Blockchain and Marketing
We know the blockchain is the latest and fastest emerging technology, which will be a force to reckon with. I am a certified blockchain expert from Blockchain Council and currently pursuing an MBA from William & Mary. Working in the field of technology for more than 15 years, I can think of numerous ways where Blockchain can be applied. It can be applied in the financial sector, pharma industry, supply chain and many others. As I study for my MBA, I am considering ways Blockchain can be applied in various MBA streams. This fall I enrolled in a marketing class where I got an idea to write an article explaining an application of blockchain in marketing strategies.
Blockchain is a technology which is poised to disrupt the marketing landscape as the internet did 30 years ago, or for that matter, social media did around a decade ago. Distributed Ledger, which is the underlying technology in blockchain, has immense potential at various points on marketing value chain. We can think of various applications like smart contracts between brands and their advertising agencies to incentivize customers via micropayments. Blockchain has immense potential in revolutionizing the marketing landscape.
Martech Advisor(2019)mentions that the number of blockchain companies has increased between 2018, with 88 startups, to 2019, with 219 startups. This increase gives us the opportunity to leverage blockchain in marketing strategy.
There are several key terms and concepts to know in Blockchain Technology, and some of them are explained below (ERTEMEL et al. Dec. 2018, pp. 1–12. 35–44.):
Decentralization: Blockchain’s decentralized nature comes from its peer-to-peer network structure coupled with cryptographically secured technology and consensus driven mechanism.
Immutability: Blockchain is, by nature, immutable, in that once a block is verified, the stored data cannot be altered.
Trust Enabling: Seebacher et al. (2017) state that trust in a business context is the expectation that the counterparty behaves according to four principles of integrity: honesty, consideration, accountability and transparency. Blockchain’s foremost characteristic is its trust-enabling nature, which it achieves via the shared transparency it provides on transactions, the integrity of data present within the system, and the system’s immutable architecture.
Privacy: Blockchain promises to respect consumers’ privacy by giving them the right to control their personal data, thereby preserving their identities from being monetized by third parties.
Reliability: The peculiar characteristic of Blockchain that makes it reliable is that it keeps a shared, single reality of data across multiple locations across a network.
Smart Contracts: Smart contracts are lines of code that are stored on a blockchain and automatically executed when predetermined terms and conditions are met. Smart contracts are often self-executing, trackable, and irreversible and contain the terms of the agreement between the buyer and seller. Their self-executing trait eliminates the need for middlemen or intermediaries, hence smart contracts are an essential and unique functionality of the Blockchain.
Let’s look at some marketing areas where blockchain can make differences:
- Marketing is all about how we approach customer’s insights and how we position our brand according to that. The blockchain can gather, check, store and update vast databases of little human interventions. Since data driven marketing strategies are poised to be key priorities for brands, blockchain is the perfect platform to achieve this.
- With data breaches becoming more frequent, businesses need to prioritize protecting customer data. The introduction of GDPR in 2018 brought about stringent guidelines for brands when it comes to gathering and using customer data. Therefore, brands have been looking for solutions that would enhance customer data protection. Blockchain comes to the rescue here by enabling users to either anonymize their data or sell their information to brands they choose.
- Reward programs are one of the most obvious things in marketing to increase sales, and blockchain provides entirely different ways for applying rewards. The distributed ledger technology can be used to automate the payments on any scale, allowing brands to send micros-amounts of rewards to the customers. This will have massive implications, as instead of physical cards or online wallets that have limited capabilities, the amount can be directly and securely transferred to a customer’s account without involving a middle layer like banks. Customers don’t need to wait to cross a threshold of actions or transactions on interactions with the brand to receive monetary incentives no matter how small the interaction is.
- One of the major focus areas of blockchain technology in marketing is AdTech. This is one of the prime candidates for moving to the distributed ledger, which is transparent, secure and accountable, because there are many types of micro-transactions that go into managing digital ads.
- Reduced Costs: Block chain, as a decentralized and peer-to-peer technology, an enormous amount of costs can be cut down because we are essentially removing third parties from the equation due to smart contract execution.
- Audience Targeting: As marketers, we are very disappointed to see failed results of our marketing campaigns. By decentralizing the advertising ecosystem, brands can directly connect with the right publishers and take their message to the right audience.
- Increased Efficiency: Activities involving paperwork tend to be time-consuming and tedious. The involvement of middle layers, like banks for payment, causes further delays process. Blockchain tackles this problem by enabling transactions to take place in real time. Since the information is accessible to both parties, it is not necessary to maintain separate records. Again, the implementation of smart contracts facilitates immediate payment as soon as the terms in the agreement are met.
- Decentralized Applications: The rules are dictated by the owner of the applications. Since no single authority governs decentralized applications like blockchain, there is no “my way or the highway” approach.
Although Blockchain brings about new promises, there are potential threats to marketers. The modern marketing environment is evolving. For instance, customers are not merely consumers, but can take the role of value creators or brand ambassadors. To unleash this potential, brands have to change their perspectives and adopt new strategies that rewards all participants for their engagement in the ecosystem. While Blockchain will enable these concepts to become a reality, it is still in its infancy. Therefore, it will take some time until we see Blockchain-based projects in the mainstream. Blockchain technology might have serious implications for marketers, and thus needs further study. Still, Blockchain is a force to be reckoned with for marketers.