Blockchain for marketing? Maybe, but privacy issues abound

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by Lindsey Francy Mar 20, 2023 News
Blockchain for marketing? Maybe, but privacy issues abound

Individuals and organizations use the technology. Data privacy issues can be created when companies try to use technology for marketing.

In a recent paper, a professor at MIT urged marketers to be thoughtful about where and whether to adopt a system based on a ledger of transactions.

Tucker said in an interview that marketers may try to adopt the technology in contexts where it's hard to establish trust. Given the amount of fraud in non-blockchain systems, marketers may look to the system for a more trustworthy supply chain.

If there is no real need to create data about an individual, marketing should still be thoughtful about it. Even the fact that someone once exhibited a particular character trait or interest can become fodder for malicious actors.

The interaction between the two could mean for personal privacy.

The pros and cons of blockchain

The public can't identify the holders of the privacy-encrypted Blockchain Keys. All ledger entries are permanent and transactions are recorded chronologically on a distributed ledger.

The account can no longer be accessed if the person loses their key. Everything on the ledger is there forever.

Blockchain and marketing

Tucker wrote that the technology poses the most problems for marketing strategies. Digital identifiers, such as login information, Social Security numbers, dates of birth, and so on, could be used to track customers' views of a particular advertisement or piece of content.

A person interested in chartering a private jet could be advertised to by a marketer using a piece of technology. When a person clicks on a private jet ad on the internet, the ledger records that click, as well as online purchasing behavior and identifying information attached to the computer where that click originated.

If the person accidentally clicked on the ad, what would happen? Is it possible that a child without private jet buying power would click on it?

Tucker said that the immutability of a ledger doesn't tell you if a person is interested in charter jets. The way to communicate accurate information is to say that a transaction happened between X and Y at a certain time. Verification of information is necessary for any statements about X or Y.

Tucker said that firms sought verification because they wanted to know more about transaction participants. The firm would have to verify if the information on X and Y was accurate.

Tucker said that the risk is that firms may adopt the method of recording transactions and then believe that the transactions can operate without being concerned about the validity of the information on participants.

Customer data concerns

Customer data may be kept by firms that useBlockchain-based marketing strategies. Tucker says that the data is useless.

A person who wants to buy a pair of shoes in the morning might not be interested in buying them a few hours later. Tucker said that the information about that person's interest in shoes is no longer useful.

The information that a person is interested in buying shoes is public for anyone to see if they are a marketer or not. It would be harder for marketers to get that information if it is a private block chain.

The data could be used to sell other things. Tucker said that they might know from other sources that a high interest in buying a particular pair of shoes is related to other things. A segment of shoe-interested participants could be created and sold to health insurers or pharmaceutical firms.

Tucker said that the key question was if a person's preference data regarding certain types of shoes from decades ago could be used to make predictions about other, more sensitive characteristics applicable to them today. If people want to, they should be able to change themselves.

Data management challenges

Tucker said that implementing good-quality protocols for purge doesn't get any easier because the cost of storing data gets cheaper. Companies don't necessarily want old data She said that it took time and skill to figure out what to purge and when.

Tucker said that the protocol is not about buying off-the-shelf software but about internal systems of data management. There is a police department that contracts with a technology company to store and destroy data from police cameras.

Tucker said that police aren't data scientists and want to use software to do that. It doesn't change the fact that the question of what camera data to purge when is complex enough that simply handing it off to software risks a lot of problems.

The General Data Protection Regulation makes it difficult for companies to hold on to old customer data. People living in the European Union have the right to know how their data is collected, processed, and protected by a company, as well as the right to request that that information be erased. Tucker said that the French data protection authority discourages the storage of unencrypted data on a Blockchain and suggests restricting access to data through defenses like fingerprints.

Warnings and wisdom for blockchain marketing applications

It is not a good idea for marketers to use the technology to market to customers. It should be used to improve trust and reduce fraud.

Keeping a record of purchases of digital ads is one of the best applications for blockchain in marketing, as there are no real-world implications foreseeable from existing privacy laws.

There are 7 ways to advance the ledger in the business.