Geo 101: What Marketers Need To Know About Blockchain
The technology that underpins cryptocurrencies like bitcoin has diverse applications for marketers when it comes to data privacy, improving distribution and more.
With the goal of breaking down some of the most important concepts to provide a better understanding of the basics — and a jumping off point for exploring how far technology may take us — we introduce the next installment of our GeoMarketing 101 series: what marketers need to know about blockchain.
What Is Blockchain?
Blockchain is the technology underpinning cryptocurrencies like bitcoin. It functions as a digital ledger that records transactions made in these cryptocurrencies chronologically and publicly.
Put as simply as possible, the name is meant to describe how “blocks” of data are strung together to comprise this digital ledger — running over a peer-to-peer network that protects and authenticates the data, which is why it is viewed as such a secure format.
That’s the textbook definition. But David Berkowitz, writing for Ad Age, makes a great point: “Defining ‘blockchain’ in 2017 is akin to defining the internet in the early 1990s. Most people still can’t clearly describe what the internet is, but they know it is the backbone of the Web, email, streaming video, and mobile apps.
“In practice, people will [eventually] become familiar with blockchain through its uses, such as payments, identity verification, and others.”
Why Does Blockchain Matter To Marketers?
Broadly speaking, any kind of technology that stands to improve payment security and authentication matters to marketers, because it impacts how people buy, acquire and sell things. But here’s how we’ve seen specific applications for blockchain cropping up in the industry thus far:
Solving challenges around ad delivery: Mindshare recently announced its plans to run a blockchain trial in partnership with platform Zilliqa, aimed at testing whether blockchain protocol can be used to better identify and serve contextual advertising in relation to fake news, to develop strategic initiatives around data privacy and to create a “tokenization” program that will grade online content for authenticity.
It’s still very early stages. But the idea is that blockchain protocols can be used to both serve more relevant ads in conjunction with better content, as well as to improve data privacy standards. Marketers should pay attention to how this and similar test initiatives play out — as we could see a new standard in advertising sooner rather than later.
Improving hotel distribution: Blockchain has begun to infiltrate the hospitality industry, with companies like German tour operator TUI reportedly taking steps to move some part of the company’s hotel data infrastructure to a private blockchain.
“The hotel industry is screaming for alternatives to the status quo in distribution. Blockchain could be one answer to reducing the total cost of doing business,” writes The Skift’s Luke Bujarski. “The bigger opportunity for blockchain platforms could be with the independent pool of global hotel properties. On the whole, this segment is much more dependent on third parties for distribution and also tends to pay a commission premium, due to a lack of bargaining power.”
Essentially, if hotels can better manage and store data, thereby improving distribution and making more bookings directly, they could save money on the amount that they currently pay out to third parties like Kayak or Travelocity. This impacts any and all parts of the travel industry that rely on third party distribution — and could cross over to other verticals as well.
The future: rewarding consumers?
The first applications of blockchain in marketing will likely be around improving data privacy standards. But payment security is a critical use case as well — especially since blockchain existed first and foremost to underpin cryptocurrencies.
Before long, Berkowitz suggests, blockchain could be used to securely pay consumers for use of content that they have already created — such as photos of a brand posted to social media. Similarly, it could be used to reward consumers for contributing new content to an advertiser’s campaign, expanding what marketers can do both in terms of payment and expanding partnerships with social media influencers, which are already top of mind for brands looking to reach millennial and Gen-Z shoppers.
For now, marketers should pay attention to tests of blockchain in the ad industry and in payment systems — and look to explore and implement their own before long. After all, while this space is still young and confusing, its diversity of applications has people in every industry talking, even if they can’t define all of what it means — just like the internet in 1994.