BLOCKCHAIN MARKETING

How Blockchain Can Innovate Digital Marketing

There are various ways in which the blockchain marketing strategy in digital business has improved companies operations.

While digital automation can easily perform most marketing tasks, advertising management improves the way marketers and digital professionals use it to retrieve data and information. This is why it is important to study blockchain advertising and how it can improve the efficiency of many business practices.

One point to note is that blockchain technology is still relatively uncommon, but the first experiments by companies are emerging. A concrete example is large brands such as Nestlé with Bacio Perugina and Barilla, which have implemented blockchain marketing technology with the aim of strengthening anti-counterfeiting control, ensuring authenticity recognition and confirming the quality image of raw materials along the entire supply chain.

Blockchain Advertising without Intermediaries

Think of blockchain marketing technology as a series of interconnected digital blocks that do not require third-party verification. It’s undoubtedly the technology responsible for the Bitcoi’s rising wave of use and success, recording all transactions in a single place.

In a centralized or client-server model, there are one or more entities known as servers that host all the information and the user (the client) must communicate with the server to access to the information.

For example, if a money transfer transaction is to be carried out via the web, it is logical that it is done through an intermediary such as a bank or other payment institution. Besides the addition of an intermediary, the centralised model is subject to various threats, such as data breaches

On the other hand, a Peer-to-Peer (P2P) network is decentralized, so there is no single host of information. Each node in the network stores information locally, so if you want to send money to someone, you can do it directly without involving a third party.

As a company or freelancer, you want to ensure that the ads you purchase are on high-quality websites that are genuinely targeting the audience you’re interested in. This means paying a significant commission to a company, like Google, that has the sought-after reputation from businesses and site owners, creating trust in the process.

With blockchain marketing technology, you can completely bypass ad networks, and users will be automatically verified, so you won’t need third parties to establish trust. Companies with verified ads and websites with available space can collaborate seamlessly.

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Data Security

The key selling point of this digital transformation is undoubtedly data transparency, which has helped many entities get well-profiled leads and offer their customers and consumers a superior experience. This is why it has become one of the fastest growing technologies in the finance and banking industry. However, there are additional implications of blockchain marketing beyond conventional markets.

Some of the rapidly expanding industries using blockchain include social media, telecommunications, and the broader advertising industry. With blockchain marketing, you can track accounts, production, orders, distribution, payments, and more, providing transparency and instilling greater consumer confidence in your service or product.

Blockchain marketing puts consumers at the forefront, empowering them to control their own contact information and ensuring that only the companies they are interested in receive their data. This may seem counterintuitive to business, but it is actually very beneficial: instead of wasting resources getting data from disinterested individuals, you will receive  targeted and accurate information from those who are truly curious about your company.

Decentralized Apps

Decentralized Apps, or DApps, are applications very similar to traditional apps, with the key difference being that instead of relying on centralized servers and marketplaces (such as Apple Store and Google Play), they leverage blockchain platforms and their distributed network. As a result, developers do not have to pay high fees, especially for in-app payments, because DApps have payment capabilities buil into their decentralized peer-to-peer network.

Therefore, data and all information is not stored in a single location but is distributed among the various nodes in the network to ensure security. This is a breakthrough for implementing blockchain marketing.

The three fundamental levels to consider for DApps are:

1. Backend: In DApps, the backend is associated with a smart contract, which are lines of code stored on a blockchain and executed automatically when predefined terms and conditions (also known as smart contracts). For example, one of the leading blockchains in marketing is Ethereum, which has created a dedicated protocol for creating decentralized applications. In ths way, a smart contract has programming that ensures that DApp works, which is public and visible, guaranteeing transparency and high security.
   
2. Frontend: This is the interface that users interact with to use the application. Both DApps and traditional apps can utilize existing graphic resources, such as web interfaces written in HTML5 or more complex open-source frameworks. The goal is to provide customers or consumers with the ability to receive or interact with information contained in the app they are using.
3. Data Storage: In a traditional application, this layer is also centralized, with data stored on users’ devices or on servers controlled by third parties. This method has several weaknesses, such as the risk of losing data in case of damage to the user’s device or on server crashes, or bugs, which could lead to loss of information or clients. In DApps, data storage is entirely decentralized.

Each user stores a complete history of actions on the network, and interactions are stored in the blockchain within blocks, securely preventing unauthorized access by third parties. Therefore, it does not matter if the user’s device is damaged, as using the DApp on another device will recover all the information stored up to that point.

Reducing Ad Fraud

One way to combat ad fraud using blockchain marketing is to remove intermediaries, eliminating networks and keeping the advertiser, publisher, and user.

This will promote greater transparency by using smart contract ledgers on the blockchain marketing, such as Ethereum’s AdChain company. The main goal is to eliminate the lack of trust and various levels of ad fraud by providing end-to-end transparency of all data and information. This ensures the authenticity of clicks and impressions on ads because they are on the blockchain.

Expanded Payment Methods

Although acceptance Bitcoin and other cryptocurrencies is not yet common, it could become so. The blockchain technology system in marketing makes this type of payment transparent.

Retailers will not have to worry about counterfeit checks, faulty credit cards, or similar problems. They will also not have to worry about actions that tend to take a long time, such as processing invoice that involve waiting for payment or involving imiddlemen, causing delays, and more.

The Blockchain technology solves this problem by enabling transactions to take place in real time: because information is accessible to both parties, there is no need to maintain separate records. The implementation of smart contracts also facilitates immediate payment once the terms of the agreement are met.

As payment method expand, one of the most important uses in blockchain marketing is tokenization, which identifies a service in which consumer’s payment information is replaced by tokens. These tokens are composed of numeric and alphanumeric codes that represent property rights. With more secure payments, thousands could be saved annually on bank fee related to chargebacks and fraud.

A concrete example based on blockchain technology is the Brave browser, which allows users to choose the types of ads to display by introducing the Basic Attention Token. This Ethereum-based token is distributed to publishers and consumers based on the ads they view. In this way, users could be rewarded for ad views.

Blockchain Marketing: Advantages and Disadvantages

We live in the attention economy where it is necessary to capture the user’s interest inorder not to lose it. Companies invest a lot of money in online advertising, but with blockchain marketing, it is possible to get the most out of the investment by showing ads only to the target audience that is really interested in the service.

Let’s consider, however, what the advantages and disadvantages of blockchain marketing might be based on what you have read so far:

Advantages

• Reduced costs where the advertising experience could become much more direct and, in some cases, companies can provide compensation to users (such as digital currencies or tokens) who view a company’s ads.
• Decentralized target leads, decentralization of the advertising ecosystem where companies can connect directly with the right publishers and deliver their message to the right audience.
• User trust, increased efficiency, and transparency without involving third parties.
• Decentralized applications. DApps can solve the significant problems of centralized applications, as mentioned before: they are immutable, resilient, and unchangeable. Assets and personal data are not transferred to third parties and are the sole property of customers. Concrete examples can be social media where data is not censored and remains the property of the user, censorship-resistant news websites, copyright platforms, decentralized messaging apps, and more.

Disadvantages

Unfortunately, like all new technologies, there are still refinements being made, and so there are disadvantages.

• Sometime Data can still be controlled, such as in cases where a single entity owns the majority of nodes.
• It’s expensive and therefore not yet accessible to many entities, with the exception of large companies.
• It requires a lot of energy, which is a significant factor in terms of environmental impact, although there is GSI Finance, a very interesting green cryptocurrency project supporting the environment.

Applications of Blockchain in Online Marketing

At this point, it’s useful to understand how blockchain is used in digital marketing. The basic application is the execution of transactions in a secure network used in various scenarios, as shown below.

Advertising Campaigns

As we have seen above, an efficient benefit for marketing is to have targeted and more accurate leads without flops in your advertising campaigns where hundreds or thousands have been invested without real profit. Another key point is the transparency of product origin, which makes it easier for consumers to trust companies.

Influencer Marketing

Brands, especially with the advent of new social media, invest heavily in public figures and micro-influencers to spread their message to a wider audience. However, influencer marketing has a bad reputation because of problems such as difficulty in tracking ROI, lack of transparency, fake followers, and engagement.

Blockchain marketing can solve this problem by enabling smart contracts in the ecosystem that facilitate payment upon completion of specific actions or after achieving desired results. It can also be used to verify the performance and legitimacy of influencers or crypto influencers.

Affiliations

Billions are spent worldwide on affiliate marketing, and despite the investment, companies face problems such as managing unsafe affiliates, wasting money on sites that provide no value, and paying high commissions to affiliate networks. Moving to blockchain marketing ends the waste of money and brings order to affiliations through 3 ways:

1. Use cryptocurrencies to simplify the payment process.
2. Payments are usually held up by the affiliate network until the minimum payment threshold is reached, while blockchain-based products can operate without these limits.
3. Introduce smart contracts to ensure transparency and reduce advertising fraud.

Social Media Marketing

Social media platforms have amassed billions of users in recent years, and while they have provided many opportunities to connect with the world, this comes at the cost of data. Since selling advertising is the main revenue stream for social channels, they track every action to improve their targeting capabilities.

Blockchain-based social media platforms give power back to users, such as Peepeth, Mastodon.Social, or Steem, which is a social blockchain that allows applications to be created on the platform and can offer great benefits to brands by monetizing content and creating an interactive community (many blogging application, video platforms, and software that allow users to fund open-source projects are built on Steem).

Another significant problem concern major social media platforms such as Twitter, YouTube, Facebook, and TikTok, which have sparked debates about their ability to censor users and content, demonetize material, and restrict the flow of money. These problems can be solved with blockchain technology in marketing by keeping user content on an immutable blockchain ledger. Social media initiatives can avoid censorship and provide users with control over cryptographic incentives.

Mass Media and Loyalty Programs

Mass media and entertainment companies use blockchain systems to manage copyright data critical for fair compensation to artists, thus requiring different transactions to record sales or transfers of copyrighted content. A concrete example is Sony Japan, which uses blockchain marketing services to make digital rights management more efficient.

The brand has successfully employed the blockchain marketing strategy, improving productivity and reducing copyright processing costs.

As for customers participating in loyalty programs, it can be said that there are two goals: either they are already loyal to the brand or they are looking for discounts. An average household joins several loyalty programs, but uses only a small portion of them, and the problem for consumers arises when it comes to redeeming poins.

Instead of being a win-win situation for companies and customers, it becomes the opposite. However, blockchain-based loyalty programs can solve this problem by introducing a frictionless system since it is a decentralized technology. In this way, multiple brands can collaborate allowing customers to redeem loyalty points with any brand within the network, and these points are deposited in real time. This innovation ensures the satisfaction of the entire ecosystem.

Conclusion and Useful Tips

Blockchain marketing offers many more advantages than disadvantages, especially in the digital sector. Although it will take time for blockchain marketing to catch on, it is important to understand where the industry is heading so you can start adopting some new tools and best practices for your innovative marketing strategy.

To be at the forefront of this field, enroll in the blockchain marketing course and learn how to leverage this innovative technology to benefit your business or customers.

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