Alternative currencies have been a very popular topic recently with all of the news happening in the economy.
There’s a lot of money being printed, and cryptocurrencies like Bitcoin and new ones like dogecoin, are coming into the spotlight.
So we want to explore exactly what the effects of Bitcoin and cryptocurrency on digital marketing are and how can it affect your business.
Today, we’re going to go over some ways Bitcoin can affect digital marketing as well as small businesses in the future.
But before we dive in on the effects of cryptocurrency on digital marketing, we’re going to quickly dive into explaining cryptocurrencies and Bitcoin.
- With cryptocurrency trending on the most popular and best social media platforms, it’s no wonder Bitcoin has come into the spotlight.
- If blockchain technology were integrated into social media though, it would benefit the consumer greatly but will have pros and cons for advertisers.
- If cryptocurrencies’ blockchain power can put the power in the consumer’s hands then we could see audience size diminish.
What Is Cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography.
This basically makes it nearly impossible to counterfeit or double spend.
A lot of cryptocurrencies are decentralized networks based on a blockchain technology.
A blockchain is an open, distributed ledger that records transactions in code.
An easier way to think of these is like a virtual bank account that’s distributed across hundreds of thousands of computers across the world.
Transactions are recorded in “blocks” which are then linked together on a “chain” of previous cryptocurrency transactions.
An even better way to think of this would be…
Imagine that you have a book in which you write down everything you spend money on each and every day.
Each page in that book would resemble a block whereas the entire book, meaning all of the pages together, is a blockchain.
With a blockchain, every cryptocurrency user has a copy of these transaction records.
This computer code will basically automatically log each transaction as it happens.
And, will then proceed to update the blockchain with the new information.
So basically, a huge benefit of blockchain is that it makes sure that every single transaction is accurate and recorded.
Thus, everybody can see exactly what is happening.
Another defining feature of cryptocurrencies is that they are typically not issued by any central authority.
This means that cryptocurrencies are theoretically immune to government interference or manipulation.
Bitcoin was the first blockchain-based cryptocurrency created and still is the most popular amongst all other cryptocurrencies.
What Is Bitcoin?
Bitcoin is a form of cryptocurrency that was created in 2009 and its creator is still unknown to this day.
However, most of the hype that comes with Bitcoin right now is appreciation and trading it.
This is in part due to the price of Bitcoin skyrocketing towards the end of 2017 and a huge surge in 2020.
This is what makes Bitcoin so interesting though.
It can be held like a stock in hopes that the price will increase.
Whereas we know today, cash depreciation value as inflation goes up.
In fact, within the last year, the value of just one Bitcoin has increased by over $50,000.
Some small businesses may also prefer Bitcoin because there are no credit card processing fees associated with them.
That is unlike other methods of payment most small businesses have to accept.
So if you’re intrigued, you may be wondering how do you get Bitcoin.
There are plenty of marketplaces that are known as “bitcoin exchanges.”
And these are where most people will buy and sell their bitcoins.
…are some of the most popular websites where you can buy and sell bitcoin.
However, with all of the attention surrounding Bitcoin in recent years, many stock exchanges are extending their offerings for cryptocurrencies.
This is so traders can use and buy on their platform.
For example, Robinhood and WeBull have started to allow users to buy and sell cryptocurrencies directly on their app platform.
People are also starting to trade bitcoins through the use of mobile apps or their computers.
This process is similar to how you would send cash digitally through an app like Apple Pay, Venmo, or Cashapp.
There a lot of benefits with using cryptocurrencies like Bitcoin but there are some major risks involved that you need to think about.
For example, bitcoin wallets are not insured by the FDIC.
Wallets that live in the cloud have been hacked in the past.
Whilst wallets that live on your computer can be deleted by accident or attacked by computer viruses.
So you definitely want to be careful when you’re thinking about getting cryptocurrencies like Bitcoin.
Now that we all have a better understanding of cryptocurrency in general, as well as Bitcoin…
…we can now move onto the relationship between Bitcoin and social media.
Right now two-thirds of United States adults get their news from social media.
In fact, social media has directly led to the popularity and growth of the digital currency.
With cryptocurrency trending on the most popular and best social media platforms, it’s no wonder Bitcoin has come into the spotlight.
In fact, Facebook is considering cryptocurrency for its own business growth.
With that said, currently, social media influences cryptocurrency, not the other way around.
For example, in recent years when Bitfinex was hacked, the value of Bitcoin dropped by 20%.
Once news broke on social media, the credibility of that bitcoin exchange company started to diminish.
Social media can also inversely affect cryptocurrency.
This is because, as the hype continues to grow over Bitcoin, more and more people and businesses become interested and thus invest in Bitcoin.
The difference between the stock market and Bitcoin though is that Bitcoin isn’t regulated in the same way.
This means that bitcoin won’t be as impacted as much by what the government decides to do.
What Would Blockchain Technology Look Like For Marketing?
So we now know how social media affects cryptocurrency but how can cryptocurrency affect social media marketing trends?
First off, it is important to understand how things stand currently.
Let’s use YouTube as an example.
If you’ve watched a video on our channel, sometimes you may encounter ads on our videos.
Here are the current roles.
- You are the user.
- We (LYFE Marketing) are the publisher.
- The sponsored ad comes from the advertiser.
- YouTube is the platform.
There are 4 parties in this example.
In this example, the advertiser is able to leverage the publisher’s audience by giving a commission to the publisher.
However, the publisher is not the only person that gets paid.
The advertiser has to pay for that ad space through the platform so, in our example, YouTube is getting the most money.
If blockchain technology were integrated into social media though, this would look a lot different.
It would benefit the consumer greatly with a fair share of pros and cons for advertisers.
The biggest change with implementing blockchain technology would be the access marketers have to user’s privacy.
As a marketer, you’d have to rely on gathering data directly from prospects and customers in order to create a digital marketing campaign.
You would also have to customize your user experience so that it is tailored to all of the specific things your audience is looking for.
At LYFE Marketing, we’re already doing that, and the best marketers are too.
Where blockchain technology really shakes things up is the fact that…
…it could allow users to voluntarily decide the type of content and ads they would like to see.
Now before we dive deeper into all of the pros and cons that would have for consumers and marketers…
Let’s take a look at an example with display ads to see what type of change blockchain technology would provide when it comes to social networks.
Although we as marketers can get great results from display ads, they can be quite expensive at times and can sometimes be complicated to manage.
On top of this, the amount of ad space, or the inventory of ad space if you will, is controlled by the platform like Google and Facebook.
On the user side of things, display ads can be intrusive, annoying, and they can also drain your mobile device’s battery while wasting bandwidth.
Now that’s not to say there aren’t any pros with display ads.
One pro could be a marketer successfully bringing a product that a user has been searching for to their attention but the cons weigh quite heavily.
With all of that said, there is a way that cryptocurrency-infused digital marketing could alleviate those issues.
That is through the use of the Basic Attention Token (BAT).
The basic attention token is a digital advertising token that was built on the Ethereum blockchain.
The purpose of this token is to, in a decentralized manner, create an ad exchange that connects users, advertisers, and publishers.
It also serves as a way to monetize user attention and remove any needless expenses related to ad networks.
This token allows for all parties involved to be rewarded.
This is because users get paid for their attention, advertisers get a better ROI for their content, and publishers also receive a fair piece of the ad revenue.
So what does this look like in action?
It all starts with advertisers.
Advertisers will be able to buy ads using BAT.
These can be any type of ad ranging from landing pages to push notifications.
Users then decide if they would even like to see ads.
If they do opt in to view ads, they will be compensated with BAT for their attention.
Users can decide exactly which kinds of ads they would like to see.
This will provide advertisers with more accurate consumer information.
This information will remain anonymous in the sense that the user’s name will not be shown to advertisers.
This type of setup will also allow users to learn more about the brands and products that they actually care about and want to hear from.
And this is since they’re in control over what advertisements they’ll see.
Users get paid a portion of the BAT that was used by the advertiser to purchase the ad space.
The last group involved in this process is the publishers.
The publishers, as they currently do, will still get the most compensation out of anyone.
This is because the publishers are compensated by both the advertisers and the consumers.
Under this system, publishers will receive a larger portion of ad spend than the consumers will.
Publishers can also seamlessly integrate premium features by charging users BAT in return for premium content and subscriptions.
Now you may be thinking, why hasn’t this happened yet? This sounds like a win for everyone involved.
Although financially, everybody wins here, there are some major changes that can disrupt the current flow.
As well as the relationships between users, platforms, and advertisers.
Impact Of Cryptocurrency On Digital Marketing
So with all of the things we’ve tackled above, the ultimate question is – what will be the impact of cryptocurrency on digital marketing?
When you think about the information that digital marketers have today, a lot of decisions are made when developing and optimizing ad campaigns.
This comes directly from the data that we have on consumers.
This data is great because we can show ads to the audiences that we choose and have the opportunity to turn literally anyone into a customer.
However, if cryptocurrencies’ blockchain power can put the power in the consumer’s hands then we could see audience size diminish.
For example, you may be able to create a highly targeted audience with Facebook ads and reach 50 million people.
If you can convert 2% of that audience, that would be 1 million customers.
But if audience size decreases, let’s say by 20%, then suddenly you can only reach 40 million people and get 800,000 customers.
This would make digital marketing much more challenging and competitive.
Cryptocurrency On Digital Marketing: Changes We Could Expect
Well, we have several thoughts of what could happen.
But of course, all of this is hypothetical and there is no guarantee cryptocurrencies will change the landscape of digital marketing.
But if it does, wouldn’t you want to be prepared?
And speaking of digital marketing, if you need help with boosting your marketing campaigns, LYFE Marketing is here to help.
Check out our various digital marketing services here or contact us today.