How Blockchain Technology Could Transform Marketing Part 2

Collecting Data. Advertising Fraud. Blockchain.

 

The Internet and technology have changed not only how people use products and services, they have also changed how people and organizations buy products and services. Today, it is possible to enter a keyword into a search engine and get information about several competing products. It is the customer who is in charge of what he or she is going to buy.

For this reason, today companies have to plan their marketing in advance and build complex marketing, operations and production systems. For instance, Apple analyses use of its existing products, designs new products in California, builds them in China, then announces them during certain times of year and only then starts selling them. Lines of people in front of Apple Stores on the launch days of new products such as a new iPhone are the result of years of work of thousands of people.

 

Types of data that companies collect

The data that companies collect about their prospects and customers has a number of properties. They are volume, variety, accuracy and speed of data collection. One of the factors that allow companies today to use artificial intelligence, machine learning and predictive technologies is that the amount of data is increasing exponentially.

At the same time, there is often a gap between how and when companies collect the data and how companies use the data. For example, in the recent years digital advertising and digital engagement have been getting more and more complex. It seems that there’s a new social media network or platform appearing every day.

If in the past a company had a choice between TV, radio and print, today a successful business needs to use all of them and in addition to that be on Facebook, Google, LinkedIn, Snapchat, Yelp, sell products on Amazon and Jet, and so on.

 

Fraud in digital marketing as a problem

Many of these platforms have their own advertising solutions and ad fraud is becoming more and more of a problem. According to a report from Forrester (source: https://www.forrester.com/PoorQuality+Ads+Cost+Marketers+74+Billion+Last+Year/-/E-PRE9724 ), in 2017, over 50% of budgets spent on digital marketing have been wasted because of fraudulent activity. In hard numbers, this means wasting over $7 billion dollars. Forrester has predicted that this number will grow to over $10 billion by 2021. The main source of the fraud and waste is video.

For example, an article in the Wall Street Journal from September 22, 2016, claimed that Facebook has been deceiving its video advertisers for over two years by overextending video ad viewing times on the platform. Facebook explained to some ad buying agencies that the mistakes it made it counting the length of times people were watching ads were overestimated by between 60% and 80% (source: https://www.wsj.com/articles/facebook-overestimated-key-video-metric-for-two-years-1474586951).

 

What is blockchain?

A blockchain works in the same way as a ledger. The Bitcoin network was the first blockchain network to gain popularity and adoption on a large scale. The Bitcoin blockchain is a ledger that contains information about financial transactions, but which is only one of the applications of the blockchain technology.

With the introduction of the Bitcoin blockchain in 2009 Satoshi Nakamoto, the creator of the network, was able to solve a problem that nobody before him was able to solve. This problem was the problem of double spending, which is when a user tries to send funds to several parties as the same time pretending that he or she is sending them to just one recipient. This is the same issue that exists with copying files on today’s electronic devices: there is nothing preventing users from copying a file multiple times and no matter if you are using Mac or PC, you can’t tell how many times a file has been copied.

Satoshi Nakamoto has solved this issue by recording all the transactions that occur on the Bitcoin network onto the Bitcoin blockchain.

 

How do blockchain transactions work?

When a user initiates a Bitcoin transaction, the transaction becomes visible on the network. For example, you can see all the visible transactions that are not yet a part of the Bitcoin blockchain here: https://blockchain.info/unconfirmed-transactions

Then, miners compile transactions into blocks of Bitcoin blockchain. The network aims to create a block of the blockchain every 10 minutes, which means that it takes about 10 minutes for a transaction to become a part of the blockchain.

There is a lot that goes into the creation of Bitcoin blocks. Miners on the Bitcoin network do not simply create sets of data with the information about transactions. They seal this data with cryptography hashes.