In providing innovative new technology to complete transactions and share data, blockchains may revolutionize marketing. Proponents call the technology one of the most important technological advancements since the internet. Bitcoin is one of the best-known applications of blockchain technology.
Jeremy Epstein, CEO at NeverStopMarketing, sees parallels in blockchains with the growth of email and the internet in the 1990s and social media in the mid-2000s. “In the mid 90s, marketers heard about email and the web,” Epstein wrote in ChiefMartec.com. “Then they heard about the Internet.”
“Only after that, did they start to understand how dynamic and interactive marketing could be. In the mid 2000s, it happened again. Marketers heard about Facebook and Twitter. Then, it was social media. Finally, they began to adapt to the implications that customers were connected and empowered in a way previously unimaginable. Marketers who recognize that blockchains represent another seismic shift have a large opportunity in front of them. History may be repeating itself,” he wrote.
This is not hype about tools in the distant future, Epstein stresses. The Depository Trust & Clearing Corp., the Homeland Security Department and the FDA are already considering or adopting blockchains.
It’s a tough technology to explain and understand – but all marketing and PR professionals who work with transactions and data will need to know about blockchains and their applications in the near future. Here’s an introduction: call it Blockchain 101.
How Blockchains Work in Transactions
Blockchains are typically described as ledgers, like Excel spreadsheets, that record transactions in chained blocks. Although blockchains are databases, they are not stored in a central location or controlled by a single entity. Instead, they are distributed, meaning they are stored on multiple computers simultaneously. All participants can input, view and verify data.
Encryption (the process of making information unintelligible by using a code or mathematical algorithm) developed for Bitcoin ensures that transactions remain secure. Users input data and complete transactions with a combination private and public “keys” or long strings of numbers. When a transaction is completed, it is grouped together in an encrypted, protected block with other transactions and sent out to the entire network.
The validated block of transactions is then time-stamped and added to a chain in a linear, chronological order,” explains blockchain product designer Collin Thompson in Medium. New blocks of validated transactions are linked to older blocks, making a chain of blocks that show every transaction made in the history of that blockchain.
While the encryption that provides security is complex, marketers don’t need to understand it to use blockchains, just as they usually don’t understand the technology behind email, electronic spreadsheets or web servers, experts say.
The Importance of Data
Data is vital for guiding marketing and advertising strategies and to determine their effectiveness. In conducting campaigns across multiple channels, marketers must obtain that data from multiple different parties, including intermediaries. The dispersion of the required data leaves opportunities for data manipulation and even fraud, rendering the data inferior or plain wrong. In addition, ownership of the data may be uncertain.
A handful of large technology companies, such as Google and Facebook, now control much of the world’s marketing data. Many marketers feel the current system lacks transparency. They refer to companies like Facebook as “walled gardens” and desire more information and greater control over marketing data they need to implement effective campaigns.
Blockchains promise to resolve those issues, experts say. Since no one controls the blockchain and every party has equal access to the same data, multiple parties can coordinate digital marketing campaigns, and reconcile data that’s sourced from different players in the blockchain, Ken Brook, founder and CEO of MetaX, explained in DMN.
A New Way of Sharing Data
Importantly, use of blockchains eliminates intermediaries, resulting in lower costs, less risk and faster transactions. In addition, blockchains can increase trust, since all network participants can view the data.
Although it’s not certain how quickly the marketing community will embrace the distributed databases, Epstein urges marketers to closely follow blockchain trends and learn how they can benefit.
“Step one is find out how can you use blockchain technology to do what you’re doing better. Step two is where you get to the world where blockchain is everything and is everywhere,” Epstein told DMN.
Early adopters have already started applying the technology in advertising. The advertising network BitTeaser uses a blockchain to allow advertisers to display ads, see where their digital ads are placed, and view click-throughs. Others are considering or testing blockchains.
“In the advertising industry we’ve seen this happen a few times where the tech to measure something comes out and then there is some lag time,” Fred Askham of media agency IMM, told Digiday. “While this is a next step toward a degree of transparency, it does require a good level of adoption.”
Bottom Line: Blockchains represent a major technological advance that may bring substantial benefits to marketers. Forward-thinking marketers will keep an eye on developing trends and consider how their organizations can benefit from the use of blockchains for commercial transactions and data acquisition.