Over the past year, blockchain has received a lot of media attention. As the technology that underpins digital currencies like bitcoin, it’s not hard to see why. However, away from the press hype and fanfare, there is an abundance of business and technology professionals working on blockchain-based projects.
Towards the end of 2017, mentions of blockchain in quarterly reports and conference calls were at an all-time high. A recent study by Juniper Research found that 57% of large corporations were either actively considering, or in the process of implementing the new technology. Interest and investment is only expected to grow. By 2022, the blockchain market is forecast to be worth approximately $14 billion (Netscribes, 2018).
Clearly, blockchain has a bright future, but why does it hold such promise and what does it mean for the marketing industry?
What is blockchain?
Put simply, blockchain technology allows a network of computers to host a shared database that contains a record of all information on the network. Information is recorded in blocks, secured through cryptography and copies are made and distributed. Unlike traditional networks, this process creates an unalterable chain of information that doesn’t require a central point of authority to manage it.
It’s this same network that allows users to transfer bitcoin across the globe without relying on traditional intermediaries, like a bank. In bitcoin’s case, the blockchain records transaction data, however many data types could be recorded, such as publishing information, ad impressions and product supply chains, to name but a few.
Marketing’s transparency problem
In 2016, the Association of National Advertisers (ANA) shed light on a number of transparency issues in the US ad industry. Major creative agencies were found to be marking up media by up to 90% – buying media on their own behalf before reselling it to a client. It’s no wonder, therefore, that only 29% of World Federation of Advertisers’ members are satisfied with agency transparency (Venture Beat, 2017).
Meanwhile, ad fraud is becoming an increasingly serious problem. Click fraud is the top concern among brand marketers and media buyers (MyersBizNet, 2017). And they’re right to be concerned. Are You a Human, a company dedicated to identifying fraud, found that 58% of Internet traffic is driven by bots. This resulted in $16.4 billion of wasted advertising revenue last year, according to WPP.
In addition to transparency issues, marketing is plagued by consumer mistrust. Almost 70% of consumers don’t trust advertising and 42% distrust brands, viewing them as “remote, unreachable, abstract and self-serving” (Ipsos Connect, 2017). And the problem doesn’t seem to be improving. A big part of this, according to Trinity Mirror, is the “arrogance” of brands adopting an unnatural purpose, leading to increased cynicism among consumers. Their research found that 58% of consumers don’t trust a brand until they have seen ‘real-world proof’ that it keeps its promises.
A blockchain-based solution
Blockchain technology promotes transparency and trust – qualities that are currently in short supply in the marketing industry. Blockchain has the potential to break down problematic industry silos, increase the visibility of where ads are appearing and who’s clicking on them, and improve supply chain transparency.
Marketers can use blockchain to rebuild consumer trust. As all transactions on the network must be verified and logged, consumers could trace the journey of a raw material through the supply chain to the finished product. Brand’s claiming their products are ethically sourced and organically farmed would be able to provide consumers with proof.
Another possible application could allow advertisers to audit every ad or impression in real-time and only pay for the right ones. The blockchain network could tell an advertiser where their ad has been placed and whether targeting is being delivered as agreed. Indeed, ClearCoin, a US startup, is working on a blockchain-based solution of this very nature. The platform already has more than 10,000 registrations and has partnered with big publishing networks including Google and Facebook.
Brands could also use blockchain to verify how their media budget is being spent. Every media buying transaction could be recorded on blockchain’s immutable database. Brands would be able to set up smart contracts that contain rules, such as acceptable mark-up margins, which must be met before a transaction is carried out.
Transparency and trust is the future
It’s still early days for blockchain. The technology will need to be developed further before the marketing industry can harness its full potential. The likelihood of this happening in 2018 is slim. Indeed, in order for blockchain to make a real impact, it will need widespread adoption. However, once it has been fully integrated, it could transform the relationships between brands, agencies and consumers.