Why marketers need to get to grips with Blockchain
Blockchain technology presents vast opportunities for brands, from ad delivery verification to the safe and transparent storage of data, so marketers should get to know the technology now and stay ahead of the competition.
At its simplest Blockchain is a digital ledger that enables organisations to record data in a highly secure fashion that is both fully verifiable and decentralised.
Once encrypted, any data put into the Blockchain can only be changed if all the stakeholders empowered to amend the data have reached a consensus. Any changes made on the Blockchain are registered. This is the reason why Blockchain is hailed as a secure, verifiable and highly transparent platform.
Currently the word is commonly grouped with the digital currency Bitcoin. But Blockchain exists entirely separately to Bitcoin and is a disruptive technology that marketers need to get to grips with now to avoid losing ground to competitors in years to come.
It is widely believed that the security of Blockchain could have a big impact on sectors from banking and insurance to healthcare and retail. The advantages for marketers, in particular, are thought to be extensive.
“The opportunities Blockchain proposes for marketers are absolutely astronomical, but it is often marred by how difficult the technology is to get your head around,” says Paul Armstrong, author of Disruptive Technologies: Understand, Evaluate, Respond.
“Blockchain, for example, gives you the opportunity to verify the identities of sellers or the authenticity of products, which could be huge for the luxury goods market and healthcare. You’ve got the potential to link back to source for everything, so in food labelling you could use Blockchain to scan a barcode that identifies a fish was caught in safe waters, reassuring consumers why they’re paying a premium.”
I don’t think we’ve fully realised the value of marketing databases.
Jascha Kaykas-Wolff, Mozilla
An early example of the technology in action is Blockchain startup Everledger, which in 2015 started tracking diamonds through the supply chain in a bid to end the trade in blood diamonds and incentivise consumers to seek responsibly sourced stones.
Last year Walmart teamed up with IBM on a supply chain verification project to digitally track the movement of pork through the retailer’s Chinese supplier base via Blockchain. The idea was to boost consumer confidence in Walmart’s supply chain by proving it could trace the pork from producer to processor to store and finally to the customer.
IBM innovation services leader in EMEA, Hugo Pinto, sees the verification and transparency of Blockchain moving beyond supply chain monitoring to content platforms like Facebook, which could use the technology to combat fake news.
“Imagine if Facebook, or any of the other platforms, had a way to detect, weed out and isolate specific pieces of fake information. That would be a very powerful differentiator right now from a media offering standpoint.”
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The insurance sector could also be a chief beneficiary of Blockchain technology, according to Direct Line Group marketing director, Mark Evans.
“At its heart Blockchain has the benefit of making data transfer more transparent, efficient and simple. By providing a tamper-proof way to store and share personal data, it can address the structural challenges within the insurance industry including fraud, claims processing and the use of intermediaries such as brokers,” Evans explains.
“It is for these reasons that many predict that insurance has more potential use cases for Blockchain than any other sector. However, the path towards the use of Blockchain is not clearly laid out yet, due to the need for validation mechanisms, which will require collaboration between competitors and suppliers. This is easier said than done.”
Despite the effort required to reach industry wide adoption of the technology, Evans believes marketers in the insurance sector are becoming more curious about how Blockchain could apply more widely to marketing itself.
Ad verification potential
As brands continue to pull spend from Google amid concerns their adverts will appear alongside content promoting hate and extremism, the idea of using Blockchain for ad verification could prove seriously attractive to marketers.
An early player in this space is BitTeaser, a Danish ad network that displays all click-throughs in the Blockchain in real time, which can be easily tracked by users.
While wider adoption of the technology is still in its infancy, Pinto sees real potential for Blockchain to tackle the issue of ad fraud.
“With the Blockchain you have a set of core rules, so whenever something changes outside the parameters of the rule, you can remove that site from the pool of websites where the ads are displayed and that’s obviously very important.”
Evans agrees that Blockchain could provide a mechanism for marketers to know, with certainty, where their ad has been placed. “This could potentially enable publishers to blacklist against fraud on an iterative basis. If this is the case, it would help to restore trust and transparency at a time when it is most needed,” he adds.
Mozilla CMO, Jascha Kaykas-Wolff, sees potential for any technology that provides public visibility and measurement of whether online ads are being delivered and seen by a human being, in order to shine “bright sunlight on an unhealthy part of the industry”.
Blockchain could not only eradicate the lack of trust marketers feel around programmatic delivery but also simplify the process by one day helping brands go direct to publishers, according to Atom Bank head of marketing, Neil Costello.
“Look at the response from Google this week. Accounts thought to be worth £50m were put at risk as the internet giant apologised for failing to crack down on extremist content. Here we have some of the world’s biggest brands having no trust in where their ads are served programmatically,” says Costello.
“Could we see a day when brands sell adverts without the middleman? Where Blockchain guarantees the validity of clicks between advertisers and web owners? Only if many, many companies signed up to the same procedures.”
However co-founder and CEO of mobile wallet service Yoyo Wallet, Alain Falys, is unsure whether in practice Blockchain could easily replace the existing guarantors in the ad verification space.
“There needs to be an initial push for standards encoded in the Blockchain, which requires some form of leadership. In addition, standards change over time and in a fully decentralised system the implementation of new standards is time consuming and potentially not feasible,” he argues.
Safe storage of data
Marketers could also utilise the power of Blockchain for the safe storage of large amounts of anonymous customer data.
To date there has been no serious data breach in Blockchain. The technology benefits from being securely encrypted and decentralised, meaning data is not stored by a single party. This, for example, sets Blockchain up as the polar opposite to the traditional banking model.
As data breaches typically have specific patterns that aid detection, the very fact that Blockchain can be clearly audited means breaches could be detected before they become large scale incidents. Aside from security, marketers are also entering an era of mandatory digital consent, meaning brands could use Blockchain to manage the “permissioning” of their data, according to Pinto.
Direct Line’s Mark Evans expects marketers to use Blockchain technology to negotiate consent as GDPR data protection rules come into force next year.
“There is an increasing reliance upon personal data to deliver mass-personalised CRM – personal pricing, propositions, and customer experience, as a way to attract and retain valuable customers,” he notes.
“But at the same time the advent of GDPR in May 2018 challenges this notion to the very core, with more onerous requirements around consent for, and processing of, personal data. Blockchain could provide a way to process huge amounts of data in an anonymised way.”
Falys accepts that data needs to be sharable and accessible, which is why Blockchain’s main advantage is its ability to create a decentralised and secure record of transactions, accessible to a number of different stakeholders. However, management of this data does not come without problems.
“Blockchain technology is often equated with decentralisation, but we believe that a completely decentralised loyalty Blockchain is unlikely to arise any time soon,” says Falys.
“Our business demonstrates that a significant amount of coordination is required to establish an effective loyalty marketplace. The inherent security of Blockchain technology is based on the fact that servers, which maintain the ledgers, are decentralised.”
The link between marketing databases and Blockchain is not clear for Mozilla’s Kaykas-Wolff, who sees marketers caught in a trade-off between the potential the technology offers and the importance of managing data centrally.
This year we’re going to start seeing a lot of emerging use cases of Blockchain on an enterprise level
Hugo Pinto, IBM
“It’s not to say it couldn’t be the case in the future, but the benefit marketing has seen by using databases is through the centralised management of information. I don’t think we’ve fully realised the value of marketing databases so jumping to what may be ‘next after next’ is hard to predict,” he says.
Costello agrees that marketers need to be sure they are applying the technology appropriately and not being blinded by Blockchain just because it is new.
“Whilst it is the shiny new technology that many organisations are embarking on, the danger is applying Blockchain to projects that are better suited to conventional database management tools. This is a danger we ourselves need to be careful to avoid.”
Choosing the right message
While Blockchain continues to creep up the marketing agenda, mass consumer understanding of technology is about five years away, according to Armstrong, who puts wide scale business adoption at two to four years.
This lack of knowledge is why Pinto believes marketers should focus on the practical benefits Blockchain offers to consumers in their daily lives, rather than trying to educate them on the nitty gritty of how the technology works.
“An example would be in banking. What if I could explain to you that as part of your savings account we will give you the chance to help farmers in Kenya grow crops and we can show how you’re helping the community flourish because we can trace your money end-to-end through the Blockchain,” says Pinto.
“These types of value propositions are exactly why marketers need to understand the technology. They are going to need to figure out how else they can generate value for customers, even if they don’t have to change the product. The messaging will have to be different because the capability is going to be entirely different.”
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While Evans agrees that the potential of Blockchain is exciting, he argues that in reality there are very few existing precedents and therefore it might be several years before we see a practical application emerging.
“Nonetheless, it is critical for marketers to stay curious about Blockchain. It is more a question of ‘when’ rather than ‘if’, which chimes with Bill Gates’ suggestion that we overestimate the impact of new technology in the next two years, but underestimate its impact over the next 10,” Evans adds.
The first wave of Blockchain adoption is expected to take place amongst small-scale enterprises looking to improve their performance and productivity or expand their reach, says Pinto.
“If two years ago we were Blockchain tourists and last year we were Blockchain experimenters, then this year we’re going to start seeing a lot of emerging use cases of Blockchain on an enterprise level,” he explains.
Pinto adds: “The reason why marketers need to understand it now is because if they are part of the first wave that is going to transform the capability for business. They are going to be the first ones to come up with ideas for new business models and value propositions that they can take to market.”
Blockchain boasts significant advantages for marketers in terms of transparency and security, to improve both the running of their businesses and their efforts to build customer trust. It is for these reasons that early adoption of the technology really could make a big difference.
- Data, CRM and analytics is a category at the 2017 Masters of Marketing awards, taking place on 3 October. Entries are open. To find out more visit www.festivalofmarketing.com/awards