Role of blockchain in marketing

There is a lot of confusion in people's minds as to the difference between blockchains and Bitcoins. Many mistake them to be one and the same.

But there is a massive difference between the two.

Bitcoin is a currency.

Blockchain is the technology that creates, tracks and manages Bitcoins, and all the other cryptocurrencies, for that matter.

At its simplest, blockchain is a virtual book for record keeping.

In accounting terms, a book that keeps all the transaction records is called a ledger.

Normally, an accountant or an accounting department enters the various transactions into a ledger and keeps it up to date.

Blockchain is a digital ledger of transactions, with all the associated details.

Did it happen? How much? When? What were the terms? While fundamentally the same, a blockchain is different.

Instead of one person or department maintaining a ledger, it is distributed to or shared with a community, members of which make it their task to validate and timestamp these transactions.

This is called a "distributed ledger."

Whenever a transaction happens, the entire community gets to see it.

That transaction is called a block.

Once a block in the blockchain is created, it cannot be tampered with.

It is called "immutable," and no one can alter the details.

If someone adds incremental data or other content to the transaction, it shows up as a new block, in full view of all the participants.

Therefore, because everyone in the community sees every block of the transaction, there is a high level of trust.

And the proof of the transaction is cast in stone (well, a digital stone).

The proof of the transaction is irrefutable and the transaction details are immutable.

For many industries, blockchains can be very helpful in increasing transparency and reducing the complexity of transactions.

Use of Blockchain Technology in Marketing:

Advertising Payments

The advertising ecosystem is opaque, filled with trust issues, allegations of kickbacks, fudging of data, and so on.

The Association of National Advertisers (ANA) commissioned K2 Intelligence to study industry practices a few years back.

Their findings were stunning-agency kickbacks from publishers were widespread.' Ad fraud was rampant.

Likewise, studies showed that only 60% of ad dollars paid by a brand owner goes to the publisher.

The rest goes to the intermediaries, whose job it is to count, verify, validate, and reconcile the numbers.

Between the brand owner and the publisher are a vast number of intermediaries at every stage who take their own piece of the pie.

As can be seen from the visual below, intermediaries include the media agency, the demand-side platform, the ad server, the ad exchange, the pre-verification platform, the supply-side platform, and the data validating/ verification platforms.

Clearly, when less than 60% of ad dollars go to the publisher, it is high time for the value chain and the ecosystem to be fixed.

And this is where blockchains can come in.

Advertisers should be paying only for those ads that have appeared legitimately and appropriately.

They need to know that their ad was viewed by real human beings, not by bots.

They need to know that their ad appeared on a real site, not a fraudulent site.

They need to know that their ad was clearly viewable.

They need to make sure that they get data back upon which they can make the payment.

Because of the lack of trust, the prevalence of fraud, and all the bad practices out there, they need a system they can trust and a system that brings in cost efficiencies by removing some intermediaries.

They will still need some intermediaries, but there are opportunities to cut out a few layers.

With blockchain technology, brands can have smart contracts with publishers and any essential intermediaries.

Each party will gain access to the same information of real impressions, as defined and agreed upon before starting the work.

They all can see what exactly is happening.

And the advertiser can then pay for exactly what was delivered.

They can save significant amounts of money, which can be put back into the business, instead of paying the intermediaries, or worse, paying for fraud.

Through blockchains, marketers can not only get a cost advantage, but they also get the much-needed transparency and accuracy of data.

And what's more, marketers can have a clearer picture of what is working and how well, so they can optimize their money allocation across various media channels or campaigns.

When they have full transparency, they can make the right calls.

In the absence of that, they may be optimizing, if it can be called that, based on incorrect information.

Blockchain is more secure than traditional accounting since the records are distributed across all parties.

If any of the participants' systems get hacked, the data is still intact for the rest of the participants.

To hack a ledger, the hacker has to hack every participant in the blockchain and every place where it is stored.

That makes the decentralised way of keeping the data far more secure than keeping it in a central place.

If blockchains are this good and this effective, surely they must be widely adopted in the ad space by now, right? Not exactly.

Not everyone in the ecosystem stands to gain as does the advertiser and the publisher.

For blockchain to really take root, the scale will be critical; this means a big portion of the media publishers and advertisers have to come together to build the blockchain ecosystem.

This is obviously not in the best interests of all the middlemen, because their roles and incomes will disappear.

But this is eventually going to happen, as it must.

Some companies like IBM have done some pilots with Unilever and MediaOcean.

Early results showed them that reclaiming 15-22 cents on the dollar within the next five years is a reasonable goal.

The global online advertising market is worth $333 billion, according to eMarketer. So, savings could run about $65 billion (estimated).

The rest of the marketing value chain

Like advertising value chains, there are other value chains in the world of marketing, such as the postproduction value chain, packaging value chain, promotional value chain, influencer value chain, and so on.

There are opportunities across each one of these areas.

The simple rule of thumb is this: any process with multiple intermediaries, concerns of transparency, the deficit in trust, prevalence of fraud, need for validation or proof of transaction, and reconciliation of numbers is ripe for blockchains.

Hence, blockchain technology is in the best interest of the advertiser and publisher and since these two are the most important parties in the advertising value chain, blockchain will take root in marketing sooner than later.

That’s it for today folks!

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