The Importance of Blockchain Technology in Digital Marketing13 Eylül 2021
Even though Blockchain is an area that needs to be researched and discovered further in digital marketing, it brings forth exciting possibilities. Many people associate Blockchain technology with Bitcoin. In reality, they're entirely different. Let's see how Blockchain technology came to be and where it is used, then talk about its importance in digital technology.
What is Blockchain?
Blockchain first came out in 1991 as a solution that made some information on the internet unchangeable. You can think of it as a high-end security area where you can store digital data. Every block in a Blockchain is like a box filled with digital information. These boxes close when they reach maximum data capacity and create a new block. They gather all their contents under a code that is as unique as your fingerprint. They continue to store information as they expand by connecting to each other like a chain, making it very difficult to change data on the Blockchain. Since there is a computer network that stores all this information, it needs to be made on all computers to make a change. That's why Blockchain technology is described as an open digital book called a "ledger". It's based on a distributed computer network, and it doesn't need central processors, and therefore, servers. We're talking about a shared system with no main centers. Every member of the network is identified with an alphanumeric code. Every registry made into the network is controlled by network members who can update and confirm its legitimacy. Network members are able to see the actions taken by everyone and the owner of these actions. This way, everything is recorded, cannot be deleted, and can be monitored transparently. But how did this technology came to be associated with Bitcoin?
When Satoshi Nakamoto decided to create their personal digital currency called Bitcoin in 2001, they put them inside a Blockchain to ensure the safety of the transaction information. They talked about Blockchain for the first time in their book called "Bitcoin: A Peer-to-Peer Electronic Cash System" and described it as "a technology in which it's possible to create a cryptocurrency". However, Blockchain is a technology that can be potentially adapted to many areas. Moreover, it's already used in various sectors such as finance, retail, and fashion. It's said that it can be revolutionary for the companies' digital marketing and advertising operations. Wonder how? Let's get back to the main point.
Why does digital marketing need a revolution?
Marketing isn't only about selling. You need to understand what the target audience wants in order to make sure their experience with you is good. Since the market changes constantly, it's critical to gather information about current and potential customers and know how their needs are shaped. Today, the internet allows marketing teams to determine the right target audience and analyze the markets more comprehensively using developed technologies. Currently, digital marketing and digital advertising grow in this market that's led by big companies like Google (YouTube, AdSense, and Admob), Facebook, Instagram, and Amazon. The market system functions simply. When a user does something on the internet, it leaves a mark. These platforms gather those data, track them, and turn them into money. However, the concerns about whether it's ethical to use personal data for product placement and increase incomes cause users to become distrustful. On the other hand, creating more personalized messages by collecting customer information is the key to digital marketing and digital advertising. Then how can we get out of this loop?
Let's explain over programmatic advertising is used in digital marketing. The problem with this digital advertising type used by platforms that automatically allow companies to create their own advertisements and show them to users is that there is no transparency in the supply chain. They use bots, for example, to increase the number of views or followers. This situation increases the risk of fraud in the advertisement sector. Therefore, brands need to be more transparent about the results they get from digital advertising investments. Otherwise, their losses can become impossible to recover from. In fact, current research shows that the bells of danger have started ringing. According to Statista data, advertising frauds caused a 35 Billion Dollar loss worldwide in 2020. Considering the fact that the digital advertising market is worth 333 billion dollars, this is a significant loss of 10%. Juniper Research predicts that advertisement fraud will cost advertisers 87 billion Dollars in 2022.
How can Blockchain improve digital marketing?
Many companies like Toyota, which managed to increase the number of visits to their websites by 21% since 2018 by working with Blockchain-based analytics agencies, are trying to invest in Blockchaintechnology. According to Never Stop Marketing, the number of Blockchain-based marketing companies that focus on e-commerce and programmatic advertising has reached over 300 in 2020. While this number is expected to increase, JICWEBS (Joint Industry Committee for Web Standards) is working for all the transactions between the advertisement network members to be registered transparently. They believe that this will improve campaign performances and reduce fraud rates and costs by removing the mediators. When we put these all together, how can Blockchain technology benefit digital marketing?
Helps increase trust
Brands use various digital mediators for digital marketing actions. These are search engines such as Google and social media platforms that can put out advertisements. Brands use these mediators to make sure they're investing in the contents that line up with their goals. They pay commission for this; but still can't guarantee reliability. Why? Services like Google or Facebook are free, and their primary income source is advertisement services. Which means their main source of income is user data. At this point, Blockchain technology can help create an advertisement network that mediators aren't a part of. It can help users get verified without needing third parties such as Google. Since no fake adverts or bots will be used to increase views, the newly created transparency could double digital marketing activities' potential of transforming customer relations. In addition, using various security systems such as encryption, digital signatures, and access control guarantees security in data storing, transferring, and saving processes. It could help marketing information such as pricing policies, product listings, advertising activities, market research results, and analyses to be synchronized between network members.
Makes it easier for you to combat click fraud
Blockchain technology creates a safer space for brands and consumers in digital marketing and could reduce risks. Thanks to the transactions in the Blockchain being non-changeable, transparent, and verifiable, publishers can be supervised better. Especially, verifying clicks is a significant factor for transparent digital marketing. This way, the companies can invest only in content that can speak to their target audience and prevent fraudulent attempts such as pay-per-click in digital marketing methods. As a result, the use of blockchain technology in digital marketing helps prevent fraud. In addition, since Blockchain allows creating verified user profiles in the registry, it helps companies better understand the users' habits on the online platforms.
Provides a basis for a fairer digital competition environment
Blockchain technology could prevent the distribution of fake products and contents that violate intellectual property rights or copyrights thanks to its control mechanisms and the complete traceability it offers. For example, if you're offering sustainable products, your target audience will want to make sure that they're, in fact, buying a sustainable product. With Blockchain, brands have the ability to prove where their products are coming from and show every step of the supply chain to the consumer. This way, consumers can easily distinguish fake products and services. All this helps the brands compete with fraudulence and violations more efficiently and provides a basis for a fairer digital competition environment.
Allows you to create efficient loyalty programs
Brands use techniques such as loyalty programs or gamification to increase customer commitment. What's essential is for digital marketing experts, consumers, system managers, call centers, sales offices, and helping members to work together. Here, Blockchain comes into play and allows for viewing member profiles, points, payment histories, and the answers given to promotions with its real-time access feature. All this will enable you to create more personalized and efficient loyalty programs.
Future scenarios in digital marketing with Blockchain
The use of Blockchain in digital marketing is still new. For it to go further, all players in the supply chain need to adopt this technology. But there are some challenges. The first scenario is whether Blockchain technology can support multiple digital marketing and digital advertising operations. After all, media is an endless ocean where millions of advertisement spaces are bought and sold within 1% of every second. Another challenge is to make all the members of the digital ecosystem adopt Blockchain technology. Still, it's safe to say that even though Blockchain technology is currently only a vast potential for digital marketing, it definitely shouldn't be taken lightly.