is so ineffective as some reports suggest, it can only be because ads are unnoticed, or ignored, or even actively avoided by consumers. In fact, it appears to be a combination of all these factors.
As marketers joke bitterly, consumers are more likely to climb Mount Everest or be accepted to Harvard rather than to click on a banner ad. Though not really serious, such statements do reflect some consumers’ distaste for digital advertising. However, blockchain can change that.
The truth is that digital ads are unpopular with many consumers. According to the research by HubSpot, almost 50% of people who click on ads do so by mistake or claim that the advertiser tricked them into clicking. Consumers often use blocking software to try to avoid exposure to digital advertising, a situation that has prompted advertisers to respond with digital ad-blocking countermeasures.
Blockchain and associated concepts, like basic attention tokens (BAT), can solve many of these problems. Instead of trying to circumvent ad-blocking software, brand owners will have the option to incentivize consumers to view their advertisements and to share their personal data based on blockchain-supported trust.
This way, consumers will have a reason to view ads again, and with better-quality profiling brand owners will be able to shift from the “carpet bomb” ad-serving approach towards precise targeting. This means consumers will only see ads that are most relevant to them, at the point when they are most receptive to advertising messages.
Consumers are no longer over-served with advertising with blockchain. This will make them more willing to share data—both as a result of incentives and improved data security—and will prompt them to click on ads to receive meaningful incentives. With tokenization creating the scarcity factor, the value of incentives will only be increasing.
As a result, consumers will become more engaged with brands and their offerings, and higher ad exposure will also raise conversion probability. Additionally, if your brand uses blockchain to highlight the sourcing ethics and provenance of your products, you can increase trust in your brand, as well as enthusiasm for your advertising even further.
While this article presents an optimistic view of blockchain as a disruptive force in digital marketing, the consultants and blockchain developers from transition make a point that these solutions are still a work in progress.
Beyond cryptocurrencies and some other financial applications, blockchain protocols are still at the embryonic stage. Therefore, take the ideas outlined above as what may be possible, not as a certainty. There are still challenges inherent in bringing blockchain to digital marketing, like interoperability across platforms and networks.
As we have seen in other digital innovations though, breakthroughs can come quicker than expected. So if your brand is to benefit from being an early mover, you will be wise to look beyond the challenges and start considering what your blockchain-driven digital marketing strategy might look like.
