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What every partner marketer needs to know about blockchain
Heard the hype about blockchain, but not sure what it means for you? Contributor Pete Cheyne explains.
You’ve probably heard a lot about blockchain. This topic has moved from a niche passion for futurists to dinner-table conversation.
But there’s often a gap between what technology will eventually do and what it does today. If you’re a partner marketer trying to separate hype from fact, these answers may help.
1. What actually is a blockchain?
Think of the blockchain as a large distributed database. It is a chronological chain of blocks where each block contains a number of records that represent individual “transactions.” A transaction can represent anything — an exchange of wealth, confirmation of an event occurring or an agreement between two parties.
As blockchains are decentralized, no single party has a controlling authority. Collectively, the network must verify changes made to each block. This collective control means that any manipulation attempted by a bad actor will be automatically rejected through the verification process. Therefore, the blockchain is considered to be “trustless”: It is an open, immutable record of data that anyone can own or interrogate.
2. Why are digital people excited about blockchain?
Blockchains make data accessible to all, but they are also highly resistant to fraud and bad manipulation. For example, blockchains power many of the new cryptocurrencies because they carefully control the quantity of currency available and have a highly secure registry of ownership and transfer. But the blockchain is not just about cryptocurrency.
One big reason people are excited about this technology is that it could verify the characteristics, provenance and ownership of both real-world and virtual items. Every purchase can be recorded accurately.
For example, a blockchain might record ownership of a specific, serial-numbered vacuum cleaner to Walmart, then transfer ownership of that specific vacuum to a consumer when they buy it. Similarly, a game publisher could prevent theft of virtual gold by verifying the bona fides of each “ingot.”
3. How else could blockchains help marketers?
Some expect blockchains will help verify the quality and provenance of real-time bidding on ad impressions on the media exchanges.
When a brand purchases an impression, they could be certain that it possessed the characteristics they wanted. Similarly, some look forward to “blockchain IOs” that ensure every impression that a brand purchases has the characteristics desired.
4. How could blockchain help partner marketers?
First, cryptocurrencies could help eliminate buying friction and limit transaction fraud. Second, using a blockchain instead of imperfect technologies like pixel tags could help dramatically reduce many types of partner marketing fraud, including cookie stuffing, IP spoofing and creative fraud.
Impressions and clicks could be verified, so the advertiser could be assured of human traffic, brand safety and genuine clicks. Additionally, since blockchains enable open access to view (but not change) data, advertisers and partners would be assured of complete and accurate data from a single source of truth.
5. Sounds great! But when does the other shoe drop?
It is very early days for blockchain. We’re a long way from widespread consumer adoption of cryptocurrency. But blockchain will likely play a role in transaction verification in the years ahead. Major advertisers are already adopting tools like the Coinbase Bitcoin payment widget to facilitate purchases.
For real-time ad verification in a real-time bidding environment, the implementation of blockchain may take a bit longer. The reason? Scale. Blockchains sometimes brag about their speed and express it in thousands of transactions per second. Ad exchanges process millions of transactions per second. That’s orders of magnitude different.
Additionally, lots of blockchain startups are still in their infancy. Blockchains are generally architected to offer a main network (“mainnet”) for transactions and a test network (“testnet”) for product testing. Many haven’t pushed a live “mainnet” yet. Additionally, when you consider that all transactions must go through a consensus protocol to provide verification, it’s clear that running a blockchain is computationally expensive.
That said, there are many potential applications of the blockchain that could be used relatively soon. Several blockchains offer micropayments which might eventually be used for remunerating partners for delivering results as they happen. With streaming payments in cryptocurrency, partners could be paid as they drive traffic or transactions instead of waiting for monthly payment runs. That creates major disruption potential.
Additionally, a number of businesses are focusing on “smart IOs” — media contracts in which impressions would be verified so that clients only pay for ads that meet the criteria established in the contract. This concept is gaining traction with marketers concerned that they don’t get what is promised.
The blockchain is being developed at breakneck speed, with many of the world’s top development talent migrating to it daily. Probably the most important metrics to watch are rates of cryptocurrency adoption by major brands, major advances in the speed with which blockchains can verify transaction and niche markets that become the early adopters of the blockchain. By tracking these developments, you can help ensure that your brand is ready when blockchain is ready for you.
Opinions expressed in this article are those of the guest author and not necessarily MarTech Today. Staff authors are listed here.