The internet has become a gift horse for most brand's marketing departments, enabling them to farm massive amounts of digital data to deliver laser-targeted ads. Consumers are all too happy to share their personal information and accept the web cookies that track every single click, meaning marketers have unprecedented insights into the likes, tastes and desires of online audiences.
Marketers have grabbed this opportunity with both hands, and research shows that data-driven ads receive far more attention than traditional, randomly-targeted ads. Studies also show that the performance of ads declines when they're based on less consumer data.
However, there is a growing dissatisfaction among consumers over the online surveillance they're subjected to by advertisers. These days, most internet users are well aware of how their data is being used, and public outcry over data breaches has become increasingly common. Consumers are on alert, and those highly personalized ads targeting dog owners and follow users across multiple websites have made it very clear they're being followed, analyzed and targeted. As a result, regulators in some countries have introduced regulations that govern how consumer's online data is collected and used.
Marketers now have to perform a more delicate balancing act. While more information can increase ad performance, if a brand gets to know its customers too well, its ads can cause privacy concerns that lead to a negative reputation.
There is evidence of this. One study found that when websites in the Netherlands were legally required to start informing consumers of the covert tracking methods they use, the click-through rates of their ads dropped significantly.
Some companies have managed things better than others. For instance, Amazon displays ads on just about every page of its enormous online retail store, with product recommendations based on user's past purchases and search data. Yet it remains one of the most successful internet marketers of all. However, Target's brand suffered damage in a now-infamous case that dates back to 2012, when it sent coupons for maternity products to the father of a teenage girl, inferring that she was pregnant. The father was at first incensed, only to discover that his daughter was indeed pregnant. When the story was publicized, consumers were outraged at the invasion of privacy, and Target had a major PR problem on its hands.
Ad Targeting Transformed
For brands, the evolution of the internet from Web2 to Web3 promises to bring them more accurate data on their users, while also increasing privacy for users, to avoid these kinds of scandals and prevent consumers from being alienated.
With Web3, the internet will be built atop of decentralized technology that gives users more control over where their data is stored and who can access it. Whereas today's social media giants, like Facebook and Twitter, amass petabytes of user's data on centralized servers, the decentralized nature of Web3 will ensure that user's information is not owned by any single entity.
Decentralized applications will store data on transparent blockchains. Unlike standard, centralized servers, multiple independent parties will hold a copy of the blockchain and cross-reference each other to ensure the accuracy of this data. Blockchains are also immutable, meaning the data on them cannot be changed once it has been entered and processed. All of this data is publicly visible, but anonymous in nature.
In other words, data in Web3 will be more private, but at the same time it will be more accurate, making it much more valuable. Since this data will no longer be controlled by big internet giants, digital marketers will need to find ways to connect brands directly with their audiences. Brands will therefore be forced to build much closer relationships with their customer bases.
Better, Happier Prospects
This will have some advantages, though. The most obvious benefit is that consumers who agree to connect with a brand are already very interested in that company's products and services. So it will be easier to find and convert leads, because each person they connect with is already a prospect.
Web3 users will have complete privacy in this decentralized environment, and so marketers will have no option but to go directly to the source of the data, the consumer itself.
One such model that demonstrates how this will happen has been developed by ReneVerse, which has created a Borderless Gaming ecosystem of Web3 video games - where users have the freedom to surpass the borders between games and bring their assets wherever they play.
Besides enabling gamers to benefit from the value of the in-game assets they own, ReneVerse has also created a novel advertising platform that allows for gamers to be targeted across whatever games they play. Users can choose the data they wish to share with ReneVerse, and this can be used by brands to create in-game ads that are hyper-targeted. ReneVerse calls this technology "Borderless Ads", and it is creating a marketplace where advertisers will be able to purchase in-game advertising slots. Brands will be able to bid on specific types of ads within desired games, and developers will be able to select which ones they want.
Borderless Ads has a strong value proposition for advertisers because such laser-focused ads will have a much higher chance of connecting gamers with the products and services they want to see. The advertiser enjoys a higher hit rate, and the gamer will not only tolerate, but in many cases welcome the ads that they see. It's an intelligent advertising model that transforms the ads themselves into assets that move across different games in an ecosystem of like-minded users.
Less Fraud, More Transparency
Web3 advertising may also help to reduce the high incidence of click fraud. Verasity is the creator of an open ledger ecosystem that brings greater trust and transparency to digital advertising and payments. In a 2021 study, Veracity estimated that advertisers would lose around $44 billion due to ad fraud in the coming year. To combat this, it has created a tool called VeraViews that relies on its novel "proof-of-views" technology to determine if users have actually viewed an ad or not.
The idea with VeraViews is that it will help advertisers to ensure they're only paying for valid ad views, reducing wasted spend on ads that nobody ever sees.
Time For An Overhaul
Digital marketers will be forced to overhaul their marketing strategies as decentralization grows and Web3 becomes more widespread. To avoid being left behind, marketers need to begin exploring ways they can connect more closely with consumers. The expansive and unethical data mining employed by marketers today will no longer be so relevant in the Web3 era. Instead, data collection will have to be done in a more open and ethical way. It'll take more effort, but consumers will appreciate it, repaying the brands they love with increased engagement and greater trust.
