Blockchain is a technology set to be worth billions to the global economy. In just commerce, it is estimated that the full introduction of blockchain to the way goods are paid for and moved could help to optimise $300 billion in costs.
The investment being secured by startups and innovators in the space highlights just how hot of a commodity the distributed ledger technology is. R3 - the blockchain consortium backed by some of the biggest banks in the world recently raised $107 million in series A funding.
Emerging as a result of the technology behind cryptocurrency BitCoin, the technology has generated so much coverage in recent years, it has unfortunately often been dismissed as ‘a solution looking for a problem’ or ‘yet another technology hype cycle’.
In the very simplest of terms, blockchains’ core offering is that it provides an open source distributed ledger and decentralised peer to peer transaction network. The benefit of this compared to traditional databases is that the content can be altered without compromising security. Each transaction or engagement is timestamped and because it is decentralised, no-one can alter the data on the blockchain once it has been created as everyone has a record.
It is this unique means of verifying transactions that has led to blockchain being so popular in finance. The technology has though in recent years been used evermore in other sectors. The betting industry has for example looked to leverage blockchain to provide gamblers with control of their own wallets. At the moment, in legal terms when users have a gambling account, the money in it is technically the betting companies in terms of management. In other words, you have to trust the company holding your money to give it to you when requested. By using a blockchain based wallet system that uses smart contracts - both parties can trust that money is always properly distributed and users keep control.
It is this ability to trace and manage transactions that I believe could make blockchain highly disrupting in advertising. In recent years creative industries have begun to harness the benefits of new technology in order to transform the way they communicate and engage with audiences. We’ve already seen mass uptake of predictive and targeted marketing. Blockchain itself has also been examined as a means to help prevent ad-fraud by providing an accurate record of both bids and displays.
The real value that can be harnessed from blockchain in my view is in fact in improving management of campaigns and targeted advertising. With a little imagination and understanding of the benefits of blockchain, it is easy to see in theory how blockchain and its smart contract capabilities can be used by brands to incentivise and engage with consumers.
For example, a brand’s own cryptocurrency could be used as a reward for completing an action. A clothing brand could reward attendees of a launch event, or for wearing its branded clothing at certain times or locations, with coins to spend in-store.
One company already exploring this sort of relationship between advertisers and consumers is connected cycle scheme Buzzbike. The company offers its members a single speed bike, designed by Cooper Bikes, an offshoot of the inventors of the original Mini Cooper. The bike comes with a rider pack and rewards such as coffee and gig tickets. Powered by an app that connects to the bike and tracks every journey, Buzzbike works with brand partners and organisations to subsidise the cost for the rider by offering fully integrated sponsorship of each bike.
The company has integrated blockchain technology into their product as a means for sponsors to track and incentivise riders. To put it into context, if you can imagine a big event such as a film premiere, a brand could identify a zone around the location and reward riders carrying their branding for journeys within a set radius around the area.
By keeping a ledger of transactions, the blockchain technology ensures every action is logged as a checkpoint and coins are released and transferred into the rider's e-wallet automatically. The core benefit is that the brand receives targeted exposure, detailed analytics, and riders instant rewards.
It is rewards and incentives where I see the greatest value available for advertisers and marketers willing to use blockchain. Music platform Aurovine for example provides music fans with the ability to stream music in return for sharing it on social media. Listeners get to listen to their favourite artists, who receive promotion in return. Built on cryptocurrency AudioCoin, artists and listeners alike can also transfer coins into FIAT currency.
In a world of ad blockers and targeted social media content, consumers can be more selective about the advertising they interact with than ever before. The millennial generation are according to expert marketing academics, already adept at filtering out advertising, and traditional marketing models are reliant on direct engagement. Rising trends such as native advertising and experiential marketing provides some evidence for this. As a result, greater use of incentivisation to encourage users to engage with advertising and marketing messages could be the direction we’re heading in.
Blockchain has for a number of years been billed as a technology looking for a problem. However, what is clear from recent explorations into its use in advertising is that it could provide much needed clarity and focused targeting. Be it in the environment, energy, music, rights management, or finance, blockchain is here to stay, and marketing and advertising are just two more areas to add to this long list of areas ripe for the technology to disrupt.
David Blundell, co-founder, BlockPool
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