Most business leaders understand that innovation typically comes from the edges of the business, not its core. That is why many companies will create R&D or innovation functions, separate from day-to- day operations.
Beyond the organisation, the edge of the business environment is where innovation potential is highest. Enlightened business leaders will know what the latest developments are. They know that if they ignore the latest developments, they will not have the foresight to know how their business might perform more effectively or indeed defend itself from competitors empowered by some new technological innovation.
Blockchain is one such innovation (see Econsultancy’s new report: Demystifying Blockchain for Marketers). While there has certainly been a lot of unbridled enthusiasm for blockchain, it would be unwise to dismiss it as a fad. Certainly, the wide scale adoption of blockchain may not happen within the next year but like the evolution of the internet, it has the ‘potential’ to lead to the reformation of entire industries.
Blockchain for marketing
It is only by trying to properly understand blockchain that modern marketers will be able to evaluate its use cases as they arise, or legitimately dismiss them. Until recently, blockchain innovation has been focused mostly on fintech but there is a lot of investment into blockchain-based marketing technology. Blockchain can impact marketing in several ways:
- Service provision between companies and their customers
- Digital advertising
- Social media
1. Service provision between companies and their customers
Blockchains can remove the need for intermediaries in certain kinds of transactions. According to Adam Helfgott, CEO, of MadHive, “Today we use banks and other arbitrators of trust to say who owns what. Bitcoin is a protocol that uses a mashup of cryptography including message signing, hashing and a distributed ledger to keep track of who has what – without an intermediary. Blockchain being taken from the bitcoin experiment is attempting to apply this to every aspect online where trust is mediated by third parties who either charge for that trust or are simply untrustworthy.”
Often cited examples where blockchain can be used to remove the need for intermediaries include platform businesses like Airbnb and Uber. Instead of a centralised system of exchange, where these kinds of companies mediate transactions between customers and suppliers, blockchains could distribute the power of the network between users (suppliers and customers).
For example, rather than searching for accommodation on Airbnb for a place to stay in New York, blockchain based solutions could be created whereby accommodation providers and guests can be directly matched based on specific search parameters without paying an intermediary. This could lower transaction costs for all parties.
2. Digital advertising
One of the most accepted use cases for blockchain is to solve issues regarding transparency across the media supply chain to make a more transparent digital advertising ecosystem.
Blockchain could give advertisers greater control by cutting out media middlemen and, through verification, also forge direct links with audiences that improve personalisation and reduce fraud by improving both ad and consumer verification.
Brave is one example of a blockchain-based browser and decentralised and transparent ad exchange based on blockchain. The exchange uses a cryptocurrency called a Basic Attention Token (“BAT”) which works by having the Brave browser anonymously measure attention to accurately reward publishers. Attention is measured as viewed content and ads in the browser’s active tab in real time.
For advertisers, gaining the attention of customers becomes less expensive because the Brave browser allows publishers and advertisers to more accurately price attention with a more transparent system which provides advertisers with clear attribution.
3. Social media
If blockchain has the potential to disrupt peer-to-peer businesses by connecting customers directly with suppliers, then it could potentially usher a new era of social networks outside the control of the main platforms like Facebook.
Blockchain evangelists suggest that blockchain-based social networks could offer a decentralised solution which could reduce concerns about privacy and advertising for users, and could reward brands for the content that they produce and distribute.
When will blockchain become mainstream?
2017 saw a lot of ideation, whitepapers and raising of capital for blockchain ventures. There are already some proof of concept projects relating to marketing now in use such as the Brave browser and Basic Attention Token.
Blockchain experts that I interviewed for our Demystifying Blockchain for Marketers report agree that it may take some time for blockchain to reach scale, partly because people still need to get to grips with the concept:
Johan Zammit, Founder & CEO, Smart Studios: “2017 was kind of a year of ideation with blockchain whereas 2018 is the year when we have started to build out the use cases.”
Adam Hopkinson, COO & Co-Founder, Truth Media Agency: “For mainstream adoption, it will take at least a year from now for anyone starting to build out a viable product (based on the time it took us to build out ours) so I would expect a really mainstream adoption in mid-2019, followed by a morph into it being like a British Standard Kite Mark by 2021.”
Adam Helfgott, CEO, MadHive: “We’re still in the early days. In practice, most people are learning how this peer-to-peer value transfer mechanism will impact their day to day business. After all, not having centralised platforms to mediate who is right and wrong is a new concept. Over the next 36 months I would expect to see immense amounts of business innovation happening because of peer-to-peer value transfer, enabled by blockchain.
Abeed Janmohamed, CEO, Papyrus: “Mass adoption of blockchain will happen faster than the adoption of mobile. We have created the rails for the protocol to run and it’s now a matter of educating consumers about the values of blockchain and what value it can bring to the ecosystem. Markets like Africa and Latin America adopted mobile and skipped the desktop and are already ahead of the western world on blockchain and the value it brings.”
Challenges to blockchain becoming mainstream
Critics suggest that despite the hype and awareness around blockchain, there is yet to be a mainstream killer blockchain application besides (crypto)currency speculation and the facilitation of illegal transactions.
Issus include cost and complexity, speed and usability, a fragmentation of blockchain based solutions, regulation and a general learning curve about the concept.
Getting to grips with blockchain
It seems that blockchain is being touted as a solution to every business problem these days. Leaders will need to exercise caution and avoid using blockchain for the sake of blockchain. This is one of the main reasons that marketers will need to educate themselves about blockchain so that they can evaluate technological solutions to business problems effectively.
Robert Cooke, Director of Partnerships, Cube Intelligence: “Consumers and companies alike need to be educated about the advantages blockchain affords to ensure general acceptance.”
Blockchain should not be used simply because it is blockchain. There may be other solutions involving other technologies or indeed, making current business processes more transparent than they currently are.
Miro Walker, CEO, Cognifide: “You need to ask if you are jumping on the hype bandwagon or is there a real problem you are trying to solve for? Ask if there a genuine disruption that you need to get ahead of or is there an opportunity to provide something useful to your consumers by making use of the capabilities that blockchain technologies provide? Marketers need to start by understanding the concept. They then need to know the use cases and domains in which blockchain can be used. This is the exciting part that will drive interesting conversations between brands, their agencies and consultancies to start creating some really interesting innovation in this space.”
The future of blockchain
Modern marketers would be wise to consider Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
In other words, don’t get lulled into inaction. As the applications of blockchain continue to expand, marketers will need to equip themselves with the knowledge they need to evaluate the potential of blockchain for their job, their organisation and their sector.
We’ve written a report, Demystifying Blockchain: Guidelines for Marketers, to do just that. It is our hope that this report will spur modern marketers to think more expansively about this exciting topic. Ideas for related content around blockchain are most welcome.