Blockchain in Digital Marketing

Concerns relating to cybersecurity, data protection, and transparency are becoming central, especially in marketing, as commerce increasingly moves to digital channels. The challenge is to build – and maintain – the trust of users and (prospective) consumers. Blockchain provides marketing organizations with new options that allow them to operate more autonomously in the advertising market, and to increase the authenticity of their product and corporate communications.

The turbulent start to the 2020s, especially in the face of the coronavirus pandemic, is helping digital technologies – including blockchain – to gain ground. Most people know blockchain as the bedrock for cryptocurrencies such as bitcoin. Yet it is also used as a permanent database of auditable (trans)actions in a peer-to-peer network. In digital marketing, this means more trust, more transparency, and more security.

Blockchain is on the rise

Investments in blockchain technology are increasing. The IDC’s Blockchain Spending Guide predicts continuous growth in blockchain spending in Europe from approx. EUR 713 million (2019) to almost EUR 4.5 billion in 2023. According to a Bitkom survey, six out of ten German companies believe that blockchain technology will play an important role in the future competitive framework. 87 percent of companies who are using, planning to use, or discussing whether to use blockchain regard it as an opportunity to increase efficiency, while 41 percent view it as a tool for building trust with other organizations.

Blockchain’s importance in the realm of digital marketing is also growing. It has ‘the potential to create more transparency, trust and efficiency in the digital advertising ecosystem’ according to a Blockchain study of publishing, agency, technology, and brand experts conducted by the German Advertisers Association (OWM) in 2019. High costs, the failure of real-time apps to achieve commercial viability, and the lack of sector-wide initiatives are (still) preventing widespread adoption. Sooner or later that will change because blockchain technology makes marketing processes more transparent, improves consumer confidence, and, as computing resources continue to grow, it will be able to handle even larger volumes of data in the future.

More trust in the digital world

The monopolies of large online platforms pose challenges to many market players. Data scandals have additionally fueled skepticism about the digital advertising scene, and insecurities among users and advertisers, who feel that control over their data is slipping out of their grasp. The blockchain can help to regain trust.

Essentially, the blockchain stores data on decentralized servers at several locations rather than in one centralized repository. These distributed data records (blocks) are inseparably linked into a chain. Every computer (peer) in the network receives the same copy of the unalterable data. This has the advantage of no more central repository that all market players have to trust – and therefore no central point of attack for cybercriminals or vulnerability to technical malfunctions. The principle is akin to an online document stored at a decentralized location that can be simultaneously updated across several computers.

Boosting brand transparency

Sustainability is a defining element of every marketing agenda – and blockchain can serve sustainability-focused brands. An increasing number of enterprises are discovering the merits of blockchain technology in supply chain management. For example, it can be used to verify that products have been sustainably packaged or transported; two key criteria when your products are organic. In combination with specially protected Industrial Control Systems (ICS, e.g. T-Systems) it ensures business continuity and guarantees higher data transparency by writing all data into a blockchain that is synchronized for all participants (e.g. manufacturer, shipping agent, and retailer).

This process makes reality checks on brand value propositions possible. Business process data can be prepared to deliver product origin and tracking information to the consumer. Solutions such as the cloud2cloud integration of the Cloud of Things (T-Systems) and the SCP (SAP Cloud Platform) use IoT, blockchain, and machine learning to monitor supply chains, such as the supply chain of the apples that are used to make a smoothie (Use Case, T-Systems). IoT data, supply data, and origin data confirming that the organic apples really are organic are in one single block, allowing companies to market their products as sustainable with far more credibility.

More online ad authenticity

It’s almost impossible to tell whether website visitors are humans, or whether click bots are being used to drive up impressions. A 2019 study by Juniper Research forecasted that advertisers would lose more than EUR 37 billion of ad spend globally in 2019 to fraudulent online advertising activities. Although the blockchain cannot prevent all kinds of fraudulent activities, it can help to improve transparency.

The adChain Registry is a blockchain-based protocol intended to prevent bots from manipulating advertising data. It replaces the ‘cost per thousand people reached’ performance metric by keeping a cryptographically secure record of publisher domain names that are accredited as non-fraudulent. Publisher domains that wish to be included in the adChain Registry pay a certain number of adTokens. If the domain doesn’t meet adChain Registry standards, it is not registered and the adTokens are not refunded. The idea is that advertisers pay registered publishers on adChain because their websites have been verified by people, not bots, and they can be sure of their quality.

Customer rewards for data sharing

Another digital online marketing challenge is how to identify customers without third-party cookies, according to two out of three experts surveyed for the Digital Dialog Insights 2019 study. One possible solution is GDPR-compliant identities in single sign-on processes and the blockchain is ideal for creating them. The advantage for advertisers is that instead of having to obtain customer data from several sources, which was necessary in the past, the customers create their own profiles.

In other words, the blockchain provides a framework for new interaction models. The Brave web browser offers a digital revenue model for publishers by rewarding users who view ad content with Basic Attention Tokens (BAT) that they can spend to support their favorite content creators. BitClave aims to make ad targeting more effective by rewarding consumers who put their data in the blockchain with tokens. Snovio has a similar concept for generating ‘better’ leads. Customers swap data against SNOV tokens and Snovio uses them to build a database of relevant, high-quality leads.

Smart cross-promotions with influencers

Smart contracts and blockchain technology open the way for cross-promotional marketing between brands and collaborations with bloggers or social media influencers. Smart contracts are computer protocols intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract.

Smart contracts automatically execute the obligations of all parties and ensure that payments are not affected until after the performance. Each contractual step must be completed before the next step in the process can take place. For example, the smart contract does not approve payment to an influencer until the influencer has published the social media post in his or her account.

Building a German infrastructure

Blockchain implementation is dependent on driving forces that are willing to establish the necessary infrastructure, according to OWM. The lack of secure blockchain infrastructure is a key hurdle to its success – in both the public and corporate spheres. This is the reason why T-Systems is investing in the German Blockchain Ecosystem (GBE). It is T-System’s blockchain-as-a-service platform offering a full set of features and capabilities to anyone who wants to execute a blockchain project or participate in a blockchain or consortium.

Many enterprises are currently considering which blockchain strategy is right for them. A blockchain-as-a-service model (e.g. T-Systems) is a practical solution that involves no investments in hardware and software resources. It allows enterprises to get their own blockchain up and running with minimum lead time and focus entirely on their own solutions – instead of wasting precious time setting up an infrastructure.

The rapidly growing competition factor

Although some potential applications for blockchain are still relatively unknown, it is starting to change the digital world. It is also fast becoming a competitive factor in digital marketing that advertisers cannot afford to ignore. Although it isn’t possible/necessary to use blockchain in all marketing scenarios, the fact that it boosts both transparency and consumer trust is an indicator of its vast potential.

T-Systems is already pioneering individual solutions to get enterprises started in the blockchain. Several pilot projects have been launched, and sector-wide experience sharing would be an important next step. Marketing organizations that want to remain competitive should definitely look into the processes that blockchain can simplify or even monetarize.

About the author:

Bj?rn Radde is Head of Digital Marketing at T-Systems International - one of the world's leading vendor-independent providers of digital services. Before he joints T-Systems he was Director Digital Experience at Sabre and Vice President Digital Marketing at Trust International. In this role, he was worldwide responsible for all digital marketing products of the company. Previously, Bj?rn was Director of Digital Marketing & E-Commerce at Okanda, an internet startup in the meeting's business, and Head of E-Commerce at the Steigenberger Hotel Group. After studying economics with a focus on online marketing and e-commerce, he initially worked at T-Online International AG and later at Deutsche Telekom AG within the Products & Innovation business unit.