How to Monetize Customer Data with Blockchain Technology
THE AI SUMMIT — if you haven’t heard, data is the new currency.
In retail, consumer data can offer revenue-generating insight to companies. At the same time, companies need to be responsible stewards of data, given how central data has become to consumer identity.
Blockchain technology can restore consumer trust in companies’ handling of consumer data and data monetization efforts, said Anindya Ghose, Heinz Riehl chair, professor of business at Stern School of Business, New York University, at this week’s AI Summit in New York City.
Blockchain technology provides an encrypted, immutable distributed ledger to enable transactions but also creates an environment in which data is treated responsibly. Transactions are transparent and validated, enabling digital marketers to measure the success of marketing efforts.
Data-driven marketing has been a boon for retail, with 80% of consumers likely to buy products at a company that personalizes their experience. Accenture predicts that there is a $2.95 trillion prize for companies that integrate a smart digital strategy to personalize customers’ experiences. According to data from MarketsandMarkets, the consumer data monetization market is expected to grow to more than $3 billion by 2023.
At the same time, digital marketing has become rife with tone-deaf marketing that barrages consumers and outright fraud. According to the report, ‘“The Economic Cost of Bad Actors on the Internet, Ad Fraud 2019,” by Cheq, a cybersecurity company, ad fraud could cost $30 billion in 2019.
“For issues related to the accuracy, reliability and transparency of the data itself … an answer to addressing this limitation lies in blockchain technology,” wrote Ghose in the Harvard Business Review (HBR) article, “What Blockchain Could Mean for Marketing.”
Data monetization with blockchain can minimize this fraud – and reduce consumer fatigue with being emailed too often – by validating and analyzing every consumer’s journey through verified ad delivery, confirming that a real person saw the ad as per the specifics of a media contract. Transactions are validated through blockchain and demonstrate their value. Blockchain data can also be anonymized to cohere with regulatory requirements.
Data anonymization and accountability become critical in an era where data privacy regulations such as the General Data Protection Regulation and the California Consumer Privacy Act place more stringent requirements on companies to handle consumer data responsibly.
But today, blockchain technology requires transactions to be independently validated by numerous computers independently, which takes time (up to about 30 seconds) and resources to validate transactions. Because of this distributed model, “we are a still a while away from actual implementation of blockchain by the ad-tech ecosystem. The key roadblock that needs to be fixed is the speed of transactions,” Ghose wrote in the HBR article.
As other experts have noted, for blockchain to become faster, models may need to become more centralized, as well as by devoting more compute power to transaction processing.
Nevertheless, the goal of blockchain is to bring both security and transparency to transactions. That objective could help those who handle consumer data restore trust and help create sustainable customer relationships. Blockchain technology provides the guardrails to customer data monetization efforts that have been lacking, enabling marketers to run amuck.
“More and more consumers are talking about their data as a property right,” Ghose said. “Data is the new oil, but privacy is the new climate change.”