The development of marketing and the growth of data volume have led to more effective decision-making in many cases, such as software marketing and banking. Studies have shown how the use of data, including that received from mobile devices, allowed getting information that has helped manufacturers better understand the needs of their customers.
The significant potential of data that is unstructured in the form of text, images, video, etc. has been documented in numerous scientific studies. But what about issues related to accuracy, reliability, and transparency. In the field of marketing, the answer to this question is the use of blockchain technology.
In recent years, the main cause of problems for many brands and advertisers has been the lack of transparency and accountability in finding out how effectively funds are spent on advertising. In digital markets, advertising is a complex process. Fraud is thriving, and the expenditure on marketers takes a significant place in the list of expenses of manufacturers.
According to Forrester, in 2016 56% of all funds spent on advertising were wasted due to the high level of fraud. It is expected that in the next decade, the level of fraud in the field of advertising globally will grow to $50 billion.
A recent study of the advertising industry showed that 79% of the surveyed advertisers expressed concern about transparency, more than a third of them are concerned about the lack of visibility of their advertising. That's why we're increasingly hearing that big brands like P & G are cutting advertising budgets because their media agencies have failed to provide them with the required level of transparency.
Blockchain implementation can change the situation in the field of marketing by focusing on the provision of more transparent information, checking and analyzing the actions of each consumer by checking the delivery of advertising in accordance with the peculiarities of the media contract. Marketers will be able to control how their ads are displayed, where their ads are placed, reducing the risk of fraud with the use of automatic bots. This will ensure that the ads are viewed by real consumers.
Consumers experience another fundamental reason for not viewing ads. Companies literally flood their customers with too many ads, emails, coupons, and messages. The reason they send dozens of different messages is that they know little about consumer preferences.
Current practice often resembles the release of dozens of javelins into the air in the hope that at least one will hit the bull's eye. A survey of marketers and advertising agencies showed that 94% of specialists do not have a common opinion about their consumers. This results in the fact that today there is a gap between consumers and marketers regarding what people want, when they want it, where they want it and how they want it.
This problem manifests itself when you see the same ad that literally haunts a user on the Internet when he goes from one site to another. For example, a person continues coming across an advertisement of the hotel, which he or she has already clicked on. Moreover, he or she booked a room there a couple of days ago.
Block technology can prevent the display of the same ad from being shown to all users, ensuring optimum frequency of ad display for each consumer. A number of studies have shown that the impact of the frequency of advertising effect on the propensity of consumers to make a purchase is from 4 to 6 ads in the optimal case. However, in reality, it is almost impossible to achieve this goal because of data quality problems. Smart contracts are able to fix this by providing the necessary level of tracking and transparency that is currently unavailable to many brands.
If consumers share more information about their preferences, manufacturers will be able to learn more about them. That will increase the relevance of their advertising messages and reduce the frequency of intrusive and useless advertising. But for some consumers, the obstacle to sharing information with companies is often a lack of confidence in how companies will use their personal data.
Blockchain capabilities, in particular, its transparency, can help companies to establish trust with consumers. It could also allow new ad technology providers like telecom providers (Verizon, AT & T, and others) to compete with Facebook, Amazon, and similar giants.
All this suggests that we are still away from the actual implementation of the advertising ecosystem based on the blockchain. The key obstacle that needs to be addressed is the speed of transactions. Due to the distributed nature of the technology, which involves the verification of transactions by miners, this process usually takes 10 to 30 seconds.
This means that today the technology cannot cope with the verification of transactions in the field of ad-tech, which are carried out within milliseconds. Thus, developers of advertising technologies will have to combine transactions into one block to form a single transaction, which, in its turn, will reduce transparency. In the short term, brands are likely to use blockchain as a means of verifying and authenticating transactions not in real time, but upon their conduct. However, this will still significantly improve the current situation.