What Is Blockchain and What Is Its Impact on Marketing
Blockchain, the Internet, and Advertising
2017 saw an explosion in the prices of and consequently the public interest in cryptocurrencies. Bitcoin’s price skyrocketed over 1300% from January 1, 2017, to December 31, 2017. Bitcoin’s main serious contender, Ethereum, saw even more astounding gains of over 9300%. As the price grew, so did public interest, and businesses certainly took notice. Mainstream businesses have famously started to accept cryptocurrencies, and the free publicity for both the cryptocurrency world and the business has marketers wondering: will crypto affect my business? And if it does, how will it?
What is Blockchain?
The first thing to define is the technology itself. Blockchain is basically a network of computers (called nodes) that collectively process an open ledger of bank accounts. People call these bank accounts addresses, and many people store their information in specialized software called wallets. The most important aspects of cryptocurrencies are immutability, distribution, and decentralization.
Immutability means past transactions cannot be changed without changing the whole blockchain, but the nodes rely on a consensus and none will accept an altered chain. The decentralization aspect of the blockchain means there is no entity that can control it. And finally, the network is distributed around the world on different nodes, so there is always a copy somewhere, even if some nodes are destroyed or shut down by authorities.
So how does this affect marketing?
There are several potential problems with digital marketing today. The user base is fragmented, partially due to bubble worlds created by the advertising networks. Perhaps more importantly, users who have seen their privacy erode through invasive advertising techniques have started to fight back, installing adblockers in droves.
Websites dependent on revenue defend their advertisement networks by refusing to serve content to adblock users, which perpetuates a cycle of mistrust from the users already employing adblockers. Unfortunately, this only serves to exacerbate the problem.
In addition to the adblock issue and fragmentation, there is the issue of the middleman. One of the most touted goals of blockchain is to remove the middlemen, thereby increasing privacy and lowering transaction costs. For content creators, these transaction costs manifest in the form of being permitted to use platforms like Google and Facebook. But Google and Facebook take huge chunks of the revenue, flooding their coffers with cash while the content creators and their advertising teams are starved for income.
Even worse, these behemoth platforms operate for their own benefit under opaque or even hidden frameworks, leaving content developers in the dark about how a change may affect them until it already has. The recent brouhaha regarding YouTube monetization changes shows how much impact platforms have on entire communities, directly aimed at benefiting the platform itself and those at the top already. Blockchain can change this paradigm.
Cutting out the middleman will certainly increase revenues for the content creators and the advertisers who receive their income from said creators. Perhaps more interestingly, though, is the reduction of invasive advertising software. If consumers feel safe in visiting a site that won’t track them, they are more likely to allow advertisements onto their web pages. Most people understand that free-to-consume content is paid for by advertisements. Further, most people do not wish to deprive the creators they love of the revenue they deserve. However, self-preservation takes precedent, and for that reason, many users install adblockers.
One blockchain solution to the invasion and opacity of the platforms and advertising networks is to monetize interaction. When a user views or otherwise interacts with an advertisement, they can be paid for that interaction (in a cryptocurrency). Then, as the user gathers coins, they can pay their favorite creators directly with that currency. Since blockchains are public and transparent by nature, everyone knows which advertisements are recording information. Nontransparent ads will be shunned, but blockchain-connected ads will be allowed by users. Subsequently, the creators will receive payments for their efforts directly from viewers.
When will this become mainstream?
That is a good question. Technology moves fast, but social trends may lag behind. One of the most prominent projects to implement the monetization of ad interaction is the Brave Browser. However, with Google’s strong grip on browsers worldwide (under Chrome), it may take some time for this paradigm shift to occur. Not least because Google, an advertising company, will likely push back against the developments.