In this third of three parts, we’re going to go over how blockchain stands to disrupt digital marketing by bypassing the middleman while offering new ways for consumers to interact with content.
|Read Part I||Read Part II|
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
– Satoshi Nakamoto
Bitcoin: A Peer-to-Peer Electronic Cash System
On October 31, 2008, Satoshi Nakamoto published the original 8-page white paper establishing the first decentralized cryptocurrency, bitcoin, and its underlying technology, known as blockchain. Who is Satoshi Nakamoto? No one knows.
Bitcoin has since made headlines forging a new frontier in banking and investment as a tradable digital currency that, as yet, appears to be too volatile to offer real value. However, the invention of blockchain, the distributed ledger database that houses bitcoin, is set to disrupt several industries. Digital marketing is just one of them.
One of the most compelling developments that could disrupt digital media will likely be micropayment transactions. Because third party systems such as Paypal have cumbersome digital and financial overhead, they don’t lend themselves well to small transactions. Using cryptocurrencies, marketers can pay users for consuming content through micropayments of around just a few cents. Micropayments are already afoot in the news industry. Imagine a subscription fee which could be reduced based on the amount you consume. The more you read, the more exposure you would have to a site’s advertisers, so it could be worth compensating you for your time. Also, what if you got paid to click on an ad, not just Google? So, if cryptocurrency can solve a few inherent problems, micropayments could become a real game changer in digital media.
Search Engine Marketing (SEM)
Website owners with available advertising space could register their sites with specialized blockchains from which advertisers could then purchase the space, eliminating the broker. Transactions could be executed in micropayments, bypassing the Google Display Network. The advantage is direct negotiations between users on both ends who are verified and appropriate to each other coupled with reduced cost. In the current paradigm, it’s not unusual to see ads served up on inappropriate sites – a very expensive problem for both parties.
Transparency & Accountability
Blockchain is based on an open distributed ledger in which all parties can see all transactions. This offers an opportunity for digital media participants to build trust by being completely open and honest in their online dealings. Customers can pull back the curtain and peer directly into a brand’s ad purchasing behavior. Companies that claim not to market age-restricted products, such as alcohol, tobacco and firearms, to those under age could offer proof by using blockchain ad exchanges.
Much is made of the lack of control that consumers have over the use of their information. Systems have already been developed that use blockchain to give the user far greater power in dictating who can use their personal data and what they can do with it.
Live on the Bleeding Edge
Early adopters of blockchain will likely be seen as thought leaders in their market areas.
Are We Getting Too Excited?
LUMA, an investment bank specializing in digital media and marketing, said at their State of Digital Media Summit 2018:
Blockchain is arguably the technology with the most upside because it has applications across almost every facet of the marketing equation. However, blockchain still just remains as an interesting idea and not much else beyond experiments and proof of concept projects.
Blockchain: So far, there is scant evidence of practical application. “Blockchain’s main attraction is its distributed ledger which tells everyone everything and thus presents the opportunity to reduce inefficiency or cheating. However, its Achilles’ heel is the need to keep every participating computer updated with everything all the time, and that’s too slow for a real time world,” states Adam Smith, GroupM’s Futures Director.
From the research I’ve done so far, it’s my belief that blockchain will find many applications beyond cryptocurrency. Its overall trustworthiness will likely outweigh its performance issues. I can foresee its use for records systems of all types that require a higher degree of verifiability, such as medical records, professional certifications and even voter registration, to name a few.
Blockchain is an idea that will find its way. I remind the doubters that some very smart people once thought the Internet was just a fad. You can Google that.
Thanks so much for taking the time to delve into blockchain and digital marketing with me. I hope you’ve enjoyed this series. Feel free to leave a comment. I’d love to hear your thoughts and ideas. Let me know if I’ve sparked your imagination.