By Eric Pulier, Co-Founder Project NGAGE
This piece is intended to educate you about the capabilities of digital objects on the blockchain for promotional marketing within retail.
A blockchain allows for transactions to be immutably recorded in a decentralized ledger. Bitcoin and the underlying blockchain that powers it are inseparable, but the concept of a blockchain has implications far beyond its initial use with bitcoin. As 2019 dawns, it is increasingly clear that blockchain has the potential to drive the future of digital engagement.
On a blockchain, data associated with each interaction is recorded chronologically and time-stamped. This information is available publicly, functioning as a verifiable source of truth. This means that every transaction is transparent and cannot be faked or altered, making it impossible to maliciously send a token to one person and then copy the same token and send it to another. This is known as the “double spend” problem, a long-standing problem for digital objects given the ease of duplicating data to make exact copies.
By solving the double spend problem and keeping a permanent open record of all transactions, the blockchain concept allows us to create truly unique digital objects for the first time and move them on networks. The human brain equates scarcity with value. With the ability to now move scarce digital objects at a marginal cost around the world, the next generation of the Internet, the Internet of Value, is emerging.
With this new asset class, promotional marketing will fundamentally change. Objects can now not only be owned and shared, but acquired from digital and traditional media, such as magazines, newspapers, television and radio shows, billboards, and augmented and virtual reality. As objects pass from person to person, they build and retain experience and history, and can change state based on user profiles and location. Every time a customer redeems a gift card, interacts with a digital marketing campaign, uses a coupon, or makes a purchase, there is a chronological ledger showing exactly when and how these actions took place.
This transparent path to purchase allows retail marketers to better engage shoppers and more effectively measure performance. Because each object is unique and distinguishable from the other, these objects can represent tickets, merchandise, coupons, or collectibles. Further, because these dynamic objects are network aware, they are capable of reacting to real-world events (like the weather, location, or sports scores) and act as ongoing communication channels with consumers to build long-term relationships.
An introduction to digital objects
Any object that exists within a traditional retail media plan such as gift cards, scratch cards, and coupons, as well as a digital media plan, like in-app loyalty points, can be represented in the form of a digital object. Because digital objects are recorded on a blockchain, they possess all of the capabilities of cryptocurrency such as verification, true ownership, scarcity, and uniqueness.
Here are a few elements of promotional marketing that can be converted into digital objects to save your organization significant time and money — while also improving your customers’ omnichannel shopping experiences.
With an already-high adoption rate, blockchain for coupons appears to offer significant potential to promotional marketers. MasterCard agrees and has filed a patent for its own blockchain coupon system.
Traditionally, coupons were a good way to bring customers into your brick-and-mortar or online store. There was an unfortunate trend, however: after customers used a coupon, they rarely returned to shop again. More often than not, retailers couldn’t even identify who used their coupons. With that lack of verification came a Wild West of coupon fraud, with recent estimates of US $500,000,000 lost annually.
Coupons as digital objects, however, are virtually fraud-proof. They are also easy to use. Shoppers can store their coupons in a digital wallet, ready to be scanned at a cash register or online checkout. Shoppers benefit from the convenience of not needing to print and clip, or even copy and paste coupons. Retailers benefit from reduced fraud and verifiable knowledge of who redeemed their coupons. This knowledge allows retailers to plan more effective promotions that continue to engage shoppers.
Loyalty and Rewards Programs
Some surveys show that nearly 87% of consumers actively seek loyalty programs, making them tremendously important to today’s shoppers. Loyalty programs are beneficial to retailers, too: they decrease customer acquisition costs and increase brand loyalty.
But too often, traditional loyalty programs fail to deliver. Some programs are confusing to the customer, while others do very little to actually increase customer value, giving away rewards for purchases that the customer would have made even if they were a non-member.
And there’s the issue of fraud, too. Some customers defraud rewards systems, while others neglect to redeem rewards altogether. Those points live on as balance-sheet liabilities for retailers.
Blockchain can make rewards programs more customer-friendly and secure. As with all other blockchain objects, reward points are verified and virtually impossible to steal or reproduce. The blockchain makes information transparent, so every customer interaction with the rewards program is tracked. This not only encourages bilateral customer-retailer communications, but opens up information that can in turn be used to offer better rewards and even gamify certain rewards.
Data Security in Marketing
With GDPR and Facebook’s 2018 data scandal, consumers are increasingly alarmed and on the defense about data breaches of their personal information. The promise of blockchain is leading to new digital identity models where ownership of personal data can be owned by the individual, rather than being controlled by a third party. In this model, people will decide for themselves how to leverage their data for personal benefit, rather than being exploited without their knowledge or consent.
Not only will consumers have greater transparency and control over their data, but retail marketers will be able to continue personalizing promotional content in a more value-based partnership with their customers. As a marketer, you’ll be able to send customized objects of value to each individual shopper based on previous actions they’ve taken, without breaching their trust. These exchanges are already showing promise of being accepted on a fundamentally different level than today’s engagement methods, opening up vast possibilities for the future of marketing, advertising and loyalty.
Blockchain’s Future in Promotional Marketing
Retail is starting to embrace platforms that leverage objects in ways that were unimagined only a few years ago. For instance, BLOCKv, the leading platform for smart digital objects (called “Vatoms”) is growing exponentially. BLOCKv launched its object developer platform in October of 2018, and has already seen hundreds of organizations and developers launch over ten million smart digital objects.
Some of the world’s largest brands and government organizations have built and deployed Vatoms, with usage metrics, indicating dramatic increases in both engagement and consumer perception of value for time. While traditional websites and apps will not disappear, retailers and promotional marketing will increasingly incorporate digital objects into consumer communication and relationship building programs.
The future of human engagement is here.