Ledger Domain: How and Why Marketers Can Improve Their Implementations of the Blockchain

Looking At Milky Way, Image by Wall Boat

Is there any product, service or technology out there today that’s just a click away from offering people the virtual equivalent of a cure for the common cold that costs less than a dollar and tastes better than chocolate? No, of course not. But as new innovations inevitably rise and fall along the waves of the tech hype cycle, the true potential of The Next Big Tech Thing often takes years to become fully realized and optimized for a deep and wide variety of markets.

One of today’s leading candidates competing for this top-level billing is the blockchain.¹ It is enjoying massive media buzz, investment and experimentation in configuring it for a diversity of applications including, among many others, food supply chains, financial services and artists rights. This technology is providing new means to accomplish business tasks more securely and reliably, thus increasing operational efficiencies.

Yet whether the blockchain can and will fully and effectively scale in all circumstances still remains to be seen by many sectors of the business world. An inherently key question at the very heart of the blockchain’s growth and acceptance is whether marketers and advertisers can leverage many of its technological virtues and, if so, how they can best accomplish this?

Taking a deeply insightful and informative look at of the latest developments concerning this is a highly informative recent article entitled How Blockchain Can Help Marketers Build Better Relationships with Their Customers, by Campbell R. Harvey, Christine Moorman and Marc Toledo, posted on the Harvard Business Review website on October 1, 2018. I highly recommend a click-through and full read if you have an opportunity.

I will summarize and annotate this, reference in some related Subway Fold posts, and then pose some of my own ad-free questions.

The Benefits of Diminishing Transaction Costs

Economic Gardening, Image by Missy Schmidt

According to a February 2018 CMO Survey, just 8% of its participants rated the usage of the blockchain in their marketing operations as being “moderately or very important”. This technology is still “not well understood” among marketers and perceived as being over-hyped. This has resulted in a “wait and see” attitude about it. Nonetheless, there are compelling reasons to understand the blockchain and build specific marketing applications for it that will be more likely to benefit early adopters and innovators.

The blockchain’s virtues of “transparency, immutability and security” make it very suitable for a wide range of transactional and managerial functions. Likewise, it lowers the costs involved in executing all of these activities and, even more importantly, the need to rely so heavily on the web’s giant advertising intermediaries (primarily Google and Facebook), may be reduced. As well, the means now exist using this technology to permit consumers to better “own and control” their personal data.²

Currently, electronic transactions using credit and debit cards involve significant costs to online and real-world vendors. These associated costs are passed along to consumers. Sellers often set minimum purchase thresholds to maintain their profitability.

However, the transactional costs of using the blockchain are approaching zero. For example, MasterCard and Visa have implemented blockchain-based alternative systems enabling customers to “send money in any local currency”, without using a credit card. This again removes any embedded intermediaries and “connects directly to the banks” involved. Consequently, cross-border fees can be dispensed.

There are other advantages emerging for marketers and advertisers involving exchanges of real monetary value with consumers. Rather than these professionals all relying on third-parties such as Facebook for acquiring troves of customer data, they could instead use a system of micropayments³ to directly reward consumers for their personal data. For instance, under this alternative model, a supermarket chain could provide shoppers with a mobile app that pays them to install it, tracks their location, and use it for special deals on merchandise at personalized prices4.

Similarly, marketers could employ the use of smart contracts that vitiate the “need for validation, review, or authentication by intermediaries”. These can be engaged when participants subscribe to an email newsletter or customer rewards program. (More on this below.) The micropayments here are dispensed to consumers whenever they respond to a vendor’s emails or advertisements.

Like Flamingo Synapses, Image by Donal Mountain

Alleviating Google’s and Facebook’s Dominance in Online Advertising

This direct-reward-to-consumers architecture could similarly be deployed for the engagement of website ads. Presently, most users are put off by the current system of intrusive pop-ups and other forms of unavoidable online advertising. A growing Web-wide push back to this has been the use of ad-blocking browser add-ons.5

New alternatives based upon the blockchain can “recapture” some this lost ad revenue by directly compensating online consumers “for their attention”6. This could potentially diminish Google’s and Facebook’s lock on the majority of online ad and data revenues.7 Blockchain options will also enable individuals to “control their own online profiles and social graphs”.8

Taken together, these possibilities might permit companies to:

  • interact directly with their consumers
  • bypass patronizing the social media and search giants, and
  • avoid relentless email solicitations and “follow-me ads”

Furthermore, meaningful cost savings can be directly passed along to consumers by virtue of this voluntarily consumed advertising via these types of blockchain-supported conduits.

Image from Pixabay.com

Shutting Down Online Frauds and Spam

By 2016, $7.6 billion was appropriated by “fraudulent or deceptive activity” and is expected to increase soon to nearly $11 billion. Nonetheless, marketing teams who deploy the blockchain to “track their ads” can:

  • maintain control over their online activities
  • be more confident that expenditures are going to “ROI-generating activities”, and
  • measure the effects of their efforts on a per-user and per-mail scale

Thus, to the benefit of marketers and vendors and to the detriment of bad actors online are the following technological advantages:

Verification: The blockchain can be used to provide verification of “the origin and methodology of marketers”. It can likewise reduce or eliminate large-scale phishing spam through the use of micropayments to the recipients of marketing emails. This will enable “companies to identify consumers” who are genuinely interested in their offerings. Micropayments could then be dispensed in exchange for access to various forms of onscreen content.

Security: Such implementations could also potentially defeat malicious hacks using denial of service attacks (DoS) and could make social media sites more resistant to automated bot accounts. The former are attempts to overwhelm web servers with a flood of traffic and latter are widely used for massive distributions of deceptive information, as well as to illegally appropriate “online advertising from big brands”.

Authenticity: A user’s bonafides is one of the main cornerstones of the blockchain. Turning this into a service, Keybase.io is a company currently working on reducing social media fraud. Their blockchain-enabled app permits individual users to prove they are the “rightful owners” of various social media account. This makes marketing easier to monitor and advertising expenses more supportable.

“Origami Fish – Made by June”, image by Penny

Increasing Revenues from Media Viewership

Original and editorial web content built upon blockchain technology can potentially permit media companies to increase their “quality control and copyright protection”.9 For example, Kodak has developed a new product called KODAKOne, an image rights and distribution platform. It uses the blockchain to record the ownership rights to individual images. Photographers will be awarded greater control over their work than they currently have with how their pictures distribution online. In the future, photographers will automatically be sent payments whenever their content is used. This could probably also be used for video content creators whose work has gone viral.

A company called Coupit also uses blockchain tech to enable marketers to join loyalty and affiliate programs whereby consumers can opt-in and “trade rewards with each other”. As a result, marketers can increase their “visibility and transparency” in order to distinguish inactive from loyal consumers. They can next sharpen their marketing strategies to distribute “targeted offers” to each of these categories.

In those cases where marketers employ a data aggregator or analytics processor, using micropayments will permit companies to circumvent ad-blocking apps10. For consumers, this gives then more fine-point control over their personal data and privacy, and rewards them for their willingness to view advertising that they have chosen.

Taking an alternative approach to content monetization is a new web browser called Brave. In addition to providing many built-in privacy and security features, it contains a blockchain-based feature called Basic Attention Tokens (BATs). These enable “publishers to monetize value added services” whereby users can dispense these tokens to sites they choose for content they select.

“The Crystal Ball”, Image by Gyorgy Soponyai

Companies and Consumers are Both Beneficiaries

Along with the progression of the blockchain’s reach and capabilities, business “intermediaries will need to adapt” accordingly. As discussed above, consumers will be exercising increased control and discretion over how they decide to engage with advertisers and Web threats such as spam and phishing will become self-limiting as their current tactics will be economically undermined.

Balancing this power and attention shift, companies might be able to exert greater control over the “quality of inbound traffic” to their marketing programs and achieve greater understanding of their customers’ needs and motivations.  When pursuing such “high value customers”, these economic incentives will perhaps result in a correspondingly increase in value.

Given all of these advantages that marketers and advertisers have to gain from further embracing blockchain technology, “finding ways to design and implement” them should be a joint effort among corporate decision-makers not just in marketing but also from the strategy, finance and technology departments. Moreover, innovative applications of the blockchain may ultimately be more beneficially in connecting marketers and advertisers with their intended audiences in ways that may have not been otherwise previously possible.

My Questions

  • Given that Google and Facebook currently have an overwhelming lock on online advertising’s multi-$billion revenue streams, will they meet any potential challenges to this with their own blockchain-founded variants? If so, how might they be different in their approach to benefit both advertisers and consumers? At the very least, do they even perceive this as a legitimate threat to their business models?
  • In addition to rewarding consumers with micropayments for ad clicks and content views, what, if anything, could companies do to correspondingly build incentives into their pricing structures for consumers’ purchasers? How should pricing be affected for repeat or bulk purchases by consumers? What if consumers make referrals of additional interested consumers to these blockchain-based vendors?
  • Would using mixed media such as augmented reality and virtual reality lend themselves to blockchain-based marketing implementations to further attract new potential consumers? That is, in return for micropayments disbursed to capture users’ attention, might enhanced advertising or content consumption experiences benefit both advertisers and consumers who would both end up feeling as though they are receiving added value for their participation?
  • What new entrepreneurial opportunities for goods, services and technologies might arise from these new and extensible blockchain-based marketing capabilities?

 


1.  Some examples of earlier implementations of blockchain technology were covered in these Subway Fold posts.

2.  X-ref to the concluding paragraph of the June 7, 2018 Subway Fold post entitled Single File, Everyone: The Advent of the Universal Digital Profile, concerning another innovative effort to return full control of personal data to consumers called the Hub of All Things. Two other similar startups that have emerged during the past few weeks are Inrupt and Helm. This is starting to become a very interesting and innovative space. Furthermore, there was a fascinating and far-ranging article in The New York Times on October 19, 2018, entitled How the Blockchain Could Break Big Tech’s Hold on A.I., by Nathaniel Popper, exploring the possibility of using the blockchain as a means for individuals to control and distribute some of their personal information to be used in AI databases.

3.  Virtual reality pioneer, Microsoft scientist and author Jaron Lanier presented a persuasive case for this, among many other thought-provoking insights about the digital world, in his book entitled Who Owns the Future? (Simon & Schuster, 2013). Highly recommended reading if you have an opportunity.

4Amazon constantly and widely varies it prices based on all of the personal and market data they have accumulated as reported in an article posted on BusinessInsider.com on August 10, 2018, entitled Amazon Changes Prices on Its Products About Every 10 minutes — Here’s How and Why They Do It, by Neel Mehta, Parth Detroja, and Aditya Agashe.

5.  For example, AdBlock and Ghostery, among others, are browser add-ons that can effectively remove nearly all online ads. These apps are continually updated by their developers.

6.  Columbia University Law School professor and New York Times contributing opinion writer Tim Wu wrote a highly engaging book on the past, present and future of how advertising and mass media compete for our attention entitled The Attention Merchants The Attention Merchants: The Epic Scramble to Get Inside Our Heads, (Alfred A. Knopf, 2016). It is very worthwhile reading for its originality and insights.

7.  See the July 25, 2018 Subway Fold post entitled Book Review of “Frenemies: The Epic Disruption of the Ad Business (and Everything Else)” for more detailed coverage on the current state of the online advertising market.

8.  See again the June 7, 2018 Subway Fold post entitled Single File, Everyone: The Advent of the Universal Digital Profile for some of the emerging innovative alternatives in this space.

9.  See also these Subway Fold posts in the category of Intellectual Property.

10.  See the August 13, 2015 Subway Fold post entitled New Report Finds Ad Blockers are Quickly Spreading and Costing $Billions in Lost Revenue.

How Robots and Computer Algorithms are Challenging Jobs and the Economy

"p8nderInG exIstence", Image by JD Hancock

“p8nderInG exIstence”, Image by JD Hancock

A Silicon Valley entrepreneur named Martin Ford (@MFordFuture) has written a very timely new book entitled Rise of the Robots: Technology and the Threat of a Jobless Future (Basic Books, 2015), which is currently receiving much attention in the media. The depth and significance of the critical issues it raises is responsible for this wide-beam spotlight.*

On May 27, 2015 the author was interviewed on The Brian Lehrer Show on radio station WNYC in New York. The result is available as a truly captivating 30-minute podcast entitled When Will Robots Take Your Job?  I highly recommend listening to this in its entirety. I will sum up. annotate and add some questions of my own to this.

The show’s host, Brian Lehrer, expertly guided Mr. Ford through the key complexities and subtleties of the thesis of his provocative new book. First, for now and increasingly in the future, robots and AI algorithms are taking on increasingly difficult task that are displacing human workers. Especially for those jobs that involve more repetitive and routine tasks, the more likely it will be that machines will replace human workers. This will not occur in just one sector, but rather, “across the board” in all areas of the marketplace.  For example, IBM’s Watson technology can be accessed using natural language which, in the future, might result in humans no longer being able to recognize its responses as coming from a machine.

Mr. Ford believes we are moving towards an economic model where productivity is increasing but jobs and income are decreasing. He asserts that solving this dilemma will be critical. Consequently, his second key point was the challenge of detaching work from income. He is proposing the establishment of some form of system where income is guaranteed. He believes this would still support Capitalism and would “produce plenty of income that could be taxed”. No nation is yet moving in this direction, but he thinks that Europe might be more amenable to it in the future.

He further believes that the US will be most vulnerable to displacement of workers because it leads the world in the use of technology but “has no safety net” for those who will be put out by this phenomenon. (For a more positive perspective on this, see the December 27, 2014 Subway Fold post entitled Three New Perspectives on Whether Artificial Intelligence Threatens or Benefits the World.)

Brian Lehrer asked his listeners to go to a specific page on the site of the regular podcast called Planet Money on National Public Radio. (“NPR” is the network of publicly supported radio stations that includes WNYC). This page entitled Will Your Job be Done by a Machine? displays a searchable database of job titles and the corresponding chance that each will be replaced by automation. Some examples that were discussed included:

  • Real estate agents with a 86.4% chance
  • Financial services workers with a 23% chance
  • Software developers with a 12.8% chance

Then the following six listeners called in to speak with Mr. Ford:

  • Caller 1 asked about finding a better way to get income to the population beyond the job market. This was squarely on point with Mr. Ford’s first main point about decoupling income and jobs. He was not advocating for somehow trying to stop technological progress. However, he reiterated how machines are “becoming autonomous workers, no longer just tools”.
  • Caller 2 asked whether Mr. Ford had seen a YouTube video entitled Humans Need Not Apply. Mr. Ford had seen it and recommended it. The caller said that the most common reply to this video (which tracks very closely with many of Mr. Ford’s themes), he has heard was, wrongly in his opinion, that “People will do something else”. Mr. Ford replied that people must find other things that they can get paid to do. The caller also said that machine had made it much easier and more economical for his to compose and record his own music.
  • Caller 3 raised the topic of automation in the medical profession. Specifically, whether IBM’s Watson could one day soon replace doctors. Mr. Ford believes that Watson will have an increasing effect here, particularly in fields such as radiology. However, it will have a lesser impact in those specialties where doctors and patients need to interact more with each other. (See also these three recent Subway Fold posts on the applications of Watson to TED Talks, business apps and the legal profession.)
  • Caller 4 posited that only humans can conceive ideas and be original. He asked about how can computers identify patterns for which they have not been programmed. He cited the example of the accidental discovery of penicillin. Mr. Ford replied that machines will not replace scientists but they can replace service workers. Therefore, he is “more worried about the average person”. Brian Lehrer then asked him about driverless cars and, perhaps, even driverless Uber cabs one day. Mr. answered that although expectations were high that this will eventually happen. He is concerned that taxi drivers will lose jobs. (See this September 15, 2014 Subway Fold post on Uber and the “sharing economy”.)  Which led to …
  • Caller 5 who is currently a taxi driver in New York. They discussed how, in particular, many types of drivers who drive for commerce are facing this possibility. Brian Lehrer followed-up by asking whether this may somehow lead to the end of Capitalism. Mr. Ford that Capitalism “can continue to work” but it must somehow “adapt to new laws and circumstances”.
  • Caller 6 inquired whether one of the proposals raised in VR pioneer Jaron Lanier’s book entitled Who Owns the Future (Simon & Schuster, 2013), whereby people could perhaps be paid for the information they provide online. This might be a possible means to financially assist people in the future. Mr. Ford’s response was that while it was “an interesting idea” it would be “difficult to implement”. As well, he believes that Google would resist this. He made a further distinction between his concept of guaranteed income and Lanier’s proposal insofar he believes that “Capitalism can adapt” more readily to his concept. (I also highly recommend Lanier’s book for its originality and deep insights.)

Brian Lehrer concluded by raising the prospect of self-aware machines. He noted that Bill Gates and Stephen Hawking had recently warned about this possibility. Mr. Ford responded that “we are too far from this now”. For him, today’s concern is on automation’s threat to jobs, many of which are becoming easier to reduce to a program.

To say the very least, to my own organic and non-programmatic way of thinking, this was an absolutely mind-boggling discussion. I greatly look forward to this topic will continue to gather momentum and expanded media coverage.

My own questions include:

  • How should people at the beginning, middle and end of their careers be advised and educated to adapt to these rapid changes so that they can not only survive, but rather, thrive within them?
  • What role should employers, employees, educators and the government take, in any and all fields, to keep the workforce up-to-date in the competencies they will need to continue to be valuable contributors?
  • Are the challenges of automation most efficiently met on the global, national and/or local levels by all interested contingencies working together? What forms should their cooperation take?

*  For two additional book reviews I recommend reading ‘Rise of the Robots’ and ‘Shadow Work’ by Barbara Ehrenreich in the May 11, 2015 edition of The New York Times, and Soon They’ll Be Driving It, Too by Sumit Paul-Choudhury in the May 15, 2015 edition of The Wall Street Journal (subscription required).