Unless you're already "in the know", you might think of blockchain technology as something new, some sort of scam, or something to do with cryptocurrency. In fact, blockchain concepts have been around since 1982, when cryptographer David Chaum first proposed the concept in a dissertation. The modern decentralised blockchain as we know it was popularised by 'Satoshi Nakamoto' in 2008 for the cryptocurrency bitcoin, and remains widely in use by cryptocurrencies – hence its common association. However, the technology itself does have uses beyond that space.
What is Blockchain?
At its core, blockchain technology enables transactions between two people (peer-to-peer) without a third-party handshake or verification. Typically it is in the form of a decentralised, public, digital ledger of records (the "blocks") that record transactions over multiple computers and which cannot be altered without altering every block. Participants can therefore verify and audit transactions independently and inexpensively – i.e. an authentication system run by the people that isn't affected by third parties. Private and hybrid blockchains also exist, but need extra thought put into their security.
Beyond cryptocurrencies and finance, blockchain technology has been trialed by Walmart in supply chain monitoring for lettuce and spinach, and has also popped up in games, energy trading, and music distribution. At its core, due to its nature, it often provides for a more secure transactional experience, one which puts consumer data back into their control. Without a third party handshake in the way, consumer information is less likely to be harvested, used, or even sold. This might sound like a bad thing for marketers and brands used to finding ways to collect consumer data or rely on traditional programmatic ways to reach out to new customers, but it also provides opportunities for brands willing to embrace a potential new way forward.
More Marketing, Less Crypto
Blockchain technology already exists in the marketing space. For example, the Brave browser, recommended by the New York Times in 2021 is a privacy-based browser with a blockchain digital ad platform. As such, Brave users have to opt-in in order to see ads, and received BATs (Basic Attention Tokens) for ads they interact with. In other words, brands trade with Brave users for attention, rather than the usual model where users are bombarded with ads they might not be interested in and brands trade with third party platforms for ad space. Other initiatives in a similar vein include Blockstack, where instead of users trading their data to access apps, Blockstack acts as a key where the data returns to the user once they're done using the app. There's also adChain, built on the public Ethereum blockchain, aiming at preventing fraud in advertising by incentivising users to create a ledger of trustworthy advertisers.
As you can see, the basic driving concepts between all of the above are:
- Consumer privacy
- Consumer choice
- Direct transaction without third party
While the above can feel challenging to traditional marketers, brands can look at it as a chance to improve their customer goodwill by embracing principles of transparency and brand integrity. By placing customer privacy first, brands can appear more trustworthy – you're not spying on your customers or knowing more about them than you should. By incentivising customers to trade directly with your brand, you might not only save in terms of ad spend, but also creating a more genuine, mutually beneficial relationship with your customer. Rather than the crapshoot that programmatic advertising can sometimes be, with false ad clicks and fake ROI, a blockchain-based advertising strategy can further streamline your marketing budget.
Incentivising Consumer Choices
Loyalty programs are a favourite marketing tool for brands. Often, the point is to try and exert control over customers by locking them in to your brand with points. However, studies have shown that more than 25% of participants in loyalty programs never redeem their points, often because of time-sensitive windows to do so. Points expiring can lead to customer frustration, particularly in products that have a high price point or that don't require renewal within a short period of time. This can aggravate customer indifference to the brand and to loyalty programs in general.
With blockchain technology, however, loyalty programs can be efficiently interlinked across every touchpoint, and be applied more flexibly. In other words, loyalty programs can be extended across different brands, leading to cooperative programs that make loyalty points more easily spendable and earned across the board, in a way that existing cross-pollinated non-blockchain programs can't currently achieve in a secure or dynamic way. For example, American Express has incorporated the Hyperledger blockchain in order to reward points to consumers based on individual products, rather than spending behaviour at particular merchants. This and other ways that blockchain technology serves to free up individual spending and allow merchants to easily track reward points allows for more flexible customer loyalty strategies.
Curious to know more? Want advice on how blockchain tech can help your brand? Give us a call.