Although 2018-2019 has been a dizzying rollercoaster ride for followers of blockchain and DLT, a massive drop in the value of cryptocurrencies has coincided with a healthy shakeout of hype-driven vaporware. Luxury brands are exploring various use cases for blockchain now, many focused on the supply chain. German-based distributed ledger platform IOTA is also launching a distributed ledger solution focused on enabling more sustainable and ethical sourcing with global manufacturing company Avery Dennison with similar goals.
Investigation by enterprise is resulting in a gradual consensus that the technology, though still truly nascent, will be disruptive. A recent Forbes study found that 83% of senior executives say their enterprises are seeing compelling use cases for blockchain today, and 40% of enterprises are willing to invest $5 million or more in new blockchain initiatives over the next 12 months.
Comparisons are often made between blockchain and the computer or the early Internet. Though initially utility for each was limited, ongoing technical and infrastructure development eventually and fundamentally upended the existing landscape. The “World Computer” represented most prominently by the Ethereum infrastructure is a new computing paradigm – trustless, shared, and as a result subject to a new set of rules across everything from storage to security and identity. Catching up will take time – it’s as though the computer has been invented again, and now in order to compete against existing platforms, its creators need to build every step from RAM to cloud computing. While it is a long road, once disruptive technologies near maturity, they have a record of upending entire sectors of the global economy.
The trustless nature of cryptographic ledgers and the decentralized, cryptographically secured approaches for direct buyer-seller relationships that they enable as a result look to be compelling solutions to the challenges publishers and advertisers face with maintaining the value of their dollars as they transact digital assets. This opportunity is not lost on the startup space – the number of distributed ledger marketing startups has grown 13x in the last 12 months, despite the last year and a half being a period of significant challenge for funding startups that involve blockchain.
In the short term, there are opportunities in fraud prevention and media supply chain optimization for digital media. Amino Payments and Lucidity have each reported efficiency gains from creating additional transparency with blockchain tech; in a recent campaign for Toyota, fraud and transparency driven optimizations through Lucidity’s solution improved campaign performance by 21%. Rachel Mervis, programmatic lead at Nestle recently reported that based on its transparency work with Amino Payments, they think it is possible to get 60-70% of every dollar to publishers.
Later this year, more opportunities to test use cases in marketing are expected to come online for testing. We see future marketplaces for media commitments (Kochava, Parsec) cross border transactions (Ripple) and media contracts reconciliation (Amino, others). It’s also a good time to engage with marketing industry groups that are writing the rules for blockchain in the marketing ecosystem (Adledger).
Medium term, the emergence of distributed, crypto driven creator networks is worthy of note. LBRY appear to be gaining traction as a decentralized YouTube competitor – as there appears to be some authenticity in directly compensating creators for content in a zero-ad environment. Brave has taken a different tack, building a crypto-first browser with a focus on enabling donations to content producers – whether or not a given creator has signed up. Notable partnerships in 2018 like The Dow Jones Media Group, Townsquare, Quant, Civic, and HTC established Brave as a viable example of blockchain-based industry disruption. Steemit represents a cross between Reddit and Medium – a community driven content site where popularity is incentivised directly. While it will likely take significant time for blockchain driven alternatives to take significant share from existing content platforms (if they ever do), it is a key place to look for the next crop of savvy creators and influencers with whom to collaborate.
Longer term, we see opportunities to combine the unique digital asset and supply chain capabilities of blockchain with luxury more directly via AR – making authenticated garments pop in augmented reality, or flagging fakes in-camera. Additionally, as payments become integrated into the fabric of the internet of things, a future where objects enable real spending – using your digitally enabled luxury sunglasses, ring or bracelet to pay, for example – will be a status symbol. These are only the tip of the iceberg; as the space continues to develop, new kinds of trust relationships will be decentralized and more business models disrupted. Wholly digital luxury brands may emerge, trafficking exclusively in custom digital assets that are worn virtually.