A packed-house talk about blockchain yielded no hype to speak of, instead providing a no-nonsense assessment of where the technology stands—and where it's headed in terms of the marketing business.
The session, in the Futures Hub at Spikes Asia 2018, was delivered by Guy Hearn, recently promoted chief product officer of Omnicom Media Group APAC. After running through a very brief explanation of blockchain that was among the clearest we've heard, Hearn moved on to the technology's place in marketing. Here are six takeaways for brands and agencies.
(If you need a primer on blockchain and its potential uses first, please see "Blockchain: The end of advertising as we know it?".)
1. Blockchain is now heading down into the "trough of disillusionment" in Gartner's famous hype cycle. This is the stage where inflated expectations get punctured as the reality sets in that difficult work lies ahead. Blockchain is probably five to 10 years from reaching the "plateau of productivity" on the hype cycle, Hearn predicted. He added that it would be helpful if people would stop equating blockchain with Bitcoin and other cryptocurrencies. He actually prefers the term "distributed ledger technology" for this reason.
2. It will likely be every bit as disruptive as you've heard. Hearn outlined the concept of an internet of value, where users are able to trade their personal data and/or attention for perks from brands. All of the people in the room, he noted, have made money for the last 15 years based on fact that consumers didn't know what their data was worth, he said. Blockchain will put an end to this.
As with the travel-agency business and others like it, the change will require certain companies to shift their footing, sometimes dramatically. "Third parties will need to provide added value, rather than just controlling the means of distribution," he said.
3. Collaboration will be required to make it work. Hearn repeatedly stressed that what everyone with a stake in the game—including brands, major media agency networks, and technology players—must do in the short term is agree on standards and protocols that will be used as blockchain deploys. He reached way back into the late 1970s and early 1980s for Betamax video players as an example of how lack of standards can delay adoption.
4. 2019 will see a lot of testing. Hearn said the next year will see a lot of smaller-scale tests, especially in applications that don't require a huge transaction volume or real-time support.
5. It will deliver first in high-value segments. Hearn said blockchain will see its first successes (in marketing) in segments where customer value is so high that the initially steep cost of implementing a full, closed-loop system will be paid back. Examples include B2B markets and perhaps luxury segments. "I do not think that in the short term you're going to be looking at closed loops for mass marketing," he said.
6. Electricity is a real issue. "Maintaining a blockchain takes an enormous amount of computing power," Hearn said. Some critics argue that running a real-time, high-volume system based on current blockchain implementations has a potential negative impact to the environment that cannot be ignored. Hearn described this power problem as a "distinct constraint" at the moment, but expressed optimism that efficiency improvements will materialise to mitigate it.