In a lot of ways, modern marketing is broken.
Speaking at this year's Digital Marketing Summit in London, Wayne Lloyd of the EOS Nation opened his presentation by outlining why the systems of marketing we use are fast become outdated.
"Middle-men are trusted in marketing to do such things as bringing buyers to real sellers," Lloyd explained. "But the reality is far less comforting".
Email: A strained relationship
The reality is, marketing today is infected with a myriad of issues. Email is the most effective way to reach potential customers, a far more effective approach than the distant second, social media. According to the lead generator tech company OptinMonster, 77% of people prefer to receive permission-based promotional messages via email, in comparison to the just 4% of individuals who prefer to receive them through Facebook and the 1% who would rather they reached them through Twitter.
"Email marketing is more effective than social media across the board, with just one exception – sharing," OptinMonster claims.
However, the effectiveness of email has also led to its abuse. In 2017, UK airline Flybe was fined £70,000 ($92,178) for sending out more than 3.3 million unconsented emails in August 2016 alone. Instances like Flybe's contributed to the introduction of the EU's GDPR regulations which not only made the penalties for such abuses much harsher, but made consent to email marketing a much more proactive choice.
Another mammoth issue with email marketing today is data security. The more email addresses and other personal information you have stored, the greater your risk of liability if (and when) your system is hacked. The constant threat of data breaches has worsened significantly year-on-year with practically every tech giant from Facebook to Amazon having been hacked at some point or another. According to a report by Carbon Black, 92% of businesses in the UK have been breached at one point, with most having been breached between three to five times.
This means no enterprise is too large or small to be safe from attack as no centralized system is immune from hacking, they can only be made marginally harder to breach.
I see…fake people
The next most popular avenue to customers for marketers is social media and the rising trend over the last couple of years has seen companies investing heavily in influencer marketing. According to Influencer Marketing Hub, Google searches for "influencer marketing" have increased by 325% in the last 12 months alone. In a survey of marketing managers, influencer marketing was the fastest growing online customer-acquisition method (28%), beating out organic searches (15%) and email (13%).
However, influencer marketing brings with it a huge challenge for marketers: The scourge of fake accounts.
Earlier this year, Social Chain research revealed that a startling 25% of influencers today have paid for followers from illegal bot farms. This is having a drastic impact on the industry. According Wayne Lloyd, this is one of the key factors leading to brands collectively wasting more than $19bn (around $51m every day) advertising to fake online entities. Accounts belonging to spambots, likebots, chatbots and similar applications make up more than three billion accounts across all social media platforms, according Statista. Researchers at the University of Southern California estimated that 15% of Twitter's 400 million monthly users are bots, but added that this estimation was "conservative".
*Percentage of their followers which are bots. Courtesy Wayne Lloyd
Businesses are being forced to think up more and more elaborate solutions to combat this waste. In regard to influencer marketing strategies, many companies have started requiring their influencers prove that the majority of their followers are real people. Similarly, social media platforms have also started penalizing and, in some cases, outright banning users who utilize shady follower-gathering techniques, or just because they have too many bots following them.
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Blockchain to the rescue
Alanna Gombert, CEO of Digital Assets Association (DATA), explains that "public blockchains operate thousands of nodes which makes changing any date point quite hard as one needs to gain consensus from all node owners. Blockchain ledgers are encrypted which of course adds additional security but the consensus mechanisms are the unique aspect".
Blockchain has quietly been growing from strength to strength ever since the unknown person under the alias Satoshi Nakamoto first released the white paper, Bitcoin: A Peer-to-Peer Electronic Cash System in 2009. Along with the paper, the person/persons known as Nakamoto also launched the original reference implementation and first blockchain database.
Nakamoto also released the first cryptocurrency software, Bitcoin, which has since exploded in popularity and infamy. Following Bitcoin came Ethereum, which was "considered by many to be Bitcoin 2.0". This was because the Ethereum platform "enabled the transfer of pre-agreed stores of value to be met when conditions had been met", Lloyd says. This widened the range of what blockchain could be used for from the one application (Bitcoin) to many, through the rise of smart-contracts and dApps.
"It was game-changing," explained Gombert. "The creation of Ethereum and the Ethereum community, as well as ConsenSys, the hub and spoke solutions mechanism focused on creating vertical solutions built on top of Ethereum have changed the world. Case in point, look at Zuug, Switzerland and the recent purchase of Planetary Resources."
dApps take the decentralized nature of blockchain and allow enterprises to apply it to apps they created themselves, meaning they have no single point of failure. Smart contracts, self-executing contracts that leverage the immutable nature of blockchain without requiring a third party as the directives for the deal are written into its code, bring buyer and seller together without the need for a middleman.
"Decentralized applications are built on blockchain instances like Ethereum through smart contracts," Gombert reiterated. "You can create working applications that leverage the underlying decentralized ledger system as well as token economics.
"CryptoKitties is a good example of a dApp that has changed the ecosystem from a gaming perspective. Likewise, Civil is an example of a dApp that is looking to change journalism through the use of a token curated registry. Everything is early," she added.
Yet, even Ethereum has struggled with scalability issues. However, Wayne Lloyd believes his company's blockchain protocol, EOS, may have shaken out the last bugs from the system and unleashed the full potential of blockchain upon the masses.
"EOS allows the development, hosting and execution of dApps," while providing "functionality for people and businesses to build their own dApps in the same way someone would do other web-based applications". It does all this without any transaction fees or scalability issues as it was built with mass adoption in mind from the get-go.
The ability to be utilized by anyone of a reasonable skill level will be key to the success of the technology as Gombert explained, "wide adoption is important and building a robust open source community is integral to building a decentralized world".
This all means that very soon, businesses of all stripes may begin utilizing blockchain capabilities with almost zero expertise in the field and create their own high-quality, decentralized, custom dApps.
The birth of a new form of marketing
In a world reinterpreted by a scalable system of digital trust, marketing may look very different.
On a completely decentralized system with databases distributed over millions of devices and individuals, data breaches would become a near impossible feat as it would require cybercriminals to crack millions of individual systems as opposed to one centralized database.
Manufacturers would also be able to provide new data sets to not only other firms along the supply chain for transparency purposes, but to conscientious customers. "A company called VeChain this year will be releasing bottles of wine with QR codes," Lloyd explained. "You can scan and know everything about where the grape was taken out of the ground, where it was pressed, who it was pressed by...even information like the carbon footprint for growing that one bottle of wine."
VeChain helps establish the Shanghai Wine & Liquor Blockchain Alliance as a Co-Founding member, making a flagship Shanghai traceability system for over 500 retail stores and capturing over 50% of the imported wines and liquor on the VeChainThor Blockchain.https://t.co/1Wal6tvNec
— VeChain Foundation (@vechainofficial) June 7, 2018
With the ability to conduct a transaction without the need for middle-men, marketers and influencers will have to evolve and expand their roles.
"Everyone here will have to ask themselves if their company is doing enough to be less of a middle-man and being enough of a forward thinker to justify their existence in five years," Lloyd warned.
Fewer influencers will exist but those that do will be much more effective as it will be easy to see who is a bot on a blockchain network.
"Essentially, it will reduce the number of influencers but leave the top influencers at the top," says Loren Baker of Foundation Digital.
The way brands push ads out and how marketers reach out to potential customers will probably change dramatically. The old way of "spraying ads everywhere" will be replaced with some kind of tokenized system whereby customers are likely rewarded for their attention and loyalty.
Publishers, institutions and individuals who produce content will become much more reliable as the transparency of the blockchain network will lead to the popularization of "truth records".
In a blockchain-powered future, not everything exists within the blockchain, (which will eventually be another skill to learn in its own right). However, despite the many hurdles the technology still has to jump to become a mainstay in our day-to-day lives, there is a good chance the technology will carry on going from strength to strength.
Therefore, if you want to ensure your enterprise's place in that future, you need to start exploring how you are going to leverage the tech before you are too late.
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