Marketing is about to get disrupted and the disruption will be significant. To give a sense of just how significant, it will likely be on the scale of how broadcast television introduced advertising to the monoculture or how the internet made advertising interactive. This latest sea change has already begun and it is coming in the form of blockchain.
For those not familiar — and to be fair, it takes some intellectual legwork to wrap your head around it — here’s a quick primer. As our lives increasingly transition to the internet, blockchain is a means of collecting a variety of different interactions online in real time. These ever-growing collections of data are called blocks and each block contains the data from all the blocks that preceded it forming a chain — hence blockchain. These blocks are both encrypted and decentralized across a network of computers to ensure the data they contain cannot be tampered with. Blockchain and Bitcoin aren’t the same thing. Bitcoin is a digital currency, and blockchain is the data that underpins it.
There are three primary implications of blockchain adoption. The first is efficiency — blockchain allows for direct transactions between two parties thus negating the need for any third-party intermediaries. The second is attribution — blockchain keeps a running ledger of all digital assets and transactions, thus making a permanent and traceable record. And last but not least — transparency. Because the blockchain exists across a decentralized network, everyone on the chain can see every transaction immediately as it occurs.
Anywhere data is stored or online transactions are made will be touched by the adoption of blockchain. In other words, just about every industry will be impacted and marketing is no exception. Here are six implications that are likely to take hold in the very near future.
1. Fewer Ads Online
Currently all online transactions are processed by a third party, like Paypal, and these businesses charge a fee to cover costs and make a profit. But with blockchain you can transfer any amount of money in digital currency, no matter how small, at without a third party added cost. By facilitating micropayments, many are predicting a new revenue model for content creators wherein rather than pay for content with attention — in the form of seeing ads — people will exchange small amounts of currency for the content they consume in an ad free environment. Essentially, it’s the Netflixification (copyright pending) of the internet.
2. Online Impressions Will Be More Valuable
“There’s at least 20 to 30 percent of waste in the media supply chain because of lack of viewability, nontransparent contracts, nontransparent measurement of inputs, fraud and now even your ads showing up in unsafe places.” This was P&G CMO speaking at the International Advertising Bureau’s annual leadership meeting earlier this year. Fortunately, blockchain looks to solve almost all these issues. With blockchain a buyer buys an impression, which is encrypted in a block, and then broadcast to every single participant on the chain. The impression is verified by the publisher, then added to the ledger. Everyone in the blockchain gets to see the impression event and approve it. Total transparency means brands can trust that their ads are being seen by the intended audience which in turn means impressions become more valuable.
3. People Own Their Data — Not Facebook and Google
Facebook and Google currently stand as the undisputed giants of online advertising. The duopoly accounts for roughly 60% of digital ad spend in the US — but that is likely to change. Because blockchain technology can distribute consumer data to the entire network, it will no longer need to be kept on secure company servers before being put up for sale to those with a relevant interest. Furthermore, because the data is decentralized, it does not require a central authority to ensure its integrity. These factors combined reduce the role that companies like Google and Facebook play when it comes to storage and verification of consumer data. In other words, marketers will have direct access to data providing individuals permit us to access it.
4. Higher Efficiency and Lower Fees
One of the macro implications of the adoption of blockchain technology is the widespread streamlining of cumbersome process and red tape. As such, many back office and supporting functions that marketers now use to get jobs done will be less time consuming and costly. For example, today we might hire a vendor and negotiate a price and a timeframe, then when the contract expires, we come to an agreement with the vendor on what has happened, and then we are billed. We approve the invoice, send it over to accounts payable, and thirty days later, our vendor gets paid. With a smart contract — code that triggers an action if pre-determined conditions are met — on a blockchain network, all of this can be automated. The foreseeable and logical net outcome of short-circuiting or automating so many of these daily processes could well be a reduction in agency fees.
5. Expanding Talent Pool
The preponderance of part time and contract employees has been on the rise for years but this trend is likely to be jumpstarted as blockchain technology becomes widely adopted. A decision to have a full-time versus freelance employee is based on efficiency. So as smart contracts become more and more advanced, a decentralized network between companies, freelancers, and even crowds can become seamless and efficient with agreements that are automatically generated and executed. With technology supporting easier coordination and collaboration, the cost of having a contractor do a job will likely fall below cost of the full-time employee.
6. Transparency Will No Longer Be Optional
With the widespread adoption of blockchain, it’s not difficult to envision a world wherein most — if not all — actions made by a company will be verifiable. Everything from product sourcing to charitable donations to investments will have verifiable proof within a network built on blockchain. Because everything is readily verifiable, consumers will come to expect a deeper level of transparency into certain company activity. In a world with growing expectations that brands will adhere to a set of values and ethics set by the consumer, people will expect a clear line of sight to whether these standards are being upheld. Brands that fall short of these expectations will be punished and those that meet them will be rewarded.
*Written with Zach Kula