With Web 3.0 on the horizon, marketers are beginning to realise that there’s much more to blockchain than Bitcoin.
While the potential for blockchain was first explored by cryptocurrency pioneers like Satoshi Nakamoto, the developer of Bitcoin, the use cases for blockchain technology are growing exponentially.
As adoption of blockchain accelerates, the technology will present some significant opportunities and challenges for marketers. The ways in which we collect customer data and advertise to them are likely to change due to blockchain - and by preparing for these changes now, you can ensure your business can seize the benefits of blockchain technology.
What is blockchain?
Put simply, a blockchain is a chain of blocks that contain information. Each block contains data, and is chronologically connected to the blocks behind and in front of it.
The data that’s stored inside a block depends on the type of blockchain. Bitcoin is perhaps the most well-known use of blockchain, and when used for Bitcoin, each block stores information on a transaction.
Once data is recorded inside a blockchain, it’s very difficult to change it. It is a distributed ledger, which means that it is open and accessible to anyone. And whenever new data is added, a new block is created and verified by the owners of the previous blocks. This makes blockchain an incredibly secure way to store digital information.
As blockchain technology can be used to record and distribute any type of digital information securely, it could have a range of uses - and benefits - for marketers.
How can marketers benefit from blockchain?
When it comes to using blockchain in marketing, there’s a real opportunity for marketers to…
Build trust with their customers
Since the introduction of the General Data Protection Regulation (GDPR) in 2018, data protection has been a key concern for marketers and customers alike. It was designed to create greater transparency around how businesses collect, control and process their customers’ personal data.
Yet a 2021 survey by KPMG revealed that 40% of customers still don’t trust companies to use their data ethically - and 13% don’t even trust their own employers. Savvy customers know that although many businesses simply use customer data to tailor their marketing to them, some companies still sell data to third parties, which can lead to customers suffering from spam at best - and identity theft at worst.
Blockchain is changing the way companies can access customer data. An excellent example of this is the open-source platform Stacks, which uses blockchain technology to enable customers to keep hold of their own data.
Many apps require users to submit their name, email address and other data before they can use the app, and the business behind the app then holds this data on their server. Stacks holds the customer’s data on blockchain, using it like a key to unlock apps when needed and returning the data to the user as soon as they are finished using the app.
At first glance, reduced access to customer data may seem like bad news for marketers. But by giving customers greater control over how and when they share their data, marketers can use blockchain to build real trust with their customers. The open-source, immutable nature of blockchain means that customers can see exactly how their information is being used, which should be good news for any reputable marketer as it means they can prove that they can be trusted with their customers’ personal data.
Improve the quality of their leads
Giving customers greater control over their data also doesn’t necessarily mean that marketers will need to resign themselves to having less data on their customers. On the contrary, those who think outside of the box could stand to really optimise the quality of their customer data and use it to secure more leads.
Today marketers typically rely on the data provided by cookies, but with Google set to block companies from tracking customers through third-party cookies, it’s time for marketers to find new ways to collect customer data. Fortunately, blockchain technology enables marketers to go directly to the customer for data collection - but how will they convince customers to share their precious data?
The answer lies in incentives, and there are a range of incentives brands could provide to encourage customers to share their data. Brands can use blockchain to set up smart contracts - programs that run when a set of pre-determined conditions are met - with their customers.
So they might send a prospect a ‘micropayment’ when they subscribe to their newsletter, for example. A retailer may send exclusive discounts to those who download their app, or provide loyalty points to those who enable location tracking.
This means that rather than relying on cookies, marketers can gather data directly from their customers - and the customers will benefit from receiving the incentive, which is likely to generate a positive association with the brand. Customers will be incentivised to provide accurate information as they know they could receive a reward for it, which means the data marketers provide should be more accurate than it is today. It’s a win-win situation.
Maximise their ad budget
Another area in which marketers can gain from blockchain is by utilising it to bypass online advertising middlemen, maximising their advertising budget in the process.
Google and Facebook currently dominate the online advertising space, with their advertising revenues totalling $209bn and $115bn respectively in 2021. Most marketers rely on these two powerhouses to deliver their ads, despite their service being far from infallible - a study by Forrester found that 69% of brands that spend over $1 million per month in ads lose at least 20% of their budgets to digital ad fraud.
Blockchain can be used to cut out the middlemen, enabling brands and websites with advertising space to work together directly and reducing ad costs immediately. And as all transactions on blockchain are open source and accessible to all, marketers will be able to track exactly who clicks on and interacts with their ads.
Using blockchain for advertising therefore has two key benefits for marketers. Firstly, it should help them to prevent ad fraud by quickly and easily identifying when interactions come from fake apps, bots or phantom clicks. Blockchain enables them to see the source of these fraudulent interactions and blacklist these sources to stop any more of their budget being wasted.
The increased transparency into who has interacted with their ads - and exactly which ads they have interacted with - should also give marketers greater insight into which messages and creatives are resonating with their target audiences. They can use this information to optimise their online advertising campaigns and ensure their budget is used as wisely as possible.
Seize the benefits of blockchain for your business
As a Web3 marketing agency, Cognition can help your business to realise the benefits of blockchain in your marketing team and beyond. If you’re interested in building blockchain into your marketing strategy, get in touch with our team today.