Embracing blockchain in marketing and advertising
By Federico de Nardis, GroupM Africa CEO
The role of distributed ledger technology (DLT), or blockchain, in the coming years can be compared to that of cheap consumer broadband in enabling mass market videoconferencing technology.
Real-time videoconferencing and videophones were promised for decades, but when they were successfully developed in the 1980s the realisation soon dawned that the development of cheap broadband technologies was a prerequisite to rolling out the services. Only after consumers could economically obtain high-speed, high-bandwidth internet connections did video chat services become widespread. Today, for applications like applied machine learning and artificial intelligence, blockchain and other DLTs may play a similar catalyzing role. For this reason, it is important that DLT’s potential not be ignored.
DLT has been available to the public for over a decade in the form of Bitcoin’s public blockchain. By the end of 2018, DLT and blockchain had finally matured to the point that it could be practically leveraged to help solve problems in the AdTech ecosystem.
Stakeholders in the advertising and marketing ecosystem are now beginning to explore the possibilities. Now is a critical time for marketers to go beyond the hype to understand what exactly blockchain is, the emerging use case opportunities and what, if any, it can provide for a business.
Recognizing the nuances of blockchain and how it can impact multiple business facets are key to ensuring a business and brand which is embracing a future where blockchain may play a major day-to-day role.
Two promising areas include the management of digital identities and providing supply chain transparency. Depending on the industry, these could have drastic ramifications and opportunities for management systems.
The advertising industry’s ecosystem is increasingly complex, making building trust among advertisers, agencies, consumers and publishers even more difficult. The different stakeholders in the AdTech ecosystem have their own objectives and these must be aligned in symbiotic fashion to ensure an industry in good health for all. There is friction in this system, particularly as it relates to identity management, data monetization and the capturing of consumer consent for use of their data.
Solutions to date have merely been expensive Band-Aids and not full answers to the fundamental challenge: helping marketers follow their data and rands across the consumer journey.
DLT may potentially reduce this friction if implemented effectively.
In early 2018, the Interactive Advertising Bureau (IAB) issued guidance on DLT, underscoring the opportunity in advertising and the potential far beyond the financial sector.
IAB said that blockchain is a natural fit for the digital advertising supply chain due to its potential benefits: increased efficiency and transparency, cost reduction and fraud reduction.
To reap these benefits companies must ensure that DLT programs are meaningfully connected to their digital transformation agenda and GroupM believes there are five critical steps that should be performed in sequence to derive maximum benefit from DLT adoption:
1. Get the data strategy right in the first place
2. Move from a distributed database to a distributed ledger
3. Understand the world of cryptography
4. Incentivize consensus protocol
5. Decide of all of this is public or permissioned
Companies must also ensure the application of technologies is aligned to the company’s business priorities.
When selecting technology partners, companies must be wary of hyperbole. As is often the case with new technologies, vendors may over promise and companies must ensure they understand the real application of this technology.
Though unclear regulatory environments, legal risks, and questions about interoperability persist while DLT grows out of its infancy, public sector participation is increasing, and many governments are exploring potential applications.
By 2020, all major companies are anticipated to deploy consultants in examination of DLT projects for cost cutting. However, for every rand spent on DLT, another R20 will be spent on the “transformation” element of these projects.
While clients and partners should begin exploring DLT now, full adoption of DLT cannot be done in isolation. An enterprise-level shift in technology is required and it must be met by similar shifts across the industry and industry bodies have an important role to play.