Will Web 3.0 change digital marketing forever?

Web 3.0, blockchain, NFT, bitcoin, cryptocurrencies… if you’d ever had to make a bet on one of these terms for a Webster’s 2022 Word of the Year, you’d run a good chance of becoming wealthy.

While this is a technological and philosophical movement that is still in its infancy, we are starting to see the reality of what this new paradigm represents to those of us in the marketing community.

Let’s start at the beginning and set the stage for how we got to where we are today. Then we’ll explore what’s new, how it works, why it’s important, and how we’ll have to adapt as marketers to make sure that we continue to reach our audiences online.

How it all began with Web 1.0

The first version of the World Wide Web is known as the “read-only” era. The early days of the Web could be chaotic and difficult to navigate. And interactivity on these pages was nonexistent.

In its original form, the Web existed so that one person (or group of people) could publish content for other people to consume. The issue was that very few people had the skills to publish information in a way that was digestible, or even findable.

Even those with enough skill to build an Angelfire website were lucky if more people than their mom and their cat saw their content.

The biggest limitation placed on those earliest sites was that of speed. For the most part, those using the internet were using dial-up connections, placing severe restraints on what could be displayed on pages and making life miserable for anyone who dared share a file larger than 50kb.

SEO was still in its infancy, and helping search engines find your site was a matter of gaming the system in a way that often left those searching for information confused, frustrated, and, in the end, without the information they were trying to find.

Page owners and publishers started looking for ways to pay for their online presence and sold banner ad space on their sites. GoTo.com are responsible for the first keyword auctions. As long as you had a site, you could now spend money to get people there.

Still, publishing content wasn’t for everyone even if it seems like everyone wanted a voice. And so the Web’s biggest innovators held up a megaphone and asked the world to shout.

Web 2.0 puts targeting in the hands of mega corporations

Web 2.0 is the version of the Web that we are most likely to interact with today. It’s recognized for its centralized systems, user-generated content, and endless personalizations. In other words, the “read-write” Web.

We’ve gone from viewers of static pages in the first version, to being active participants in Web 2.0. With the rise of platforms like Facebook, Twitter, YouTube, Wikipedia, and myriad others, users are now encouraged to share and create content instead of just consuming it.

Writing on medium.com, Vivek Madurai points out that new programming capabilities through HTML5, CSS3, and Javascript frameworks like ReactJS were responsible for allowing startups to put their new ideas into production and allow users to contribute more.

New technologies like broadband and mobile computing are making these centralized content repositories far more accessible than they were in the early days of the Web and made it even more simple for people to add content, regardless of where they were.

With search and display advertising in full effect, multiple advertising platforms, and access to highly targeted audiences via social channels where people were willing to exchange information on their interests in order to share content with a wide audience, digital advertising reached a little more than half a trillion USD in 2021.

What is Web3?

Web 3.0 is the term that we use to define a new technological movement. It’s characterized by the expansion of Web usage and interaction based on a decentralized online ecosystem.

It will allow users to create, publish, and interact with content without needing a central entity that owns their data. This means that big corporations will no longer have control over the Web, and their algorithms will not dictate the content that one sees.

Many of the most popular sites and apps today rely on user-generated content. The companies who use that content (Meta, Twitter, etc) are the owners of the content, as well as the data that they get from displaying it. All of this content and data is in a centralized location (or, most likely, locations).

The difference between those developing Web 3.0 applications is that the content would be owned by the users who post it, and the data would be stored on decentralized servers. But how does that work? Developers are aiming to leverage the power of blockchain in order to make this a feasible reality.

What is blockchain?

The technology that is being used to decentralize the storage of content and data is called blockchain.
At its core, it’s a decentralized ledger that exists on multiple computers simultaneously and that facilitates the process of recording transactions and tracking all sorts of assets. Given the shared and immutable nature of this ledger, it becomes an incredibly reliable network that is now vastly adopted for a multitude of applications.

Bitcoin is one of these applications and is built on the blockchain network which serves as its operating system. The latter was introduced as part of the proposal for a virtual currency and became the very first application of blockchain technology.

This system was developed from the need for an efficient technology that enabled trust, security, transparency and connectivity free of administrative control.

For instance, imagine that you’re attending a party and you’re received by a bouncer holding a guest list to either authorize or deny people entry upon arrival. You hand over your ID card, he verifies his list and proceeds to give you the judgy staredown. And boom, just like that it doesn’t even matter if you’re on the list anymore.

This metaphor best describes the current centralized system of the internet. With blockchain, every attendee at the party would have access to the guest list and if an unauthorized individual comes in, the guests would intermingle about it.

This procedure works as a peer-to-peer synchronized verification system that’s in fact called the “gossip protocol.” And they say developers don’t have a sense of humour!

The case for decentralization is very compelling and promises different benefits that include:

Data Ownership

Web 3.0 Promises to give the data back to the people. The content that you upload to platforms will belong to the creator instead of the platform.

Security & privacy

Web 3.0 promises to be more secure and private than web 2.0. Due to the “verification” system set up by the blockchain, it makes it incredibly difficult for hackers and criminals to penetrate your systems.

Decentralized organizations

Decentralized autonomous organizations aim to be open platforms through which individuals control their identities and their personal data.

Web 3 is still in its infancy phase, There are many considerations for its widespread adoption, meaning Web 3 may not live up to the hype promised.

Questions remain, such as can Web 3 scale sustainably? Will Web 3 really deliver online sovereignty? Can we educate and shift the culture of the masses to understand Web 3?

While these questions are still yet to be answered, there are some things that we do know in the meantime.

Non-Fungible Token (NFTs): what’re they all about?

Another way of using this technology is with NFTs, which are digital cryptographic assets ranging from art, music, in-game items or even tweets. Non–Fungible means that it’s unique in nature and can’t be replaced with another item of identical value. For the most part, they are typically held on the Ethereum blockchain which is another cryptocurrency like Bitcoin.

NFTs have had a meteoric rise to popularity within the past year with a market worth a whopping 22bn$. Despite that it can be easily accessed, replicated, copied or downloaded given its digital nature, NFT’s are meant to give you one thing that can’t be reproduced : ownership of the work.

For artists and creators, NFTs can be an attractive tool, as they no longer have to rely on galleries or auction houses to sell their art. Instead, they can sell it directly to any interested buyer. The artist may also program royalties, so as to receive a percentage whenever their art is sold to a new owner. This is made possible by the smart contracts that are embedded in the Ethereum blockchain.

Fun fact: Even mass retailers such as Nike are getting in the NFT game by acquiring RTFKT studios, who specialize in making NFT footwear to help accelerate their digital transformation.

I know what you’re thinking: how is this beneficial?

1. Trust (or the lack thereof)

Blockchain is usually recognized as a trustworthy network, which actually has all to do with its technical reliability and nothing to do with trust. A trustless system is based on the enhanced security of the blockchain and the removal of intermediaries or middlemen.

Bitcoin and other cryptocurrencies are general examples of how blockchain enables “trust” between participants who don’t inherently know each other.

2. Sharing and storing data with no single entity in charge

Blockchain creates a decentralized structure that allows for more transparency given the distributed ledger that is recorded on all computers on the network.

The “chain” system creates an unalterable record of transactions that prevents fraud or other unauthorized activities and makes hacking virtually impossible. That makes it a very efficient technology for digital record keeping and transactions among multiple parties, as the ledger itself can be designed to trigger transactions automatically.

3. Multiple companies, institutions and nations improving their services using this technology.

More than a billion people don’t have access to identification and registry systems. Accordingly, this technology has the potential to provide a standardized network of identification that can be safely stored, validated and accessed across different sectors such as finance, healthcare and education.

The supply chain sector is also making use of this technology. Companies like Walmart and IBM use it to streamline their transaction process, as it allows them to efficiently administer inventory and easily respond to merchandise and invoicing issues.

In India, this technology is now applied in the banking and insurance industries, as well as the public sector for matters like land title registrations, vehicle registrations, electronic health records among other things.

Just like every emerging technology, Web3 is not all sunshine and roses

Despite many advantages, blockchain also has its fair share of drawbacks.

1. It’s a network that relies on nodes to work properly

These nodes form the infrastructure of the blockchain and are constantly exchanging data. The quality of the nodes in turn determines the quality of the blockchain, which can drastically affect the speed of the process as the number of users on the network increases.

2. Scalability

Every transaction requires additional computational resources to authenticate the blocks and each device on the network must have a copy of all transactions.

As a result, there will be a high number of copies of the same data and that redundancy makes it hard to scale. It requires massive storage and the bigger the blockchain, the more power the nodes need to process everything.

3. Environmental impact

Mining with regards to blockchain is the process of adding transactions to the ledger. It uses a form of cryptographic proof to validate the “block” which relies on miners to solve complex mathematical problems. These mines require a large amount of electricity to solve problems, with some of them generating more carbon dioxide than entire countries.

4. No backspace button

The immutable nature of this technology (or at least in theory) means that once the data is written it can’t be removed. It is clear that multiple sectors like supply chain and finance can benefit from this immutability.

It can become very problematic if, for one reason or another, users need to replace or upgrade the cryptographic algorithm that was originally used. This can cause some major privacy issues depending on how the technology is applied.

5. It’s somewhat inefficient

One of the major selling points of this technology is the transparency and its integration in commercial use. Although transparency is generally encouraged, it’s not always ideal on a public blockchain in a commercial environment.

Why? Simply because the data of consumers and other parties would be subject to the same openness. In commercial settings, full disclosure isn’t entirely idealistic as it enables all participants to see progress in real-time.

Despite being safer than other platforms, it’s not necessarily 100% foolproof. There are multiple different ways that the network can be compromised and as the technology grows, so will that threat.

Even with the problems that we identify with this technology, we should certainly give it the benefit of the doubt. It’s still in its early stages and has a lot of potential for growth.

While it may seem too idealistic for some, this technology has a strong chance of affecting the way we do business and interact with each other in the future.

How can brands and marketers adapt?

A decentralized Web means that marketers who promote brands will not be able to use many of the tools that they have come to rely on over the last couple of decades. If you can’t access data about a specific user, then you obviously can’t target them with an ad that you think would be useful to them.

It also means a return to what made the Web great in the first place:

Community

In the earliest days of the internet, people gathered in spots to discuss topics, share information, and engage in spirited debate. As more people begin to adopt Web 3 and all it represents, we’ll see a resurgence of smaller, more focused communities… in a centralized location.

The author of this article on Entrepreneur.com puts it well:

In Web3, NFTs are people’s digital identities. An active community member showcasing their identity associated with your project is your best salesperson. Because of that, the impact of losing an active community member in Web3 is way more significant than in Web2.

It is extremely important to identify and nurture those active community members on every stage of the project. Establishing personal contact with them and finding ways to regularly incentivize them is crucial, as they are the most efficient gateway to the wide community

Great content creates connections

As this article in 101blockchains points out, “the web3 landscape is capitalizing on the themes of FOMO alongside creating a perceived scarcity of access. “

Communities exist, and they’re based around niche ideas, meaning that it’s possible to be very targeted in communications, as long as the content that you create is interesting to that audience.

Content creators and artists who are able to regularly bust out great content are going to be in high demand. The fun part is that it will put the power of connection in the hands of those content creators, which could possibly lead to a decentralization of marketing organizations.

But that’s a conversation for another time.

The idea that targeted content is important—or will be even more important—is not new. It means that our campaigns will need to be even more focused on the content and the people who create that content.

Which is going to be a lot of fun.

Will Web 3 change the entire digital marketing landscape?

So what does this all add up to? What does it all mean for marketers? Are we seeing a complete sea change in the way we’ll engage with audiences as digital marketers?

I think we can sum up what we’ve learned above in the following three points.

Targeting options for reaching audiences are becoming increasingly narrow, but they’re not altogether defunct. It’s still possible to reach target audiences through search engine marketing, display advertising on a wide variety of platforms, and through engaging social media campaigns. That will most likely be the case for quite a while.
To reach an audience who are opting for a more decentralized Web experience, building strong, engaged communities is the best way (for now) to ensure brand awareness.
The way we all engage with each other via the internet is in constant flux and nothing will ever remain the same. Just ask Tom from Myspace.

We know that the means by which we reach audiences will always be changing. What we also know is that great content that sparks an emotional response from an audience is always going to be a great way to create awareness of a brand, regardless of how people get that message.

The basics of marketing remain the same even when the ecosystem around sending out messaging changes. So let’s keep creating great content with solid messaging and make sure that our audiences have a good reason to interact with our brands.