For nearly a decade, digital ad sales gained increasing traction as customers began giving progressively more time to their personal technology. A study conducted by the Pew Research Center in March revealed that “26% of American adults now report that they go online ‘almost constantly.’” More than ¾ of American adults are online throughout the day, and constant connectivity is a cultural norm for younger generations.
Therefore, companies are sending their messages to the most crowded public square: the digital wasteland of the internet.
In 2017, digital ad spending finally surpassed the amount that brands spent on television advertising, According to Recode, digital ad comprised 41% of all ad purchases, and that number is expected to reach 50% by 2020. In fact, digital ad sales are rising precipitously. Data provided by Statista shows companies doubling their digital ad spending between 2015 and 2020.
However, there is mounting evidence that digital ads may not be the most effective way to spend an advertising budget. With all the media attention and public scrutiny of Facebook and their use of user data to create a lucrative advertising platform, a broad discussion is emerging that questions if this is the best way to connect with customers.
After all, most companies are focusing their efforts and marketing budgets on digital advertising, which is creating a crowded advertising arena that has the adverse side effect of aligning the company with predatory big data behaviors.
More importantly, it’s creating an opportunity for companies who are willing to try a different approach.
It’s possible that there may be cheaper, more effective ways to reach customers without putting the company’s brand or reputation at stake. With so many companies focused on digital advertising, there is an opportunity to take advantage of their misdirection and to pursue a more impactful strategy instead.
Personal Referrals Directly Drive Business
Overwhelmingly, studies show that the best way to earn your next customer is through the ones that you already have. A 2015 Nielson survey found that “Eighty-three percent of online respondents in 60 countries say they trust recommendations from friends and family.” Therefore, the key to earning the next customer is motivating current customers to spread the word.
Of course, companies are not wholly unaware of this. To different disagrees, companies strive to build reward systems that encourage customers to tell their friends about the business. They offer discounts, provide personal recognition, and offer exclusive experiences.
However, unlike couponing and discount services, there isn’t a central platform or service that normalizes these procedures or provides productive incentives for customers to recommend a product or business. Establishing these tools can empower companies to parlay their existing customer base into a growing expanding crowd of consumers.
Building New Systems with Blockchain
Blockchain technology – the accounting ledger that underpins cryptocurrencies like Bitcoin – may have the best chance of implementing these services.
Although it was popularized by digital currencies, the blockchain’s capabilities far exceed its ability to account for Bitcoin transactions. In the past 18 months, dozens of new blockchain-based platforms emerged that strive to bring innovative solutions to stubborn and persistent problems. With its smooth value transactions and secure ledgering, it represents an ideal technology for buildings customer rewards programs. As research and consulting firm, Deloitte, identifies, the blockchain can make customer rewards cheap, frictionless, and quick.
What’s more, the unique platforms emerging on the blockchain can propel this movement forward. For instance, Ponder is a blockchain application that gamifies the customer recommendation experience. Using their service, companies can build direct reward systems for personal referrals, so their customers are incentivized and rewarded for making a referral. It activates an otherwise static and passive activity by engaging both the business and the consumer in an active relationship.
2018 is being dubbed the year of blockchain adoption, and it’s likely that, as it becomes more mainstream, additional companies will come around to the possibilities. In the meantime, those that are early adopters can buck the digital advertising trend by more cheaply and effectively connecting with their customers and creating new business.