How Blockchain Technology Could Transform Marketing Part 5

Keeping customer preferences on blockchain. Potential roadblocks.

 

While it is true that different customers prefer different ways of communication and a customer may not notice a banner ad but will notice a Facebook ad, overwhelming customers with ads is not always a winning strategy.

Often, the reason why businesses show all the ads they show is simply because they do not know enough about their prospects and customers and have no way of merging and segmenting the data, as strange as this may sound in the twenty-first century. Sometimes, business and organizations simply do not know enough about what their customers want, when they want it or in what format they prefer information.

For instance, if a company knew that prospect A is likely to respond to a banner ad and not likely to respond to a video ad, not showing the video ad would benefit both the company and the prospect. The company would save money on advertising and the prospect would be annoyed with an ad that he or she would not respond to anyways.

You have probably experienced this problem yourself. You would be looking for an item in a certain category, say, a toaster. You would spend a few days deciding what toaster to buy and where, yet even after you make the purchase you will still see banner ads with toasters, Facebook ads, and more. By the time you have made your purchase, all these ads are completely irrelevant and are simply a waste of advertising dollars.

Managing ads via blockchain could prevent this from happening. A network could have an optimal frequency parameter or length of advertising period parameter and once a prospect does not fit into a category any longer, it would stop showing ads, not waste any money, and not aggravate the customers with useless and irrelevant advertising.

Some people may erroneously believe that consumers would not want companies to have their information. This assumption is simply not true.

According to an article in Bloomberg from November 2, 2017 and multiple other studies and sources, people have no problem sharing their information if this leads to better user and engagement experience and less annoying and irrelevant advertising.

Consumers have been exchanging their personal information for information, services and products they believe are valuable, for a long time. For example, today nobody is surprised when they come to a website and see a banner window that offers them a discount off their first purchase in exchange for their email. In essence, this exchange is an exchange of personal information for a benefit. The same happens when consumers verify their identities with their social media profiles in order to get access to free Wi-Fi and other services.

The problem of many consumers who do not want to share their information is not about the information as such. It is about trust and being confident that the company that they share the information with will not abuse the data, will not make it accessible to a malicious third party or leave it vulnerable to hacking attacks.

As history and instances such as the hack of Equifax agency show, companies often leave information vulnerable when the protection of the data should be their primary goal and concern.

Blockchain technology could save these problems by keeping information secure and only letting authorized parties access the data. Just like the Bitcoin network serves as a trusted third party between users who want to transact with each other without a bank or a government-issued currency, a blockchain network could serve as a way for consumers to let brands know about their preferences. Brands could also use such networks to collect a variety of data to sell more effectively and efficiently and eliminate advertising waste and fraud while at the same time protecting privacy, rights and wishes of the consumers.

 

Potential roadblocks: blockchain transaction capacity

One of the biggest roadblocks in the implementation of blockchain technology in marketing tools and services is transactional capacity of blockchain networks.

For instance, Bitcoin network keeps the size of its block limited by one megabyte. Satoshi Nakamoto has programmed the network to aim to create a block of the blockchain every 10 minutes. In practice, these numbers mean that the transactional capacity of the Bitcoin blockchain is between three and seven transactions per second. Some other cryptocurrency networks such as Bitcoin Cash, Ethereum and Litecoin have tried to solve this problem by increasing the size of the blocks and creating blocks faster than Bitcoin, but their transactional capacity is still measured in tens of transactions per second. For comparison, Visa financial network can process more than twenty thousand transactions per second. Obviously, a blockchain that records marketing information about ad viewership and preferences for thousands of customers will not be able to function with a small transactional capacity. It will need to be closer to the current capacity of Visa and not Bitcoin or Ethereum.