Blockchain’s Role in Disrupting a Data-Driven Marketing Ecosystem
When it comes to data, today’s world is one of abundance—where everything from a consumer’s browsing history to their foot traffic and location could give brands a window into who they are as people, their behaviors, and their preferences. Amid rapid technological advances, the last decade alone has seen the emergence of novel customer channels and opened the path towards previously inaccessible markets—not only in terms of geography, but also in terms of mediums—be it mobile, web, or social media.
Now, we’ve reached the point where marketers can use real-time data to deliver tailored recommendations, content, offers, and experiences in a way that is both meaningful to customers and profitable for companies. At the same time, the revenue generated from these data-driven advertisements plays a fundamental role in keeping their favorite websites, apps, and essentially, the internet, afloat. Such is the nature of today’s digital marketing ecosystem.
To this effect, data is not only a helpful tool for modern marketers but a necessity. However, with the overwhelming amount of data being leveraged across today’s marketing landscape and the ever-evolving approaches to data governance, critical roadblocks have emerged when it comes to data security, privacy, and quality. Thankfully, implementing and integrating the right technologies can allow marketers to better utilize data to optimize campaigns, while simultaneously forging trust with customers by adequately protecting their data.
Enter Blockchain in Data-Driven Marketing
Once classified as a technological experiment, blockchain has since made the leap from theoretical to practical—and as the technology continues to mature, we’re seeing increased development of more robust, enterprise-ready solutions. With blockchain pilots from IAB Tech Lab and JICWEBS catching the interest of household names such as Nestlé, McDonald’s, and Unilever, it’s becoming increasingly clear that the technology has proven its worth as being more than just a buzzword.
So what exactly can it do for you?
Well, many marketers will be well-acquainted with long-standing pain points that continue to plague today’s digital marketing ecosystem—be it data discrepancies, the challenges of an opaque supply chain, or ad fraud. Blockchain is well-positioned to address these issues, restoring not only trust and transparency but ensuring greater uniformity within a largely fragmented sector—potentially revolutionizing the way marketers conduct their campaigns.
For one, smart contracts—self-executing agreements—can be pre-encoded with guidelines with which to evaluate impressions, ensuring that each one meets a common standard. This allows for greater uniformity in data standards while providing greater assurances that advertisers are only paying for genuine impressions that were served verifiably viewable environments. This could potentially solve the perennial issue of ad fraud which, estimated to hit $35 billion in this year alone, has been a long-standing issue across the digital advertising sector as a whole.
Furthermore, as an immutable, distributed ledger, blockchain can inject greater accountability in a campaign environment. With it, all campaign stakeholders benefit from a full, standardized view of all transactions taking place in real-time.
When Privacy Meets Provenance
Amid ever-increasing rates of data breaches or uncannily accurate marketing messages, consumers are becoming more sensitive to how their data is being used.
Regulators have responded in kind, with some of the world’s most stringent data protection frameworks emerging in the past five years following wide-scale data breaches involving social platforms. While it’s certainly true that rapid advancements in technology have led to the challenges that we’re seeing today, technology, too, will be the backbone of the solutions to address them.
Employing the use of an efficient, automated distributed ledger technology could help brands, advertisers and publishers maintain an end-to-end view of the entire history of given data points with a full view of how, when, and for what they were used. Blockchain, which allows data to be stored in a tamper-proof yet replicable way, eliminates the need to trust in a central authority or an independent third-party. Moreover, blockchain can also facilitate the portability of consumer data and enable secure data processing through capabilities such as audit trails and traceability, and the use of consensus mechanisms.
In a bid to govern the privacy of sensitive personal data held by businesses and organizations, requirements stipulated in today’s data protection frameworks call for a degree of traceability and accountability from data controllers. According to Article 30 of the European Union’s General Data Protection Regulation, all data processing activities are subject to stringent documentation requirements—to that end, if a regulator asks to see the history of use for a given data set, it needs to be able to be produced. By recording how data has been processed and used, the provenance of blockchain could be the solution to greater data analytics capabilities in a privacy-compliant manner, enabling advertisers to collect and store consumer data securely while adhering to those regulatory requirements.
Undeniably, the enactment of privacy frameworks like the GDPR and, more recently, California’s Consumer Privacy Rights Act has catalyzed a widespread revision of existing data collection, management, and analysis processes across every industry. Under such regulatory demands, compliance may be key, but marketers will also need to continue delivering the same brand experiences that consumers have come to expect—all while adhering to the various data privacy guidelines.
Evidently, integrating blockchain technology can likewise prove advantageous for organizations in several ways. As a distributed ledger, blockchain can offer a distributed or decentralized network for marketers to leverage, mitigating the threat of data breaches and potential cyber compromise due to the absence of a single-source of failure.
Centralized databases, on the other hand, are potential honeypots for hackers as existing security vulnerabilities can easily be exploited, causing the entire system to fail once it’s been penetrated. By spreading processing activities across a network of systems, blockchain eradicates the possibility of a central point of failure on an infrastructural level and distributes risk such that even if one area of the network is attacked, the entirety of its operations cannot fail and security can be preserved.
To make it even more secure, pairing blockchain with other security mechanisms such as differential privacy and federated learning adds an extra layer of protection, allowing companies to securely collect and share aggregate data about user habits. With these technologies, marketers can continue to leverage consumer data to deliver personalized marketing messages while keeping personal identities secure and ensuring that the compliance process remains transparent and accountable.
Quality over quantity
Data is only as valuable as the insights it produces, the decisions it influences, and the results it yields. Without the ability to ensure data integrity, marketers are relinquishing their most powerful tool. Harnessing trusted, high-fidelity data that has been procured in a compliant manner is not just vital in empowering marketers to effectively understand and engage their consumers, but also in ensuring that media budgets are not unnecessarily wasted. With nearly 7 in 10 brands expecting a reduction in their advertising budgets in the wake of COVID-19, this could be exactly what the digital marketing industry needs to in order to make best use of every dollar in their media spend.
Furthermore, in an increasingly privacy-conscious world, accountability and compliance need to come first. With the help of emerging technologies such as blockchain, advertisers and publishers will be able to bring much-needed clarity, transparency and accountability to the advertising supply chain ecosystem.