Can blockchain solve some of marketing’s biggest problems?
The lack of transparency, fraud, brand safety and privacy are costing marketers billions each year. In a recent WFA webinar, R3's Greg Paull explained how some marketers are experimenting with technologies like blockchain to close gaps in the process.
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The lack of transparency, fraud, brand safety and privacy are four areas that are costing marketers billions each year. Consider the following:
- 71% of marketers in 16 of the biggest global markets agree that it has become more difficult to evaluate the effectiveness of digital media investments in the last five years.
- Video ad spend might have constituted only 45% of total ad spend in 2018, but it was targeted by 64% of all ad fraud.
- In 2019, e-commerce sites are estimated to lose $10 billion to cyberattacks and bots.
It’s safe to say that these problems won’t be disappearing any time soon and marketers need to proactively find ways to protect themselves and their customers. Having good security hygiene and conducting regular audits should already be part of any company’s strategy to identify vulnerabilities and minimize the impact of fraud. Some marketers, however, are experimenting with technologies like blockchain to close gaps in the process.
What is blockchain?
Blockchain technology is a sequence of data blocks which provide a public ledger of every step of a financial transaction or data exchange. Each block in the chain has an alphanumeric key which contains information about all the preceding blocks. Any attempt to change the chain is recorded in all the linked blocks, thereby providing a high level of transparency and security.
How is it used in marketing?
R3 reviewed more than 200 blockchain vendors to find practical applications in marketing. Programmatic, Data, Commerce, Decentralized Marketing, Social Marketing and Content Marketing were identified to benefit from blockchain as they rely on digital transactions to transfer, verify and process information, and as a result, are susceptible to being manipulated.
Here are a few practical examples of how blockchain mitigates common problems in these six areas:
- Programmatic: The difficulty in manipulating data stored on a blockchain ledger is what makes it such a powerful tool against ad fraud. Bots whose job is to imitate identities and artificially boost views and clicks will have their activity recorded, allowing administrators to prevent similar types of behaviors from repeating.
- Data: Marketers can review past behavior on a blockchain ledger to determine current opt-in status and identify where there might be GDPR compliance issues in their marketing and communications processes.
- Social Marketing: By using smart contracts built on blockchain technology, fees can be kept under warranty until influencers meet all agreed obligations. Once the project is completed, payments are automatically transacted; protecting the interests of both client and vendor.
- Commerce: Smart contracts can also make payments between advertisers and publishers more streamlined and transparent. Financial transactions need not be delayed and money can be transferred instantly based on real-time data.
- Decentralized Marketing: Ad platforms that incorporate blockchain technology enable marketers to pay and reward consumers directly for engagement with ads or use of their data.
- Content Marketing: Ownership of images and video can be easily traced to their original source when marketers use content marketing platforms built on blockchain. Creators can track the distribution of their assets and be fairly paid for use; alleviating concerns about copyright infringement.
Should you introduce blockchain into your marketing ecosystem?
Though companies like Unilever, Coca-Cola, Mastercard and Danone are exploring blockchain-based platforms, the technology is not for everyone. Blockchain is very much a new solution to old marketing problems. It can improve cost and operations efficiency by removing the need for third-parties to be in involved in financial transactions, email, or other kinds of advertising. It can give brands direct lines to consumers, and boost trust by forcing brands to respect data privacy rights. What it cannot do is to give you an understanding of why these issues might be happening in the first place.
How to get started?
If blockchain is a technology your brand would like to explore, here are three things to do:
- Conduct an audit: Blockchain is not a panacea for poor process. The first step in deciding if blockchain-based platforms will add value to your operations is to identify your risk quotient.
- Evaluate the vendors: Only 5% of blockchain vendors we reviewed have been in business for 10 years or more. 20% have only been in business since 2018. Selecting a vendor with expertise as well as business sustainability and technical longevity is important.
- Test the technology: Will the results be worth the investment? Create an area in your business where innovation can show what’s its capable of and expose what might need fine-tuning. Through this method, blockchain could turn out to be just one element within a wider solution.
This opinion was written by Greg Paull, Co-founder & Principal of consultancy group R3. Watch the WFA webinar with R3 here.