Napster pioneered peer-to-peer sharing for the music industry. While their methods were illegal, it paved the way for companies like Spotify and Skype. Digital marketing is used to change. And while disruption might cause inconvenience, it also brings opportunity. This newest disruption won’t just affect marketing but will apply to everything from finance to people getting married. In 2016 marketers saw ad-blocking begin to be the norm, and now at the culmination, we will see how blockchain affects digital marketing in 2018. Blockchain won’t be poised to make major disruptions for awhile longer, it needs mass adoption to really do that, but it continues to gain traction and marketers all see changes filtering in.
What is Blockchain
Simply put, blockchain is the ultimate peer-to-peer network. At its core blockchain allows information to be stored and distributed without being copied. Because of that blockchain has numerous uses, across a spectrum of industries.
Blockchain is often thought of in relation to finance. If blockchain is a public ledger, everyone can see the ledger and it is shared amongst all users. The data is stored in a chain-like configuration, where the transaction history s stored in ‘blocks’, and the people using the blockchain keep the ledger up to date. This ledger can only be built upon, never changed.
To change the history it would essentially need to be hacked. The ledger could only be changed if there was a change in the majority of participants. Looking at the number of people already using blockchain, this is nearly impossible. And will only become even more impossible the more people there are using it.
When everyone has the ledger it becomes decentralized. Compare that to your bank, where transactions are stored privately and are managed only by the bank. Blockchain exists outside of any bank or government. There isn’t a central authority setting regulations. Blockchain gets rid of the middleman, banks or other financial institutions, who take a fee.
ConsenSys gave a report to the World Government Summit highlighting three main advantages of blockchain:
- It’s decentralized. No center means everything is the same.
- Greater cybersecurity. Transactions are protected by the unchangeable nature of the ledger.
- No one is in charge. Nobody owns the blockchain as a whole.
Innovative companies are jumping on the blockchain bandwagon, and you’ve likely heard of at least one of them, Bitcoin. Bitcoin is why many people equate blockchain with finances. Bitcoin, like all cryptocurrencies, or new digital currencies, uses blockchain as a base. Digital currencies, so far, have been the major users of blockchain.
Cryptocurrencies aren’t physical coins or cash, instead, this digital currency is stored in a ‘digital wallet.’ The easiest way to think about digital currency is to think of it as a foreign currency. Like a foreign currency, the value Bitcoin is still affected by supply and demand, as well as world happenings and government policy.
In 2013 a single Bitcoin was worth about $7. Today that same single Bitcoin has been valued as high as nearly $18,000, the figure is constantly changing. But Bitcoin isn’t the only digital currency on the market, other cryptocurrencies include Litecoin, Digitalcoin, Peercoin, and Ripple, to name a few.
As marketers, it’s important not to pigeonhole blockchain as just Bitcoin. Remember, blockchain is a disruption that is here to eliminate the middleman. For advertising that means creating a much better value for ad campaigns. In finance cutting out the middleman means eliminating a bank, in marketing that middleman or central authority might be Google or Facebook. Cutting out the middleman could mean a decrease in costs and an increase in your profit margin.
One of the biggest obstacles that companies face is trust. It’s a marketers job to build trust in the product in order to sell it successfully. Something that helps build trust is transparency, and that is exactly what blockchain can offer. Walmart teamed up with IBM to make their supply chain process more transparent. They used blockchain to digitally take where their pork products came from, which in the end boosted the confidence of consumers in Walmart.
Another blockchain benefit for marketers is public accountability. Blockchain can be used to created digitized contracts. These contracts are made public and the company is easily held accountable by its customers.
There has been an increased focus on consumer identity concerns. And a few companies have stepped in to offer services that allow a consumer full control of their identity and transaction history, including uPort, MetaMask, and Keybase. With these services, marketers will have to earn the customer’s permission for their information in a completely new and different way. You could see where the customer charges the marketer for access to their data. It would be an entirely new way of doing things, but would also provide marketers with a unified customer profile.
Imagine a future where the marketer could end up paying the user to consume their advertising material. The email opt-in would be an exchange where the customer sets a price, for example, 0.003 cents, to read an email. The payment would be handled through a cryptocurrency like Bitcoin. In this future marketers would consistently be challenged to prove the value of their relationship to the customer and find new ways to engage with them.
A company that embraces emerging technology is one that other brands might want to copy. Start thinking in relation to your own company how blockchain affects digital marketing in 2018. Bitcoins are already being accepted as a form of payment by hundreds of companies, and there are many companies out there that already making use of blockchain for marketing purposes in a variety of ways.