TABLE OF CONTENTS
- What is decentralization?
- Understanding Blockchain and Cryptocurrencies:
a) Fungible vs Non-fungible Tokens
- Understanding Blockchain and Cryptocurrencies:
- Metaverse Marketing
- Applications of Blockchain in Marketing
- Leverage Blockchain for Marketing
What is Decentralization?
The metaverse is here, and everybody wants in. A fully decentralized world is one where user-generated content and interconnected interfaces, with the ability to interface between various environments, refactor the way we perceive life.
By 2022, global spending on blockchain solutions is expected to reach over $11.7 billion. Virtual and augmented realities are revolutionizing human-technology experiences, with use cases rising across diverse areas like telemedicine, retail, manufacturing, and FMCG, among others.
Bridging various worlds using blockchain technology—a decentralized virtual ledger empowering users to track the authenticity and ownership of digital assets Metaverse marketing is the future. Nearly every business developing aspects of the Metaverse is projecting a future characterized by decentralization via blockchain. By ensuring secure and verified ownership of digital assets and transactions, blockchain brings transparency and security to open trading.
To delve further into blockchain technology, we will decode the critical role of blockchain in the modern world of marketing. Think of this analogy: if the Metaverse is the globe, think of each virtual environment or world as an individual nation separated by the ocean. The introduction of blockchain into the metaverse is like the invention of ships.
Using digital ownership security, users can store their merchandise and collectibles (tokens) on their blockchain wallet. This allows users to travel between worlds with a personalized and secure space to store collectibles wherever they go. Even if the virtual worlds or augmented realities cease to exist, the user still retains full ownership of the digital assets they have collected and stored.
For the user to trade, in case they want to buy or sell items, they have the freedom to leverage an open world (market) to do so. This is how ownership remains true in the metaverse. Using this revolutionary technology, verified instant transactions can be made in volume and velocity with decentralized access to an open global market.
For businesses looking to get their products and services out there, new, intuitive, and inventive market interactions are possible with blockchain marketing.
Understanding Blockchain and Cryptocurrencies
Our technology is currently secure, but not safe enough. How frequently have emails about data breaches at businesses that possess your customer data been delivered to you?
In addition, some businesses that you provide your data to—even if it’s just your name and email address—sell that information to other businesses in order to generate revenue. And then, out of nowhere, you find yourself signed up for twelve brand-new company emails that you never requested.
All of that may be altered with blockchain. You don’t need to be concerned about your data being compromised because all transactions on the blockchain are kept entirely anonymous.
Today, more than 5% of the world’s population is already using blockchain. Blockchain has the potential to reduce up to 30% of banking-related infrastructure costs, which exceed $10 billion each year.
It is expected that by 2025, 55% of all healthcare applications will also adopt blockchain for commercial purposes. As the real-life use cases of this technology are many and spread across diverse areas, adoption will skyrocket over the coming years. By tokenizing virtual environments, experiences, assets, and interactions, blockchain and the metaverse open new avenues for businesses to expand their reach in the market. Let’s understand more about the implications of this life-changing technology.
Blockchain in marketing can strengthen the bond between businesses and their customers by eliminating the need for them to share their data with multiple businesses in order to produce more precise advertisements.
Blockchain Marketing: Advantages
A few benefits of blockchain implementation in the marketing sector include:
- The blockchain is reliable.
- Data cannot be sold or stolen
- It stops fraud.
- It does away with the necessity for an intermediary in advertising and transactional processes.
- It makes content monetization stronger.
The Drawbacks of Blockchain Marketing
Every rose, of course, has a thorn. Blockchain still has drawbacks:
- Data can occasionally still be managed, for example, when the majority of nodes are owned by a single entity.
- It’s pricey.
- It takes a lot of effort.
The key components of the Metaverse are the blockchain and Ethereum. While many key standards exist for Ethereum, each of them serves a unique function when building the Metaverse and its key components. Blockchain is the core of the Metaverse and includes the following key standards:
- ERC-20: This technical standard is used for smart contracts on the Ethereum blockchain for token (digital asset) implementation. Popular use cases include in-world currencies, where a fungible currency can be interchanged with others of its kind.
- -721: This standard for non-fungible tokens is a verified system of ownership. Using the ERC-721 standard, every single digital item is unique – much like an artist’s painting or other digital collectibles. Ensuring the uniqueness of digital assets in every way, it carries along a programmable smart contract that has numerous other benefits. The item can be sold to others via instant transactions with verified ownership.
As blockchain redefines the way the world trades, the digital and real worlds will be bridged by components of the metaverse, augmenting global interconnectivity and the way humans interact forever.
“Everything will be tokenized and connected by a blockchain one day.”
Fred Ehrsam, Coinbase Founder
a) Fungible Vs Non-Fungible Tokens (NFT)
The word “token” refers to a unit of data stored on a digital ledger. Knowing how these tokens work is important to understanding how consumers will engage with each other and with brands in the metaverse. The two types of tokens are fungible and non-fungible.
- Fungible Tokens: A fungible item, is like Bitcoin – a digital currency token that is interchangeable with other items of the same kind. In the Open World, the use of blockchain empowers users to exchange digital assets (tokens) with each other, ensuring true ownership of their virtual items on the blockchain. This concept of true ownership is the foundation for understanding digital goods, and how users determine the value of experiences in the Metaverse – not brands.
Example: Cryptocurrencies are the key example of fungible tokens since each coin has the same value as any other coin of the same type at any given moment.
- Non-Fungible Tokens: Refer to a digital item that is a one-of-a-kind, completely unique asset. The token symbolizes the authenticity of digital trade, where the privacy of digital transactions is secured by true ownership. Being digital, NFTs can be traded using the blockchain, but they are not on the blockchain themselves. They also carry additional rights and benefits with them to further the tokenization of virtual experiences. This aspect of NFTs creates a revolutionary change in how brands foster direct, long-term relationships with consumers, interchanging assets tied to the virtual world with real-world benefits.
Example: Real estate is a non-fungible token that can only have one of each kind. But a more Metaverse example would be digital artwork or in-game items like digital and non-digital collectibles, avatars, user names, event tickets, coupon codes, etc.
Metaverse and Marketing
Blockchain technology is the most sought-after technology, bursting into the marketing landscape and accelerating over the last decade. Although most commonly associated with cryptocurrencies, the application of blockchain technology goes far beyond that domain. Blockchain’s use in marketing, for example, has expanded its significance to other areas of commerce.
As of today, the limitless possibilities enabled by blockchain and smart contracts are nowhere close to being fully explored. Nearly every area of modern marketing has something to do with blockchain technology, whether OTP integrations for lead tracking or open marketplaces for digital art.
Furthermore, multiple studies indicate that using blockchain technology for business applications improves efficacy by leaps and bounds. A comprehensive understanding of blockchain marketing is fundamental to modernizing your go-to-market strategy in the digital age.
Blockchain Delivers Transparency with Open Trade
Some companies may claim to sell only organic goods. Can they, however, back it up?
Customers naturally have skepticism about marketing initiatives and commercials.
But because of the blockchain, businesses can now be a lot more transparent, which makes it easier than ever for customers to believe in them. Businesses can use blockchain to demonstrate their supply chain operations because it displays a variety of transactions.
Customers may now view the precise location, manufacturing facility, and materials used to make a product. For instance, if the food was truly organic or if the farmer in the supply chain was compensated correctly, blockchain can ensure that fair trade is practiced and transparency governs every transaction.
When it comes to competition, information like this will have a significant impact. Due to consumers’ increasing awareness of the impact of their purchases, businesses that may have previously been preferred will lose out to those with a more ethical supply chain. However, this is advantageous. Because of this, consumers are more likely to trust small businesses, which gives them an advantage over big-box retailers.
“Blockchain is the biggest opportunity we can think of over the next decade or so.”
Bob Greifeld, Nasdaq Chief Executive
Engineers and computer scientists have spent years attempting to broaden the applications and knowledge of blockchain, as well as to code using this technology. Blockchain, a decentralized ledger, is altering the global market by introducing refined means of interactions, transactions, and interconnected tech-enabled experiences.
Powering blockchain technology, several computer servers store parts of a vast database as “nodes.” Each exchange of data is stored within these nodes, or entities called blocks. Each block comprises the contents of the stored data, the hash code, the timestamp, and most importantly, the location of the preceding block. Using blockchain-verified transactions retains its autonomy across global markets, the authenticity of true ownership, and the historical record of the asset’s movement in the market. For a modern marketer, this is the holy grail of ensuring secure, intuitive, and immersive consumer interactions. Blockchain applications in marketing are numerous, and some popular use cases are discussed in the following section.
Applications of Blockchain in Marketing
Securing transactions at scale and velocity across global and local markets, blockchain is the fuel for decentralization. Without this, data privacy, identity, and ownership would hinder the development of the metaverse. Using blockchain marketing, businesses of all sizes have already exhibited the impeccable uses of the technology.
Five Applications of Blockchain Marketing are Outlined Below:
a) Influencer Marketing
Influencer marketing is widely popular, with a steady increment in the number of social media influencers and tech entrepreneurs making waves in their niche. However, some major stumbling blocks faced by brands when hiring influencers include expanding the reach of their campaigns. This problem often impacts the nature of the influencer’s work and the efficacy of marketing efforts.
There is no other way to determine whether a particular influencer’s reach is as broad as claimed. Only blockchain technology can help in analyzing the data generated by specific users, each with a sizeable contribution of insights for understanding the consumer journey at various touchpoints. Using user-generated data, blockchain helps brands position marketing activities and customer promotions while being able to assess the efficacy of marketing efforts.
b) Affiliate Marketing
Affiliate marketing refers to the use of third-party promoters to help expand the usage of products and services. A popular example is the use of links within blogs to direct users to third-party product pages, upon which each sale is monetized by the creator of the blog, aka an affiliate.
Affiliate marketing can face many of the same challenges as influencer marketing. There is no doubt that affiliate marketing spans every industry and market, proving an effective method to generate income and employment for many users of the internet. Given that it is used in nearly every domain, how effective can blockchain make affiliate marketing?
Blockchain allows cryptocurrencies to be used to make payments and simplify transactions. Blockchain is also used to embed smart contracts, making it seamless to track the number of conversions brought in by any single affiliate. This time-saving feature of blockchain enables brands to identify high-value affiliates and focus efforts on marketing channels that are most effective.
c) Loyalty Programs
Every consumer gets excited by loyalty programs, and brands know this. One person might join a brand’s loyalty program solely because they like shopping at their store; another person may sign up because they find monetary benefits in joining the loyalty program.
Yet, the vast majority of loyalty programs have reward systems that are rarely redeemed. This lack of engagement in loyalty programs results in financial liabilities for many brands.
Using blockchain marketing applications, numerous brands can tie up to form an alliance that engages a unified reward points system. The creation of such an alliance for a reward system improves the bandwidth of operations for the partnered brands.
In this system, reward points from one brand can be redeemed for another brand’s virtual experience, product, or service. This creates a healthy balance where brands and customers can explore their preferences and experience a personalized approach to better understand the nature of buyers and the product. It’s a win-win situation for both the brand and its loyal customers.
d) Targeted Advertising
The most practiced, sacred, and powerful area of marketing is advertising. How do brands reach consumers who are more likely to use their unique product than competitors? Targeted advertising introduces an opportunity for brands to pursue quality leads in the market with a personalized approach to luring specific customer demographics to use their products or services.
Targeted advertising for brands, however, can end up looking like shooting arrows in the dark. Hoping that at least one arrow hits the target, brands end up spending more money on targeted ads with very few returns. Blockchain has changed that forever!
Blockchain enables brands to develop Ethereum tokens, which are used as payments only when a customer lands on a targeted ad and interacts. This type of intrinsic value results in the ability of brands to monitor consumer journeys and act promptly.
The blockchain payment process is automatic and based on an algorithm, in which all parties involved in a transaction earn and spend based on the performance of the targeted ad. This is how performance marketers can keep their products at the top of a competitive market by leveraging consumer insights to create better experiences that result in higher conversions and brand value.
e) Tackling Fraudulent Advertising
A major application of blockchain in marketing is preventing fraudulent advertising. Numerous networks have swindled brands that pay for legitimate ads by posting stolen ads on illegitimate websites and portals with zero returns. This fraudulent activity is also the cause of fake or malicious ads, which increasingly damage a brand’s reputation.
Using blockchain technology, brands can remove all the middlemen involved in a transaction. The brand can direct its advertisement publishing activities and make automated payments to ensure continuous marketing. Only the brand that owns the advertisement and the advertising publisher are in direct contact with the activities of the advertisement. This application of blockchain to ensure the efficacy of privacy policies and identity protection is essential to building interconnected worlds and connecting parts of the world to an open global market.
Leverage Blockchain for Marketing
To use blockchain in marketing, brands are required to understand the implications of blockchain. For this, numerous courses are available online. If you’re intrigued by the limitless possibilities of blockchain, you will be happy to know that user adoption is on the rise. More brands are building virtual and augmented worlds to engage consumers.
As of 2022, 53% of companies that are investing in the metaverse have invested in cryptocurrencies. Currently, there are more than 400 million monthly active users in the Metaverse. Roblox is known as the biggest virtual world in the metaverse.
Additionally, 51% of the Metaverse’s users are 13 years old or younger. If modern brands are to remain responsive to modern consumer demands, the Metaverse is a beacon of hope. With verified means to monopolize and monetize global market reach, smaller businesses benefit from increased access to opportunities, while bigger businesses can also strategize their investments better. The use of blockchain for marketing will continue to rise across industries, and the consumption patterns that evolve with the Metaverse will define the economic and business activity of the future.
Especially as transactional volume and velocity go up, the relevance of robust technology to govern user experiences and ensure secure interactions becomes evident. Increased understanding of customer journeys and market monopolies are direct outcomes of blockchain and the metaverse.
Blockchain is here to stay and will expand its applications by redefining marketing methodologies and product development activities. Branding in the digital age is a careful combination of digital agility and technological positioning, creating new supply chain dynamics for a decentralized mode of global connectivity. Stay updated with the latest news by subscribing to Konnect Insights, where everything tech is awesomely yours.
“Today, I believe we look at the internet, but in the future, you will be in experiences.”
Mark Zuckerberg, Meta Founder