Blockchain for Marketers: Transparency and Security in Digital Advertising

Blockchain technology is a topic that has remained popular in recent years, with over 300 million people worldwide using it today. The term is often associated with cryptocurrencies. However, a blockchain wallet is not the only advantage this innovation offers. The technology is chosen for solving other business challenges where data security and transparency are critical. Marketing has also become a field where blockchain is utilized to enhance trust, customer loyalty, and data security across promotion channels. While not a universal solution, it is a highly effective tool for marketers.

In this article, we will explain blockchain in simple terms and explore the advantages it offers for marketing.

What is blockchain?

Blockchain is a decentralized method of data storage across multiple sources, represented as a chain of interconnected, encrypted information blocks. Each element in the chain "communicates" with the others, making it impossible to replace any single block.

Here’s how blockchain works: new actions are recorded and verified not by a single source but by a network of computers, all of which have equal rights to process the information. After verifying a transaction, a record of it is added to a new block in the chain and encrypted with a hash (a digital signature).

Although the concept of blockchain technology emerged in the 1990s, it wasn’t realized until the 2000s, when the necessary technical resources became available. The first mention came in 2008 with the description of the first cryptocurrency, Bitcoin. This record was made by an individual under the pseudonym Satoshi Nakamoto (whose real identity remains unknown).

With the growth of the digital environment, blockchain development gained momentum. Today’s blockchain is a mature market, reaching $17.57 billion in 2023. Factors such as the COVID-19 pandemic and the integration of AI accelerated its adoption. Digital transformation and evolving approaches to data security have enabled blockchain to extend beyond the financial sector into other business areas.

The technology ensures security, transparency, and reliable information storage—critical features in a world plagued by data breaches and ever-evolving digital fraud schemes.

Blockchain in marketing

For marketers, the role of blockchain is becoming increasingly significant. The technology helps address several issues:

• False information and news used to attract customers and mislead advertisers.

• Opaque money flows in advertising campaigns, including unclear commissions.

• Traffic manipulation, where fraudsters use bots and other automation tools to inflate activity on websites or platforms through fake engagements.

In marketing, blockchain technology is applied to enhance audience trust, as it ensures that recorded information in the chain’s blocks cannot be altered or falsified. Client data protection, transparency in processes, and loyalty programs are elevated to a new level. Below, we’ll explore examples of how blockchain is used in marketing.

Enhancing data transparency

Blockchain in business enables tracking financial and other actions related to specific clients. This ensures that no transaction is lost or falsified. Disputes are resolved quickly, which increases customer trust.

Marketers also gain clarity on how budgets are spent when conducting advertising campaigns through third-party individuals and platforms. Additionally, blockchain can eliminate the need for intermediaries, reducing costs and increasing trust in customer data. This gives marketers direct access to collected information, which can then be used to fine-tune advertising campaigns. As a result, marketing campaigns become more personalized and effective.

Protecting personal data

The confidentiality of client data has been a pressing issue in the fields of marketing and IT for several years. Policies regarding data usage are changing, and access to third-party cookies is being restricted, necessitating new solutions for collecting and storing analytics. This is where blockchain’s efficiency proves invaluable, as it protects client information from loss and theft while ensuring that data remains inaccessible to unauthorized parties.

With blockchain technology, it is possible to regulate data access levels and monitor user behavior while maintaining anonymity if necessary. This approach enhances audience loyalty and trust in the company.

Combatting marketing fraud

Marketing is not immune to fraud: inflated views, clicks, fake metrics, falsified reviews, and other deceptive actions. These practices result in wasted advertising budgets. Moreover, inaccurate data leads to poorly constructed marketing strategies, causing brands to offer customers products or services that do not meet their needs. This undermines trust and reduces loyalty.

Blockchain eliminates fraud because data within the chain cannot be altered, and every action is recorded. This allows marketers to trace the details of advertising campaigns and ensure accuracy throughout the process.

Another advantage of blockchain is the protection of intellectual property rights for digital products. Information about authorship and ownership is securely recorded in the chain and cannot be falsified. Blockchain technology underpins platforms like NFTs, where the authenticity of digital assets is of critical importance.

Developing loyalty systems

Loyalty programs often raise concerns among customers. Unclear and non-transparent methods of awarding bonuses and cashback undermine trust and reduce sales.

How blockchain can improve the situation: it increases the transparency of loyalty programs. Decentralized storage of transaction information eliminates errors and data loss. This ensures that customer purchase data is securely saved and bonuses are awarded accurately and promptly. As a result, customer complaints are minimized, and the entire loyalty program becomes transparent and understandable for marketing teams.

Additionally, costs associated with creating loyalty programs can be reduced, as intermediaries are removed from the process.

Pros & cons of blockchain for marketing

At first glance, the technology seems like an ideal solution for marketing challenges. However, there are nuances indicating that blockchain is not a panacea. Let’s examine the advantages and disadvantages of this method of working with information.

Advantages of blockchain

Security: The technology ensures data protection, which benefits both marketers (as it prevents competitors from stealing information) and customers, who are guaranteed that their personal data will not fall into the hands of undesirable organizations.

Speed: Actions occur directly and with full transparency, making data handling faster.

Accuracy: Blockchain’s decentralized verification system helps eliminate errors. It also validates the authenticity of information, which is critical for maintaining a brand’s reputation.

Increased loyalty: The safety and transparency of a company’s marketing processes foster greater customer trust, helping to build strong relationships and increase business revenue.

Future potential: Blockchain technology is continually evolving and being adapted for new fields. Starting to explore its applications now can give a company a competitive edge in the future.

Drawbacks of blockchain

Cost. Like other IT technologies, blockchain requires the involvement of highly skilled experts and technical resources. After the system is implemented, it also needs continuous support. The cost of this may be prohibitive for small businesses.

Complexity. This technology is still relatively new, so its integration and user understanding remain challenging. There are also issues with scalability and compatibility with other systems. Therefore, blockchain remains complex for widespread adoption at the moment.

Unclear legal framework. Decentralized data storage raises many legal questions. As a result, blockchain regulation is still in the process of being established and is constantly changing. New legal documents are being introduced to regulate the technology's operations. Additionally, IT corporations (Google, Apple) are tightening data policies, which complicates blockchain implementation.

Rejection. Any innovation faces resistance. Blockchain eliminates intermediaries in some marketing processes and leaves fraudsters out of work, which, of course, they don't like. Additionally, marketers are not always ready to adopt the new technology due to its complexity and unfamiliarity.

Summary

Blockchain is a promising technology where data is not stored on a single resource but distributed across multiple ones. At the same time, all information undergoes multi-party verification and encryption. This approach ensures data security, eliminates the possibility of forgery, and increases process transparency.

For marketing, blockchain is valuable in building audience trust. The technology is used in the storage of personal data, collection of customer information, as well as in fraud prevention and the development of loyalty programs. Blockchain provides security, speed, and data accuracy, which increases customer loyalty and boosts company revenue.

At the same time, there are challenges with implementation due to high costs, user misunderstanding, and an uncertain legal framework. Despite these difficulties, blockchain remains a promising direction in the field of marketing.