Last updated on June 21st, 2023 at 05:01 pm
The unique properties of the blockchain such as decentralization, speed, and transparency have prompted many sectors of the global economy to adopt this technology, thus enhancing business processes.
At the moment, every industry wants to make the best use of blockchain technology, including digital marketing.
The dream of every business is to get higher conversion rates through its digital marketing and advertising campaigns. Artificial intelligence (AI) and other analytical tools have contributed greatly to this aspect. However, there are prospects for blockchain to make even bigger contributions.
This technology will make it easier for consumers to search for better preferences which are of great benefit to many businesses. There are suggestions that the future of blockchain technology is Exit intent popup which is said to increase conversion rate to a great extent.
This article will focus on how blockchain technology is generally taking digital marketing a step further.
Why Blockchain is Necessary for Digital Marketing
The use of blockchain in digital marketing is important due to a number of reasons explained below;
To improve security
Security poses a major concern when it comes to buying and selling online, especially in the area of financial data. With blockchain, even though participants are anonymous, transactions are verified and visible for all to see. This improves security and minimizes hacks.
Initiating Ads without intermediaries
As a business, reaching your target audience through advertisements will involve spending a huge amount of money, as well as the use of search engines (e.g. Google) to help you reach customers. However, with the use of blockchain technology, there will be no need for a third-party network because users will be automatically verified.
Access to quality customer data
Customers have always had issues signing up with one company and receiving ads from another. The use of blockchain will eliminate such breaches, ensuring that customers’ data stay with only companies they’re interested in.
Trust-building
This is particularly important for small businesses which potential clients are usually wary about. There are situations where clients will prefer to patronize big and established businesses because they feel they are up to the task. But if small businesses use the blockchain to upload all valuable data, it will be available for all to see, hence increasing their reputation and making clients believe they are capable of a given task.
Alternative payment method
The use of blockchain in digital marketing will pave the way for other payment methods such as cryptocurrencies. Crypto payments are usually fast and transparent.
Eliminating fake actors
When it comes to digital marketing and social media platforms, fake likes, fake followers, fake retweets and fake products are not strange. Investing in blockchain will ensure businesses get direct access to their target audience, ensuring that unscrupulous intermediaries are eliminated.
Use of Blockchain in Digital Marketing
There are suggestions that blockchain in digital marketing will provide better metrics for a wide audience without the use of intermediaries, resulting in higher conversion rates.
Below are some of the use cases of blockchain in digital marketing:
Bringing gift card merchants together in one place
Gift cards can be likened to prepaid debit cards loaded with funds for future use. The two major types are the close loop and open loop, which could be spent online or in person. According to a survey, about 59% of customers tend to spend more than the value contained in a gift card, while 29% of those surveyed never get to spend gift cards they receive.
Even though gift cards are registered online for security, they could still be lost. But the blockchain could serve as a more secure locker through the use of encrypted authentication methods that ties a user to his/her gift card.
Prevention of product fraud
Gone are the days when customers relied on brand loyalty. Nowadays, they focus on product quality and also lay emphasis on ethical practices and workers’ welfare. For instance, Amazon was seriously criticized for overworking their warehouse workers, prompting them to increase the company-wide minimum wage to $15 per hour.
With blockchain technology, the genuineness and legitimacy of a product can be tracked, giving customers an insight into who made the product. All of this information forms an integral selling point in ads campaigns.
Tokenizing loyalty rewards programs
Loyal programs are usually targeted at customers to choose one company over another that offers similar products and quality. Though there may be signs that businesses like to take advantage of customers, reports have it that at least half of loyalty programs face low engagement.
The use of blockchain in loyalty programs will unify the process, allowing customers to redeem their points immediately or trade the points on the blockchain marketplace. Also, blockchains could allow the use of smart contracts for the automatic distribution of rewards.
Protecting and rewarding customers for personal information
It is important that companies protect customers’ personal information when they sign up on their websites. Blockchain technology can protect personal information based on choice. There is an option to share user data for financial rewards.
The data is simply extracted from the website. When users voluntarily give out their data, advertisers will get greater insights, while consumers will get extra perks at their disposal.
Verifying ads engagement
The internet is now filled with bots posing as humans, hampering online ads by falsifying engagement statistics to a large extent. As far back as 2013, it was assumed that 20–90% of clicks on online ads were executed by bots and not actual humans.
However, blockchain has the ability to keep bots from interacting and executing clicks associated with online ads, hence making engagements to be truly verified.
Effect of Cryptocurrency on Digital Marketing
So far, we have seen the importance of blockchain in digital marketing — the necessity of this technology and how it is used in digital marketing. In addition, user data is quite useful to digital marketers who build and optimize campaigns.
This data helps marketers display ads to their target audience and convert them to paying customers.
Cryptocurrencies have an inverse impact on digital marketing because if the blockchain power of digital assets can move the power in the users’ hands, the audience size is bound to decrease. John Jack, in an article, gave an example to corroborate this inverse relationship.
“You might be able to generate a highly targeted audience with Facebook Ads and reach about 10 million consumers. If you can convert 2% of that audience, it would be 2,00,000 customers. However, if the audience size diminishes by 10%, for example, suddenly you will only be reaching 1 million customers and convert 20,000 customers only. Needless to say, this would make digital marketing even more challenging and competitive at the same time.”
How to use MLM in Marketing
Multi-level marketing (MLM) is a distributive method used by companies to get their products to customers through the use of sales representatives rather than offering them in brick and mortar stores.
These representatives may walk from home to home to sell these products and earn based on commission earned from personal sales. To use MLM to market your product, the first step is to recruit an individual with interest in your business and product.
Below is a sequence of how MLM works in marketing.
- A number of individuals are brought into the business like contractors or distributors and tasked with selling the company’s products or services to family and friends.
- Sales can be done online or in-person and these distributors earn on a commission basis.
- As sales progress, the distributors are now encouraged to recruit other participants to also join the company as distributors of the same products and services.
- As long as the chain or pyramid keeps growing, participants at every level get some form of commission or incentive. Over a hundred or thousands of participants may be involved, depending on the size of the company.
This method may seem quite impressive in marketing a product, however, a major challenge is the pyramid scheme where money is taken from new recruits to pay those at the top of the pyramid, rather than those who performed better.
Challenges of using Blockchain in Digital Marketing
While blockchain has proved to be potentially useful in digital marketing, there are still some challenges standing in the way of this technology in this sector of the economy. These include:
Partial centralization
Partial centralization could occur if a company owns more than 50% of the nodes in the network, giving them the power to easily control data traffic. This defeats one of the major goals of the blockchain which is decentralization.
High energy consumption
Blockchain technology consumes too much energy. This is because miners are involved in every step of the way, verifying transactions. This may pose a very big challenge when it comes to digital marketing.
Future Improvements of Blockchain in Digital Marketing
Blockchain technology has the potential to make digital marketing big in the near future. However, there are areas that must be improved on. These include:
A shift from the norm
The use of a blockchain will represent a total shift from the commonly known financial and commerce model. This will require investment from both users and operators. The culture of blockchain must be driven into every aspect of marketing.
Regulatory improvement
At the moment, there are no regulations on how blockchain transactions in digital marketing can be written, making the technology behind in this aspect. If not properly addressed, this may remain a challenge in countries and industries when the use of bitcoin and blockchain is highly regulated.
Scalability
The blockchain ecosystem currently faces scalability issues that affect consistent speed and verification. Sorting this out will allow for the widespread adoption of blockchain in digital marketing.
In Conclusion…
- Blockchain is a fascinating technology that doesn’t just give room for data storage, transaction verification, but has also found vast applications in the global economy. Its application in digital marketing will help small businesses compete with larger companies, eliminate product fraud and protect customers’ data.
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