WHAT BLOCKCHAIN COULD MEAN FOR MARKETING
Companies are collecting more data than ever before, and are making significant business
decisions based on it. Of the 4 Vs of Big Data (Volume, Velocity, Variety, and Veracity), we
have now seen ample evidence of the impact and importance of the first three. A higher
“Volume” of data has led to more efficient decision-making in numerous instances, such as
in programmatic marketing and in banking. Research has shown how leveraging high
“Velocity” data — such as data from mobile devices — has unearthed knowledge that has
helped firms better understand their customers. The significant potential of high “Variety”
data — data that is unstructured in the form of text, images, videos, and so on — to make
better predictions has been documented in numerous academic studies. But what about
issues related to the accuracy, reliability, and transparency of the data itself, which basically
comprises the fourth V, “Veracity”? In the field of data-driven marketing, an answer to
addressing this limitation lies in blockchain technology.
In recent years, a major pain point for brands and advertisers has been the lack of
transparency and accountability in being able to ascertain how their ad dollars have been
spent. Digital advertising is complex, because ensuring that the media that was purchased
was actually delivered as it was intended, is non-trival today. Ad fraud is pervasive, and costs
marketers and publishers a significant amount of money. Forrester reports that as much as
56% of all display ad dollars were lost to fraudulent inventory in 2016. And the cost of ad
fraud globally is expected to increase to $50 billion over the next decade. A recent study into
the state of programmatic advertising revealed that 79% of advertisers surveyed expressed
worries about transparency, with over a third regarding the lack of visibility on third parties
as one of their key concerns. It’s why we are increasingly hearing that major brands
like P&G have cut their ad budgets, because their media agencies failed to give them the
transparency they needed.
Blockchain can make data-driven marketing more transparent by validating and analyzing
every consumer’s journey through verified ad delivery, confirming that a real person saw the
ad as per the specifics of a media contract. Marketers will able to control how their assets are
delivered by monitoring exactly where their ads are being placed, alleviating ad fraud from
automated bots by ensuring that real followers and consumers are engaging with their ads,
and ensuring proper ad engagement tracking that will lead to more precise digital attribution.
Another fundamental pain point in the mobile economy is experienced by consumers.
Companies are overwhelming their customers with too many ads, emails, coupons, and
messages. The reason they send out a dozen different messages is that they don’t know much
about consumer preferences, as astonishing as that might seem in todays’ data intensive
economy. The current practice is often akin to throwing a dozen darts in the air and hoping
one will hit the bullseye. A survey of brand and agency marketers revealed that 94% of
marketers don’t have a single view about their consumers that could have facilitated cross-
platform continuity. Therefore, there’s a disconnect between consumers and marketers with
respect to what people want, when they want it, where they want it, and how they want it.
This problem manifests itself when you see that same display ad for a hotel following you
from one website to another, even though you already made a booking for that hotel two
days ago. Blockchain technology can prevent the same display ad from being over-served to
anyone, ensuring the optimal frequency of ad serving for each consumer. Studies have
shown that when it comes to the impact of frequency of ad exposure on consumers’
propensity to buy, anywhere from four to six ad exposures is optimal. However, it has been
nearly impossible to deliver on this optimal goal due to issues of data quality (the fourth V).
A smart contract on blockchain can fix this by providing a level of tracking and transparency
that is currently not available to brands.
If consumers share more of their preference information, brands will know more about them,
which in turn will increase the relevance of their messages and decrease the frequency of
advertising. But for some consumers, an impediment to sharing information with firms is
often a lack of trust with what firms might do with that data. Blockchain’s inherent ledger-
based transparency can help companies build trust with consumers. We have seen ample
evidence of how consumers are willing to share their data with firms in return for better
offers from the companies they regularly patronize. Their revealed preference is that they are
more than willing to part with data to gain something of tangible value. This implies that
brands who have earned consumer trust and who offer a relevant, value exchange will be
given greater access to personal information. The advent of blockchain technology offers
tremendous potential for mitigating such consumer concerns by giving consumers a
transparent look at how their data has been used by marketers and advertisers. This will likely
give rise to markets for consumer data that will not only give users a transparent look at how
their data has been used by advertisers, but will also give them more control over how their
data should be used. It also has the potential to allow newer ad tech vendors, such as telecom
providers like Verizon and AT&T, a credible chance to compete against the likes of Facebook
and Amazon.
All this said, we are a still a while away from actual implementation of blockchain by the ad-
tech ecosystem. The key roadblock that needs to be fixed is the speed of transactions.
Because of its distributed nature, where transactions are verified by “miners” around the
world, blockchain generally takes between 10–30 seconds to validate transactions. This
means that as of today, it cannot validate ad-tech transactions (that occur in milliseconds)
fast enough. So ad tech vendors will have to aggregate ad transactions into one block to
create a single transaction, but of course that reduces transparency. In the short term, brands
will likely use blockchain as a post-campaign layer to validate and authenticate transactions,
not in real-time, but after-the-fact. However, this is still a vast improvement over current
practices.
Despite its speed limitations, blockchain will change the data-driven marketing business
landscape.
