Blockchain is not only the latest in a line of buzzy technologies to invade marketers’ consciousness, it is also a means of solving many of the problems that exist in the advertising supply chain.
But first things first. The question jumping to most marketers’ lips is still probably ‘what is it?’
To précis Wikipedia, a Blockchain is a continuously growing list of digital records, called blocks, which are linked and secured using encryption.
It is an open-source way of recording transactions between parties efficiently and in a verifiable and permanent way – a ‘distributed ledger’, so-called because there is no centralised data storage or administrator.
Blockchains are secure by design and are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without affecting all subsequent blocks. A Blockchain therefore requires collaboration between the majority of its network of users.
They’re potentially suitable for the recording of events, medical and other records such as identity management, transaction processing, and documenting provenance.
You might first have come across Blockchains the context of Bitcoin, a ‘cryptocurrency’ with the basic characteristics of any other currency but unique in having no state backing. The currency is ‘minted’ by activity, not government fiat.
Bitcoin has been a terrific, if sometimes risky, investment. From a nominal value in 2011, one bitcoin is now worth £3,170 at the time of publication. Imagine if each penny in your loose change had grown to that value.
Blockchain sounds like the panacea for our overly complex, at best fraught and at worst downright corrupt, online advertising ecology.
Bitcoin has gained notoriety as the currency of the dark web for trades of illegal goods and services, and latterly, ransomware payments. Even national law enforcement agencies struggle to trace the beneficiaries of such activity, suggesting that the Blockchains that trace bitcoin transactions are very secure.
Many use Bitcoin, but some use their own ‘cryptocurrencies’ and can as easily use conventional currencies too.
Why should advertisers be interested?
So Blockchains are open yet highly secure systems that carry records of all transactions along them from end to end. This sounds like the panacea for a number of markets, not least our overly complex, at best fraught and at worst downright corrupt, online advertising ecology.
This is not to say that every marketer out there should only look at Blockchains from an online marketing perspective. Many will surely work for enterprises which already have internal or external teams considering the impacts of the technology on numerous aspects of their business, from supply chain logistics to finance and beyond.
Blockchains offer some specific solutions that are highly relevant to most companies that advertise. I’ve already mentioned their suitability for cleaning up an online ad market that most have now come to realise is as grubby as it is huge.
Advertisers concerned about the clarity and transparency of their media value chain could already, and likely will eventually, demand that Blockchain technology is used to give them the visibility they need. Or simply deploy it themselves.
Blockchains are yet more interesting to companies that sell through intermediaries – consumer goods, for example, where many of the biggest spends still reside.
Consider the creation of end-to-end channels that use the technology to pass through intermediaries, in order to reach, quantify, engage with and monetise the end consumer.
Finally, it may be the August silly season in the newspapers, but The Sunday Times recently described how a Blockchain can be used to directly and continuously reassure nutrient-conscious consumers of the provenance of ingredients.
What are the watch-outs with Blockchain?
Like artifical intelligence, Blockchains are another ‘next big thing’ for the reasons above, so all kinds of chancers are likely to jump on the bandwagon and ride the next wave of fashion for profit. Whether you’re looking at it from a marketing perspective or one of the (many) possible others, some serious due diligence is required to establish potential partner credentials.
The very nature of Blockchains advantages the management consultancies. Often stemming from accountancy beginnings, Blockchains are much more their language than that of the marketing industry. I’m not optimistic for agencies, nor the ad tech players, many of whose previous over-promises and hype won’t help.
The big tech players – Google, Facebook and co – have the smarts and certainly have the resources, but will they be prepared to submit to the client scrutiny that Blockchains allow? Their reluctance to open up on viewability, ad fraud and brand safety until pressure becomes overwhelming suggests that they might be hesitant in this space too.
And as with any significant new development, there’s controversy. A startup Blockchain-based search engine called Bitclave is challenging Google by offering a direct advertiser-consumer connection and incentivisation channel. Yet critics are already suggesting unviable businesses can issue calls for funding using cryptocurrencies, with individuals then profiting from the currency’s rise in value.
If Blockchains can be a vehicle for financial speculation, it casts doubt on their suitability to achieve some of the tasks I’ve set out above.
Finally, it goes without saying that Blockchain is not a technology whose intricacies you can leave marketing procurement departments to work out. Senior management and IT must be closely involved too.
Before you take the plunge, seek trusted counsel on what Blockchains might do for your business and discuss your findings with senior colleagues across your organisation.
Bob Wootton was director of media and advertising at ISBA and is now principal of Deconstruction Consulting.