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Changing the world of marketing with blockchain


By Roel van Rijsewijk | 28-11-2017 – Deloitte.






Roel van Rijsewijk
Roel van Rijsewijk
The world was introduced to the phenomenon of ‘blockchain’ through the launch of the bitcoin. Although this electronic currency was originally viewed with quite some skepticism, the underlying technology is now being seen as an innovation that is creating a revolutionary range of opportunities. In this blog we will imagine how blockchain could fundamentally change online marketing.

What is blockchain?

Blockchain has become a collective name for a whole variety of things based on the concept behind bitcoins. It is hard to explain exactly what it is. Because, how do you explain how the internet protocol works? If you do not yet know anything about the technology, I recommend you have a look at our Blockchain page to find out more. Alternatively, read a book, take a look at YouTube clips or ask a technical whizz to explain it. Don’t be put off by any difficult terms used. The great thing about blockchain – just like the internet protocol – is that it is fairly simple. The only thing is not to be scared off by complicated terminology. Just take some time to familiarize yourself with the basic concepts of cryptography.

What are 'fat protocols'?

Blockchain is more of a protocol than a technology, just like TCP/IP the internet protocol. Say you compare football to playing a game of chess. In football, the rules limit the game. As you can sometimes win by breaking the rules, you need a referee to enforce them. And there is always discussion about this. In chess, on the other hand, the rules themselves make the game. And that is what is called a protocol. You can break the rules in chess by, say, moving your knight in a different way than the protocol allows. But then you are no longer playing chess. You do not need a referee in chess games. The players themselves check each other’s moves on the chessboard. And then there is nothing to argue about because the whole game is based on consensus regarding the rules (i.e. the protocol).

What we have seen on the internet is the inevitable emergence of dominant applications like Google or Uber. In other words, a thin protocol layer – like TCP/IP (a set of universal standards enabling all computers to share data) – and everything else in a single, dominant application that contains all the data, sets all the rules and has the most value. What blockchain can do is expand the protocol layer so that only a thin application layer is needed, with most of the rules and all the data – so also the highest value – residing in the protocol.

That means you will soon be able to get into a taxi and pay your fare enabled by a very fat protocol, without the need for a fat application like Uber. That represents a total paradigm shift in society and the economy. Blockchain can create anarchy without chaos, trust without authority and security without controls.

Why is blockchain attractive for online marketing?

So is blockchain a solution looking for a problem? I do not think so. There are some systemic problem with the current online marketing eco-system that blockhain could potentially solve.

Look, for instance, at the power that dominant applications such as Google and Facebook have in online marketing. Or at transactions between advertisers and publishers involving all sorts of intermediaries consuming so much of the value created. What about malvertising and ad-blocking, and the challenges to privacy that society is having to contend with? These are all fundamental problems in the current ecosystem for which blockchain, a fat protocol, can provide solutions because of some unique features.

Distributed Ledger
In blockchain recording of transactions is distributed making everyone on the network a bookkeeper. This makes fraud impossible because everybody has the same informations which you can’t manipulate on your own. Transactions are checked by all nodes on the network and is based on consensus. There is only one truth.

Programmatic
Blochain is digital so currency can be programmed. For example you can program a payment so it is only released when certain conditions are met. This leads to so-called ‘smart contracts’ where terms and conditions about transactions are programmed. Paper is no longer needed and contracts are automatically enforced.

Cryptographically sealed
Cryptography ensures transparency without the loss of privacy. You can prove that you are entitled to something or that you possess certain attributes without disclosing your identity.

Works ‘trust-less’, e.g. without a trusted third party
Bitcoin has shown that autonomous, open-source technology (a fat protocol), can safely facilitate sensitive transactions between two entities that do not necessarily know or trust each other, without a trusted third party in between. In the case of Bitcoin, payments without the need of a bank. In the case of online marketing, advertising transactions between an advertiser and a publisher without an advertising network or agency in between.

So, what if a consortium of publishers and advertisers comes up with a protocol, a P2P marketing network of and for everyone, that facilitates direct auctions and transactions between advertisers, publishers and consumers without any third-party involvement? And what if there was a universal currency or token you could program and use to pay for online marketing in smart contracts? What if important metrics underlying interactions with content could be used in a distributed accounting system, with only one truth? What if users were in total control of their own personal information and that they can privately revealcertain attributes, without the users identity having to be disclosed? What if people could be paid if they make their attributes known to advertisers and drawattention to branded content? Maybe there could be a cryptocurrency for brand equity? These are just a few ideas, but the potential is incredibly interesting.

Blockchain certainly offers clear benefits for consumers and advertisers. These are distributed networks, where the power is no longer in the hands of major tech companies, but instead the community or, in other words, consumers and advertisers. And the fact that transactions are online means you bypass all sorts of third parties wanting to make money from them. That way, consumers and advertisers can reap all the benefits of a world where everything is connected andinformation flows freely but privacy is ensured.
Putting blockchain to work

My advice to those wanting to start using blockchain in marketing is to first buy some cryptocurrency. But do not put all your savings into these currencies. Instead, treat them as a ‘training budget’ because they’re still highly speculative.

Google the words ‘marketing’ and ‘blockchain’. Many of the new initiatives you’ll come across are being funded by an Initial Coin Offering (ICO) and they all publish a white paper explaining exactly what it is. So why not give a blockchain ICO that looks interesting a try?

The numbers of these marketing start-ups using blockchain are huge and increasing by the day. Have a look, for instance, at Brave, a new web browser from the makers of Firefox. It has a blockchain-based advertising network that uses its own currency, the Basic Attention Token (BAT). Or what about Steem, a social media platform where you get paid for posting content. Will this be a success? I’ve no idea. But it is certainly worth taking a look.


Note: the ICO's and start-ups mentioned in this blog should not be seen as endorsements by Deloitte.

For more information about blockchain applications, please contact Roel van Rijsewijk via rvanrijsewijk@deloitte.nl / +31882881103 or Jacob Boersma via jboersma@deloitte.nl / +31882882069.

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Thursday, December 7th 2017
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