13 June, 2018
As the marketing world slowly catches up with emerging technologies, we will undoubtedly see growth in the industry. The increasing worldwide interest in blockchain, and the growing number of governments and major companies adopting the technology, indicates that blockchain is here to stay. And if current trends continue, its impact will certainly be felt in online advertising as well.
What is blockchain technology?
The term “blockchain” is an apt descriptor: blocks of data are linked (or “chained”) together via a public digital ledger that runs on a decentralized peer-to-peer network. All information on the blockchain is public, verifiable, and unchangeable, secured by cryptographic hashing. The most widely-known use of blockchain is for cryptocurrencies like bitcoin—for which the technology was originally designed—but because blockchain can be used for so many other applications, its value lies in its structure.
Not having a central authority as the main repository of data means that every individual is on a level playing field. When it comes to online marketing, advertisers and consumers alike would have access to the same data, and consumers could maintain control over what personal information they’re willing to give out publicly.
The potential impact of blockchain
Google, Facebook, and Amazon are at the forefront of digital advertising today. Each of these platforms operates as a walled garden, with exclusive data and creative formats that only work within the platform itself. Without an incentive to work together, these major companies will undoubtedly maintain their closed format that inhibits innovation and collaboration.
If blockchain technology were to be implemented in a universally accepted manner across media platforms, advertisers could see how users behave online—and the exact path they take—enabling greater accuracy in ad targeting and personalization. Large corporations and individual media platforms would no longer be the gatekeepers to this information. Most importantly, the anonymity of the data in turn would alleviate consumer concerns about privacy and prevent personally identifiable information from reaching the wrong hands.
Issues within the industry
The online ad industry suffers from an accountability problem. A marketing company can show you a report that says your ad was liked by 5000 Instagram users—but that doesn’t always mean very much without solid data to back it up. Are all those users real people? How active are they on the site? What kind of friend and follower networks do they have? If you don’t know anything about the users who like your ads, you’ll have little opportunity for follow-through or valuable conversions—and sometimes you can even be duped by bots. That’s where blockchain comes in.
With blockchain technology, marketers can validate the information of users with complete transparency. By being able to confirm how many of these “likes” are from real accounts, they can get a clearer picture of their reach. Blockchain effectively cuts out any middleman that was once needed to validate these figures. And by offering a more transparent platform, the technology could make influencer campaigns more profitable for all parties involved.
In addition, marketers can decide with greater accuracy where their ads are placed and who is really in the audience they are looking to reach. They can monitor ad fraud by making sure real consumers and user profiles are engaging with their advertisements instead of automated bots. Blockchain can also offer more precise ad engagement tracking, leading to more accurate results and analysis.
Too many ads that lack effectiveness
Another major problem in digital marketing is the number of ads that overwhelm consumers on a daily basis. Many companies send out several different ads to a single user every day by email, simply because they are not privy to enough information about their consumers and are left grasping at straws to try and connect with them as best they can.
In one survey, it was found that “94% of marketers don’t have a single view about their consumers that could have facilitated cross-platform continuity.” This has not only led to a disconnect between marketers and their consumers, but has also failed to answer some of the most fundamental questions in advertising: what, when, where, and how. The problem is commonly seen in instances where you book a flight and continue to see ads for that same flight three days later. That particular ad is wasted on someone who has already taken advantage of the deal, but there’s no data to show the marketer that it’s a waste of time.
Blockchain technology can prevent ads from being seen or over-served to any one consumer, which would help ensure that the optimal ad exposure for each target consumer is met more accurately. Studies have shown that four to six ad exposures per consumer is optimal if a brand or company wants the highest chance to sell its product or service. Because of the limited amount of data available, though, it has been nearly impossible for companies to meet this goal effectively.
Taking security and transparency seriously
Utilizing smart contracts with blockchain could create a level of transparency and tracking that has yet to become available to brands. Smart contracts are essentially automated “lawyers” that are put into place when a connection between two or more parties is established to make sure everyone is following the guidelines that were agreed to in the relationship. Using smart contracts also builds a bond of trust between all participants—especially since it cannot be changed after the fact to benefit one party over another.
The more information a consumer is willing to share with a brand, the more accurate an ad campaign can be. One of the major reasons consumers fail to give enough information is due to lack of trust that it will only be used by that brand and not sold to third parties or otherwise used for anything other than its original intent. Using blockchain’s ledger to enhance security and accountability can help brands build trust with consumers, resulting in a higher willingness to share information.
Consumers have also expressed that they are more willing to share information with companies if they are given something they can use in return. By using blockchain to gain insight and access to consumer information, brands and marketers can offer consumers a look at how their data is currently being used. Going one step further, brands can allow consumers to see how their data will be used in the future as well. By allowing consumers to have more input on what happens to their information in terms of advertising, marketers can actually gain the upper hand over their competition.
Offering consumers something more tangible is also possible. For example, at VeriToken, our platform allows users to be compensated with cryptocurrency tokens for providing access to their own verified information on the blockchain. There are various different applications for this framework—from job recruiting to online dating and even health information exchange—but improving online advertising is one of the most visible for consumers’ everyday lives. The advertising industry is long overdue for an overhaul, and we believe blockchain is the technology that will transform the arena and usher in new levels of accuracy, security, and transparency for all.