Table of Contents:
- Digital Marketing Today
- Crypto Effects on Digital Marketing
- Crypto-Driven Digital Marketing: Benefits and Drawbacks
- Advertisers’ Potential Solutions
- Final Note
With blockchain and crypto penetrating various business niches from healthcare to algorithmic trading and proving its utility, digital marketing is now making moves to adapt itself to the crypto world. Although only about 9% of large companies are committed to accepting crypto tokens in consumer transactions over the next few years, more will follow suit. Thus, it is important to understand how cryptocurrency will transform digital advertising.
Digital Marketing Today
Currently, digital marketing uses a shotgun approach to reach large audiences. It pushes its advertisements, promotions, and sponsored events into the faces, places, and spaces of large audiences and hopes for high conversion rates, like 2% of the audience reached by the ads.
Moreover, it decides which members of the public are likely to purchase its goods and services by using data collected on the public by private companies. These private companies use the data for their own marketing campaigns or sell the information to other companies that want to use it to target specific demographics.
Notably, the public has no control over how or when it is exposed to advertising content. Also, the public is not financially compensated for the time it spends watching the advertisements. Lastly, it is quite difficult for advertisers to know which advertisements were effective and which members of the viewing audience responded to them.
Crypto’s Effects on Digital Marketing
Cryptocurrency will reduce the number of parties involved in advertising campaigns. Modern digital advertisements involve four parties: the consumer (you), advertiser, content creator, and platform hosting the advertisement (e.g., Google, Facebook, YouTube). With blockchain advertising, advertisers can eliminate the platform that hosts advertisements. Instead of paying them, advertisers will upload their advertisements to a blockchain and the blockchain will make them available to its platform users. In short, the future of digital marketing limits the interacting parties to three groups: the consumers (you), advertisers, and the blockchain supporting the transactions between the consumer and advertiser.
As blockchain technology and cryptocurrency become more pervasive, digital marketers must incorporate them into their marketing strategies and campaigns, e.g. rewards or loyalty programs. To do so, they must understand the benefits and drawbacks of engaging in crypto-driven advertising in terms of using it and how to overcome its data collecting limitations.
Firstly, social media will play a key role in driving traffic to advertisers’ content. Advertisers will be using online forums like Reddit, Discord, Twitter, and Facebook, which will fuel interest in the content via word of mouth. It is the promotion, discussion, shared links, etc., that are shared and discussed in these forums that will replace the shotgun advertising that is common today.
On the blockchain, platform users will be able to select which advertisements they want to view online. If they engage with the advertisers’ content, then they will be rewarded with crypto tokens. They will also be paid crypto tokens for giving advertisers their personal data. So, in short, it is the public that is paid for its information and decides which information it will sell to different advertisers. For exclusive advertising content, blockchains may require users to pay them for the privilege of accessing the content.
Crypto-Driven Digital Marketing: Benefits and Drawbacks
There are several benefits and drawbacks to using crypto-driven digital marketing. The ones listed here are the most obvious and will need to be addressed before it can be effectively implemented by advertisers.
- It will be easier to locate ads for goods and services of interest using keywords and phrases when the ads are on the blockchain.
- Consumers who engage with ads on the blockchain will have a higher conversion rate than those being forced to view the ads.
- Consumers receive ad tokens for engaging with the ads and sharing their personal information with advertisers.
- There is greater protection of consumer data and privacy.
- Advertisers will have lower advertising costs because there are fewer parties involved in their advertising campaigns. Although blockchains must be paid for by making the ads available to their platform users, the fees assessed are much lower than those charged by private companies like Google.
- More direct and quicker transactions between advertisers and consumers are possible.
- No more fake experts, actors, fans, devotees, or other trickery used to persuade the public to purchase the promoted goods/services.
- Advertisers will choose the blockchains that host their advertisements based on the blockchain’s reputation.
- It will be difficult for advertisers to collect copious amounts of data about the general public and their customers.
- Companies will find it more difficult to target specific audiences on the blockchain because they may not know how to attract their attention or interest.
- Digital ads will have to be more relevant, compelling, engaging, and attractive to platform users if advertisers want the platform users to select them.
Advertisers’ Potential Solutions
The drawbacks faced by advertisers in the crypto-driven marketing space have been faced by advertisers at every stage of the evolution of commerce. For example, the introduction of online commerce flummoxed advertisers until they figured out how to collect data from consumers shopping online. Moreover, when social media sites became a social phenomenon, advertisers and social media platforms learned how to passively collect warehouses full of data about social media users.
Some actions that advertisers may choose to take are:
- Using ad tokens that are specific to their preferred advertising platforms.
- Using platform-specific promotions, events, and content to encourage consumers to use specific blockchains.
- Requiring platform users to register for specific crypto wallets in order to store their ad tokens.
- Requiring platform users to complete “Know Your Customer” (KYC) processes if they want to use a platform or be rewarded with ad tokens on it. KYC registration enables platforms or third parties operating on the platform to collect information on the platform users via their platform activities and token earnings.
Crypto-driven marketing strategies represent tremendous opportunities and challenges for advertisers. These same pros and cons were present when consumers began using online commerce, third-party payment processors, and coupons. In each instance, advertisers were able to optimize their collection of consumer data and reach their target audiences. Still, crypto-driven digital marketing does offer blockchain users more protection and privacy than current marketing strategies. In addition, the anonymity and transactional independence available to individuals via Web 3.0 is a welcome commercial advance and gives consumers more control over how, when, and with whom they do business. This makes for greater competition and ideally more innovation in the crypto world.