So why should you care about blockchain?

BBDO's Thomas Kenny and Zach Kula break down the marketing implications for the biggest buzzword in tech.

By Thomas Kenny and Zach Kula

In the simplest terms, blockchain is a means of collecting a variety of different interactions online in real time. These ever-growing collections of data are called “blocks,” and each block contains the data from all the blocks that preceded it, forming a chain – hence, blockchain. These blocks are both encrypted and decentralized, stored across a network of computers to ensure the data they contain is both transparent and cannot be tampered with.

The broad impacts are efficiency (allowing for direct transactions between two parties and negating the need for intermediaries), attribution (keeping a running ledger of all transactions, making a permanent and traceable record) and transparency (existing across a decentralized network, allowing every to see every transaction as it occurs).

Anywhere data is stored or online transactions are made will be touched by the adoption of blockchain. That means just about every industry will be impacted, but these are six implications that are likely to take hold of marketing in the very near future.

Online impressions will be more valuable

“There’s at least 20 to 30 percent of waste in the media supply chain because of lack of viewability, nontransparent contracts, nontransparent measurement of inputs, fraud and now even your ads showing up in unsafe places.”

This was P&G CMO Marc Pritchard speaking at the IAB’s annual leadership meeting earlier this year, but blockchain could solve almost all these issues. A buyer could buy an impression, which is encrypted in a block, and then broadcast to every single participant on the chain. The impression is verified by the publisher, then added to the ledger. Everyone in the blockchain gets to see the impression event and approve it. With this level of transparency, brands know with almost complete certainty that their ads are actually being seen by the intended audience, which in turn means impressions become more valuable.

Fewer ads online

The other reason impressions might become more valuable is because blockchain will make them more scarce. Online transactions are currently processed by third parties that charge fees to cover costs and make a profit. But with blockchain, you can transfer any amount of money in digital currency, no matter how small, without a third party’s added cost. Many are predicting micropayments that will create a new revenue model for content creators. Rather than pay for content with attention – in the form of things like impressions – people will exchange small amounts of currency for the content they consume in an ad-free environment. It will make the subscription-based, Netflixification of the internet that much easier.

People – not Facebook and Google – own their data

Facebook and Google currently stand as the undisputed giants of online advertising, accounting for roughly 60% of digital ad spend in the U.S. But because blockchain technology can distribute consumer data to the entire network, the data will not need to be kept on secure company servers before it’s put up for sale to those with a relevant interest. Furthermore, because the data is decentralized, it does not require a central authority to ensure its integrity. Both of those factors reduce the role companies like Google and Facebook play when it comes to storage and verification of consumer data. In other words, marketers will have direct access to the data they want, and providing individuals permission to access it.

Higher efficiency and lower fees

One of the macro implications of blockchain is the streamlining of cumbersome processes and red tape, meaning many functions marketers use to get jobs done will be less time consuming and costly – and possibly reduce agency fees. Today we might hire a vendor, negotiate a price and timeframe, and then – when the contract expires – come to an agreement with the vendor on what has happened and get billed. We approve the invoice, send it over to accounts payable, and – thirty days later – the vendor gets paid. But a “smart” contract could use data stored on a blockchain network to determine if pre-determined conditions have been met and trigger an automation of the whole process.

Expanding talent pool

The preponderance of part time and contract employees has been on the rise for years, but this trend is likely to be jumpstarted as blockchain technology becomes widely adopted. A decision to have a full-time versus freelance employees is based on efficiency. So if smart contracts become more and more advanced, a decentralized network between companies and freelancers can become seamless and efficient with agreements that are automatically generated and executed. With technology supporting easier coordination and collaboration, the cost of having a contractor do a job could fall below the cost of the full-time employee.

Transparency will no longer be optional

With the widespread adoption of blockchain, it’s not difficult to envision a world wherein most actions made by a company, if not all, will be verifiable. Everything from product sourcing to charitable donations to investments will have verifiable proof within a network built on blockchain. Consumers will come to expect a deeper level of transparency into certain company activities. In a world with growing expectations that brands will adhere to a set of values and ethics set by the consumer, people will expect a clear line of sight to whether these standards are being upheld. Brands that fall short of these expectations will be punished and those that meet them will be rewarded.

Thomas Kenny is VP of strategy at BBDO Toronto
Zach Kula is a strategist at BBDO Toronto