Why Blockchain For Brands?

Aug 16, 2023

Pink Flower
Pink Flower
Pink Flower
Pink Flower

As the next evolution in internet technology, Web3 promotes individual data ownership, privacy, and control. A key feature in this consumer-centric ecosystem is the Web3 wallet. Web3 wallets are a gateway to consumer data in this new world. We call this "first-party-data".

What is Web3?

Web3 known as the decentralized web, is the next phase of the internet. It adds an "ownership" layer to today's internet. The goal is to decentralize power from a few tech companies that currently own and utilize every piece of data and history on consumers. Web3 envisions empowering individual users so they decide what to do with their own information.

What is a Web3 wallet exactly?

A Web3 wallet is a key to an individual's account on the blockchain. We'll get into blockchain later. It's similar to an email address in terms of function. However, the wallet is cryptographically protected so that the true identity of the wallet's holder is forever secure and hidden. For example, you can't exactly search someone's wallet on Google and find their LinkedIn!

Limitations of second-party and third-party data

Second-party and third-party data face inherent limitations in today's customer-centric era. Second-party data refers to data that has been collected by one entity and sold to another. The second-hand nature of this data means that brands must place trust in the accuracy of the information. Third-party data refers to data gathered from many sources. While this method can give a broad view of customer behavior, it lacks precision. In fact, third-party data often results in customer personas that are too generic, resulting in irrelevant ads which then backfire for brands that paid for that data.

Wallets give rise to "first-party-data"

Web3 wallets can offer a rich data environment for brands to understand consumer behavior via first-party data. First-party data refers to information that a brand collects directly from its consumers. Unlike in Web2, brands in Web3 can access first-party data directly without an intermediary. This allows more precision and specificity for brands, resulting in greater personalization for the consumer.

First-party-data is the key in digital advertising

The regulatory environment along with consumer demand has placed enormous pressure on big tech to be more privacy-preserving by default. A world without "cookies" presents a challenge in the advertising ecosystem which has historically relied on tracking user data across the internet. Relying on first-party and even zero-party data (data that consumers voluntarily share with a brand) is crucial more than ever before, some of which are already stored in a brand's business system: CRM, call center, product reviews etc. Unlocking the entire power of first-party data requires a scope of access that only blockchain can provide. So where does blockchain fit in?

Blockchain puts consumers in control with all the right incentives

Blockchain is a system for storing data. It protects the privacy of all users while still ensuring that the management of data remains as efficient as possible. Web3 uses blockchain technology. The benefits of using blockchain extend beyond privacy and security, although both should not be understated. Blockchain-based consumer data is anonymized and secure, thereby increasing consumer trust in how their data is used. By utilizing first-party and zero-party data, brands can gain a more holistic view of customers while honoring individual consumer privacy. Research conducted by Boston Consulting Group revealed that brands leveraging first-party data saw a 2.9x increase in revenue and a 1.5x increase in cost savings.

As Web3 becomes more dominant and consumers feel the benefits of personalization, the brands that are early Web3 adopters will undoubtedly become category leaders and a permanent fixture in their consumers' lives.