Blockchain and the Digital Trust Economy
Blockchain technology has the potential to overcome trust issues between consumers and marketers — but brands need to understand and invest first.
If you’ve even partially followed the Bitcoin saga these last few years, chances are you’ve at least heard of “blockchain” technology. At its core, though, blockchain has many more applications than cryptocurrency only.
In blockchain technology, “blocks of data” are strung together into a distributed ledger that runs over peer-to-peer networks, authenticating and protecting the exchange of assets that passes through. Using blockchain, digital information and data can be distributed but can’t be copied.
Once in the blockchain database, all information is shared and continuously updated. Because the database doesn’t exist in a single location, data is public and can be easily verified — and because it isn’t centralized, it’s safe from hackers.
“The technology is a game changer,” says John Bates, Adobe’s director of product management. “It’s on par with technology like personal computers and the internet.”
That said, from an integration perspective we aren’t there yet. “While it’s still largely unknown exactly how blockchain will apply itself to our daily processes,” John says, “the potential is undeniable. We’re already positioning blockchain as a disruptive technology with massive potential for decentralization.”
The power of blockchain
With more customer data being collected than ever, and data sharing across departments and companies at a premium, blockchain could provide exactly what marketers need to tackle issues like fraud detection, brand safety, and customer loyalty initiatives. With its unique structure, transparency, accessibility, and privacy features, blockchain also has the potential to simplify transactions between brands and consumers, driving greater trust and loyalty.
Even with such grand expectations around blockchain, however, John describes the technology’s current state as “the Wild West,” and many experts agree. Because of its relative newness and unique features, no one knows exactly how blockchain will be incorporated into ad tech and marketing ecosystems beyond its initial cryptocurrency uses.
Marketing’s “Swiss army knife”
That said, when it comes to blockchain, there are endless possibilities for marketers savvy enough to dive in. Considered the “digital Swiss army knife,” blockchain has a host of use cases and, as a result, could have a massive impact on a host of industries and functions.
Ad management and delivery
Maximizing ad spend has always been a top focus for marketers — but knowing for sure if customers are seeing and engaging with your ads has always been a struggle. Until now, advertisers have had to settle for views and impressions as a rough measurement, making it nearly impossible to gauge ad performance and delivery.
However, because of its proven ability to authenticate records, blockchain could make it possible to verify for marketers, without a doubt, whether or not their advertisement was delivered to, seen by, and engaged with by the target consumer.
Transparency and advertising efficiency
In 2016, a jaw-dropping 56 percent of 2016 display ad spend went to fraudulent inventory — and those numbers aren’t slowing down. Over the next decade, experts anticipate the cost of global ad fraud to top $50 billion.
These staggering numbers are well on marketers and programmatic advertisers’ radars — 79 percent say they’re worried about delivering total transparency to clients. It’s a massive trust deficit, and one that blockchain is uniquely positioned to fill.
“Blockchain is a potential cornerstone for trust for the digital economy,” says John. “I’d go so far as to say this technology will usher in a new era of digital trust, which is something the industry and consumers could definitely benefit from.”
Verification, consent, and digital asset management
Blockchain’s ability to verify will also extend into the realms of content approval, sponsored contests, social media influence, and even loyalty programs. For example, blockchain could prevent unapproved advertising or content from being published, preventing branding mishaps as well as unintended spend.
In the case of sponsored contests, blockchain technology could be used to protect the program validity, ensuring each entry is only counted once. And those “influencers” pushing fake followers to inflate their perceived reach? With blockchain, it would be easy to verify the authenticity of each follower and weed out bots.
Blockchain could also have significant impact in brand loyalty programs. No longer could consumers rack up additional rewards without making required purchases, nor could hackers infiltrate high-value programs. This would, instantly, put an end to an issue plaguing nearly every sizable customer loyalty program out there, saving brands time, resources, and reimbursement costs while eliminating ongoing hacks that can drive consumers away.
On the upside, a digital wallet could house most, if not all the loyalty programs one person participates in. A blockchain could provide near-instantaneous receipt of rewards and easy redemption or exchange of loyalty points across programs, vendors, and industries. These are all changes that improve the customer experience, as well as their loyalty.
With digital assets, blockchain is already changing the game. This technology has been effectively integrated by music streaming service Spotify, which was being inundated with lawsuits tied to royalty payments. Because Spotify owned the database where all transactions were recorded, plays were hard to verify — making artists and labels suspect.
“To overcome these issues, Spotify bought a media chain lab,” John says. “By incorporating this blockchain technology, they were able to set up a node for all of the parties involved — from the artist, to the music producer, to the record label — to Spotify. Suddenly, they all had the same record of truth, and that gave them better attribution.”
“Blockchain doesn’t solve all problems,” John says, “but it does improve digital rights management, providing a traceable ownership solution and helping to assure and show, from a legal perspective, that digital rights aren’t being infringed upon.
Separating the steak from the sizzle
While the benefits abound, blockchain still isn’t ready to step into the marketing limelight. Because the technology is still emerging, it has to be fully understood by the majority of brands and businesses.
“There is so much hype,” John says, “that understanding the legitimate use cases of blockchain is a challenge. Couple this with the pervasive lack of awareness of the true applications of the technology, and it’s easy to see why we aren’t there just yet.”
Beyond awareness, though, there’s also a sizable chasm between where the technology is today and where marketers need it to be. “Blockchain was not built for enterprise,” John says. “Ledgers were not designed for commercial use — for things like governance capabilities, performance, and confidentiality.”
This, likely, will expose a lack of critical skill sets and architecture as blockchain starts to trickle out and integrate. “Effectively leveraging blockchain will require a new skill set — skills that don’t exist yet, in many cases,” John says. “And trying to integrate blockchain with existing IT architecture will require significant investment.”
While opportunities abound, John is hesitant to recommend businesses dive right in. “Blockchain is an island without a bridge to the mainland of IT,” he explains. “Any company considering using it might want to weigh the possibility of waiting until other companies with more resources have built those bridges, versus the costs and benefits of taking on these daunting projects themselves.”
Even after these bridges are built, though, blockchain may still have some innate challenges, at least in the short term. For instance, blockchain’s ability to verify data requires 10 to 30 seconds, which, in the digital world, is an eternity versus the milliseconds consumers are used to.
Beyond that, there’s the computing power required for blockchain verification. Bitcoin, for example, is legendary for its energy usage. To keep its networks running, the company requires a tremendous amount of power — the amount is on par with the energy consumed by 159 countries combined.
A final — and arguably the most major hurdle in blockchain adoption — is the lack of regulation and guidance. Though not centralized, the technology also lacks clear-cut oversight, which makes it ripe for hackers and other fraudulent uses. What’s more, the format of blocks isn’t always tough to crack, which could give hackers a jumping-off point. This could jeopardize trust, and lessen corporate investment and adoption.
Future implications for blockchain
Regardless of the risks and wrinkles, the promise of blockchain technology still represents unparalleled opportunity, making it irresistible to brands and marketers.
“Transparency and trust are key ingredients when it comes to customers and loyalty,” John says. “Eventually, blockchain technology will enable consumer data to be shared transparently, while still being verified and secured.” This trust is essential to experience creation and delivery in the coming years. “The Trust Age and the Experience Age are one and the same,” he says. “And that’s exactly where we are right now.”
Learn more about the technology and innovation driving today’s enterprises in the Overheard in the C-Suite series on the Adobe blog.