Blockchain marketing

A parallel industry evolving alongside blockchain loyalty is the new field of blockchain marketing. From a loyalty perspective blockchain marketing involves rewarding members with cryptocurrency or cryptotokens in exchange for their attention, brand advocacy and data insights, while giving them full control over their personal data which is stored in a secure digital wallet on the blockchain. The essence of blockchain marketing is marketers earning the member’s permission to promote to them and access their personal data, with members able to earn a benefit for providing their attention and sharing their data.

A 2015 survey by Aimia and Columbia Business School identified consumers are growing increasingly weary of handing over their personal data but were willing to share if they received rewards.[1] The research showed 85 per cent of consumers globally wanted to know more information about the data collected by  companies. A further 86 per cent wanted to exercise greater control over their data. 80 per cent of respondents said they would only give data to a few companies they trusted. Probably from real life experiences, 75 per cent were worried (and rightly so) that sharing data made them targets for marketing campaigns.

More recently, the scandal surrounding Facebook and Cambridge Analytica’s use of member personal data to influence the 2016 US presidential election has led to a groundswell of public opposition against the use of personal data. One popular saying for these times is, ‘If the product is free, then you’re the product,’ and it certainly rings true when one considers how many companies use member data to boost their profits.

There is also the tightening up of personal data privacy and security rules, such as the implementation of the General Data Protection Regulation (GDPR) which was implemented 25th May 2018 in Europe and aims to ‘protect all EU citizens from privacy and data breaches in an increasingly data-driven world that is (rapidly changing)’.[2] Data is now widely regarded as a valuable commodity, and abuses of its use will be tolerated less and less.

All of this provides the perfect foundation for a new approach to data-driven, personalised marketing.

To illustrate how blockchain marketing may manifest within a blockchain loyalty program, consider a possible member lifecycle. The member joins the program with a simple registration process (name, email, password) and a secure digital blockchain wallet is created with the member holding the key. Over time, the member is invited to load their personal data into the secure wallet, for which they are rewarded with cryptotokens; date of birth, address, mobile number, links to social media profiles, gender, sexual orientation and so on. In parallel, the loyalty program collects the member’s transaction data to understand the types of products they buy and where they shop. This may be from participating retailers, but the member might also be rewarded for scanning receipts from other major retailers. The member is also rewarded for filling in surveys to share their likes, dislikes, favourite brands and other information which can be used by the loyalty company to ascertain products and brands which will best appeal to them. The loyalty company can now work with reputable brands to deliver highly relevant, personalised promotions to the member, and if the member chooses to engage with those promotions, they earn cryptotokens. They may be rewarded for viewing the promotion, but also for purchasing the product or service, and ideally for providing access to some or all of their data within their secure digital wallet so the brand can better understand them.

Compare this to all existing loyalty programs, where the loyalty company collects as much data as they can and does what they like with it (within the confines of data privacy and security legislation), with the member having no control and receiving no rewards.

The premise of blockchain marketing is that if marketers know the value they can ascribe for a member’s attention, advocacy or data, they’ll be able to accurately decide what investment they should make in that member. This is similar to the approach used by companies such as Facebook with its advertising platform which allows marketers to set a fixed budget to reach a certain number of potential customers and accurately track the revenue outcome of the campaign activity. The stark difference is that the member is in control of their personal data (no Cambridge Analytica moments here) and is rewarded for their engagement.

From a company perspective, the true benefit of having access to an accurate data profile for a member is it allows them to better tailor their products, services, offers, rewards and marketing to meet their needs. For most companies, their member’s personal data is isolated in the many different organisations that collected it, making an accumulated overall picture very difficult. The potential for blockchain marketing lies in incentivising the member to connect these disparate bits and pieces of information, then reward them further for adding additional information such as transaction data, personal biographies and likes, wants and needs.

When it comes to collecting transaction data, there is a clear distinction between capturing the amount the member spends and the actual products they purchased. If a loyalty company knows how much a member is spending at a particularl retailer, that is incredibly useful in building a profile of that customer. If they know the specific products they purchased from that retailer, that is an exponentially more useful insight. For a company running their own loyalty program, collecting that transaction level data is relatively easy but for a coalition program it’s very hard. This is because the retailer rarely provides the product level data to the coalition operator, as only the total amount spent is required to calculate the amount of points earned.

To illustrate, if the member shows a history of purchasing KitKat chocolate bars and the loyalty program can collect this data, the member may be provided with the option to earn bonus cryptotokens for viewing a promotional offer from Nestle. Companies like Nestle often struggle to reach their customers directly because they sell through wholesalers and distributors to extensive retail networks, meaning the opportunity to build a direct relationship with a member is of high value to them. The member can indicate in their profile if they’d like to receive chocolate bar offers and they are willing to share their personal data profile to chocolate bar manufacturers in exchange for a cryptotoken reward. Nestle now has the opportunity to build a campaign using a much richer data set than they usually have access to and can target customers who are already consuming their product. They can incentivise the member to share the offer on social media, write positive reviews, fill in surveys and even forward the offer to family and friends. If executed correctly, Nestle now has an army of crypto ambassadors recruited to promote the KitKat brand. They may also be provided with the opportunity to target members who consume their competitors’ products.

From a commercial perspective, this type of engagement approach has the potential to be incredibly cost effective, with the brand able to deliver one to one promotions to a member who has already indicated they want to receive offers and has provided access to their digital wallet to allow the brand to tailor an offer that specifically meets their needs. This reduces the need for costly ad services such as Google AdWords by creating a direct, desired link between the member and the company.

Blockchain marketing has the potential to be disruptive to the digital advertising industry, which is renowned for pushing advertisements to users which are irrelevant or based on out of date data. Many consumers have had the experience of buying a product only to have it promoted to them for weeks after via remarketing efforts, which is a waste of marketing budget and irritating to the consumer.

Some of the blockchain marketing players which sit outside loyalty programs are taking a two-step approach; directly disrupting the digital advertising industry by blocking ads and trackers, while rewarding members for attending to ads they wish to receive. It is too early to say how much traction they will get in the market but it does have the feel of Netflix taking on free-to-air television.

Blockchain marketing fits perfectly within a blockchain loyalty program, for four reasons. Firstly, by registering with the program the member has already started down the path of providing their personal data and in a framework which makes sense to them because they’ve likely joined other loyalty programs before. Secondly, because earning cryptotokens is central to the design of the program, providing additional opportunities to earn by sharing data with preferred brands feels like a natural extension of the program, rather than the total program itself. Thirdly, the approach allows the loyalty company to position themselves as genuinely differentiated from existing loyalty programs which often subject their members to marketing assault and sell their data to third parties without the member being aware or being rewarded. A transparent, ethical marketing approach which gives members back control over their data is a sharp contract to today’s paradigm for which a sizeable consumer backlash is growing steam. It will also be virtually impossible for existing loyalty companies to change their approach, as their business operations are heavily dependent on the unhindered use of member data, meaning the differentiated position is also defensible. Fourthly, the approach has the potential to build into a valuable incremental revenue stream for the program, with brands eager to pay for the ability to send targeted marketing to members willing to hear from them. Consider a loyalty program with a base of 2 million members who can generate $10 per member incremental revenue per annum plus deliver additional cryptotoken rewards to the base.

While this new marketing approach fits neatly within loyalty program designs, at the time of writing there is yet to be a blockchain loyalty program who has adopted this approach, therefore from a loyalty perspective the concept is purely theoretical. That being said, there are a number of blockchain marketing companies operating independently to loyalty programs who can provide insight into different approaches a loyalty company can take. While it is still very early days for blockchain marketing, the space is fascinating and something worth watching closely as new business models evolve over the coming years.


This is an excerpt from Blockchain Loyalty: Disrupting loyalty and reinventing marketing using cryptocurrencies (1st Edition) by Philip Shelper.

Blockchain Loyalty is available at all good book stores. Buy it now.

[1] http://marketingmag.ca/wp-content/uploads/2015/11/aimia.jpg

[2] https://www.eugdpr.org/