Good advertising is part science and part art. Economically speaking, quality advertising helps close the information gap between producer and consumer, seeking to build trust and motivate action. Culturally speaking, advertising embeds iconic symbols and euphonic catchphrases into everyday life. More than that, the field’s most revolutionary brands are able to predict, or even drive, cultural trends.
The first digital banner ad appeared in 1994 and since then, digital advertising has experienced tremendous growth. Crude “click here!” ads have been replaced by integrated advertisements, virtual reality ads and targeted ads, which rely on massive amounts of consumer data, often unfairly extracted.
The uncontrolled collection and exploitation of data has allowed Big Tech to profit hundreds of billions off consumers’ personal information, making data the world’s most valuable asset. As a result, global regulatory shifts are changing the digital advertising landscape and reigning in unjust data collection practices. California’s CCPA, Europe’s GDPR and China’s PIPL set the foundation for increasing consumer sentiment and awareness about the value of their data.The next moment in advertising is thus one where privacy, data ownership and true consent are the priority. This is bigger than the next cultural trend, and it’s happening in Web3.
Appreciating how advertising in Web3 will manifest entails being cognizant of the wider world of Web3. If Web 1.0 is the read-only web and Web 2.0 is the social-media driven read-write web, think of Web3 as the updated read-write-own version. Web3 is about decentralization, transparency and autonomy through consensually shared databases made possible by immutable blockchain technology. As this new environment continues to develop, individuals will increasingly be in control of their digital experience and, most importantly, have full ownership over how their data is used.
When Apple updated its privacy settings in iOS 14.5, 96% of users opted out of sharing their data. Platforms with business models that rely on harvesting and selling consumer data for targeting advertising are already suffering devastating effects. Indeed, Facebook expects to lose $10 billion in sales as its targeted ads become less effective without unmitigated access to consumer data. The recognition that user data fuels the advertising industry has woken consumers up to the value of their data, leading to widespread demand for more control. Reports showing that users are willing to share their data if they are offered something in return suggest that the impact of iOS 14.5 is a cautionary tale for what happens when consumers aren’t explicitly asked and compensated for their valuable information.
This shift in behavior, along with the demise of the third-party cookie and the subsequent rise in demand for first-party data by brands themselves, creates a need for a permission-based advertising strategy, where brands and advertisers ask permission to collect data from their audiences. Reports already show that79% of consumers are willing to share their personal data for a reward.
Brands have long been using permission-based tools and loyalty programs because they lower cost-per-acquisition for advertisers and build respect and trust. In fact, investments in loyalty programs totaled $126 billion in 2019. Investments in permission marketing are even more relevant today with the rise of Web3 technologies and the transfer of data ownership back into the hands of individuals.
To be sure, opt-in value exchange will drive advertising in Web3, creating a Win Win Web where individuals are fairly compensated for their data and brands build direct relationships with their consumers. Advertisers should think beyond the typical loyalty program and explore utilizing cryptocurrency as a tokenized unit of value exchange. Crypto is a natural reward because of its liquidity, aspirational components and security.
Early adopting brands that offer desired rewards to their engaged consumers will benefit by building brand loyalty, while tapping into the burgeoning young and diverse market of the crypto world. Over 50 million Americans are interested in buying crypto within the year. The average age for current cryptocurrency investors is 38, while the average age of individuals heading mutual-fund-owning households is 50. Trustworthy and in-demand cryptocurrencies are indeed a promising reward for opt-in value exchange.
We are amidst a significant digital moment, the maturation of the web economy and the advertising that allows it to flourish. Staying ahead of the curve means investing in building long-term trust and one-to-one relationships with consumers by rewarding them for their engagement. By asking permission and compensating consumers for data shared, brands have the chance to jump to the front of the long line of Facebooks, Googles and Twitters that have driven the ecosystem for the last decade.
Brands that embrace such fair and transparent strategies will succeed in Web3. Interactions with consumers will finally be on equitable terms, ensuring brand loyalty and respect that will benefit bottom lines and increase social impact.
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