Posts Tagged 'Research Technology'

Will Blockchain Disrupt Marketing and Research?

The field of survey research was largely established in the 1930s and matured in the post WWII era as the US economy boomed and companies became more customer-driven. Many early polls were conducted in the most old-fashioned way possible: by going door-to-door with a clipboard and pestering people with questions. Adoption of the telephone in the US (which happened slowly – telephone penetration was less than 50% before WWII and didn’t hit 90% until 1972) made possible an efficient way to reliably gather projectable samples of consumers and the research industry grew quickly.

Then the Internet changed everything. I was fortunate to be at a firm that was leading the charge for online market research at a time when Internet penetration in the US was only about 20%. By the time I left the firm, Internet penetration had reached over 85% and online market research had pretty much supplanted telephone research. What had taken the telephone 40+ years to do to door-to-door polling had happened in less than 10 years, completely transforming an industry.

So, what is next? What nascent technology might transform the market research industry?

Keep your eyes on Blockchain.

Blockchain is best known as the technology that underpins cryptocurrencies like Bitcoin. The actual technology of Blockchain is complex and difficult for most people to understand. (I’d be lying if I said I understood the technology.) But, Blockchain is conceptually simple. It is a way to exchange value and trust between strangers in an un-hackable way and without the need for middlemen. It allows value to be exchanged and stored securely and privately. Whereas the Internet moves information, Blockchain moves value.

Those interested in the potential for Blockchain technology should read The Blockchain Revolution by Don and Alex Tapscott. Or, if you’d like a shortcut, you can watch Don’s excellent Ted Talk.

If Blockchain gains steam and hits a critical mass of acceptance, it has the potential to transform everything including our financial system, our contracts, our elections, our corporate structures, and our governments. It has applicability for any aspect of life that involves an exchange of value that requires an element of trust – which is pretty much everything we do to interact as human beings.

A simple example of how it works is provided by its first widespread application – as a cryptocurrency like Bitcoin. Currently, if I buy a book online, my transaction passes though many intermediaries that are often transparent to me. My money might move from my credit card company to my bank, to another bank, to Amazon, their bank, to the bookseller, to their bank, and I suppose eventually a few crumbs make their way to the author (via their bank of course). There are markups all along the way that are taken by all the intermediaries who don’t add value beyond facilitating the transaction. And, at every step there is an opportunity for my data to be compromised and hacked. The digital shadow left allows all sorts of third parties to know what I am reading and even where I am reading it.

This is an imperfect system at best and one that a cryptocurrency resolves. Via Bitcoin, I can buy a book directly from an author, securely, with no opportunity for others to see what I am doing or to skim value along the way. In fact, the author and I remain strangers.

Blockchain is mostly known currently as Bitcoin’s technology, but its potential dwarfs its current use. Blockchain will clearly transform the financial services industry, and for the better. Buyers and sellers can transact anonymously and securely without a need for intermediaries. Stocks can be exchanged directly by buyers and sellers, and this could lead to a world devoid of investment banks, brokers, and hedge fund managers, or at least one where their roles become strictly advisory.

A useful way to think of the potential of Blockchain is to think of trust. Trust in an economic sense lowers transactions costs and decreases risk. Why do I need lawyers and a contract if I can fully trust my contractor to do what he/she promises? Why do I need Uber when I can contract directly with the driver? As transactions costs decline, we’ll see a much more “democratized” economy. Smaller entities will no longer be at a disadvantage. The costs of coordinating just about anything will decline, resulting in a smaller and very different role for management. If Blockchain really ignites, I’d expect to see flatter corporate structures, very little middle management, and a greater need for truly inspirational leaders.

Any industry reliant on payment systems or risk is ripe for disruption via Blockchain technology. Retail, insurance, government contracting, etc. will all be affected. But, Blockchain isn’t just about payments.  Payments are just a tangible manifestation of what Blockchain really facilitates – which is an exchange of value. Value isn’t always monetary.

Which brings me (finally!) to our field: marketing and marketing research. Marketers and market researchers are “middlemen” – and any middleman has the potential to be affected by Blockchain technology. We stand between the corporation and its customers.

Marketers should realize Blockchain may have important implications to the brand. A brand is essentially a manifestation of trust. In the current digital world, many marketers struggle to retain control of their brands. This is upsetting to those of us trained in historical brand management. Blockchain will result in a greater focus on the brand by customers. They will seek to trust the brand more because Blockchain can enable this trust.

As a researcher I see Blockchain as making it essential that I add value to the process as opposed to being a conduit for the exchange of value. Put more simply, Blockchain will make it even more important that researchers add insight rather than merely gather data. In custom research about half of the cost of a market research project is wrapped up in data collection and that is the part that seems most ripe for disruption. There won’t be as many financial rewards for researchers for the operational aspects of projects. But, there will always be a need to help marketers make sense of the world.

When we design a survey, we are seeking information from a respondent. This information might be classification information (information about who you are), behavioral information (information about what you do), or attitudinal information (information about what you think and feel). In all cases, as a researcher, I am trusting that respondents will provide this information to me willingly and accurately.  As a respondent, you trust me to keep your identity confidential and to provide you an honorarium or incentive for your time. We are exchanging value – you are providing me with information and your time, and I am providing you with compensation and a comfort that you are helping clients better understand the needs of their customers. Blockchain has the potential to make this process more efficient and beneficial to the respondent. And that is important – our industry is suffering from a severe respondent trust problem right now. We don’t have to look much past our plummeting response rates to see that we have lost the respondent trust. Blockchain may be one way we can earn it back.

Blockchain can also authenticate the information we analyze. It can sort out fake data, such as fake postings on websites. To its core, Blockchain makes data transfers simple, secure, and efficient. It can help us more securely store personal information, which in turn will assure our respondents that they can trust us.

Blockchain can provide individuals with greater control over their “digital beings.” Currently, as we go about our lives (smartphone in pocket) we leave digital traces everywhere. This flotsam of our digital lives has value and is gathered and used by companies and governments, and has spawned new research techniques to mine value from this passive data stream. The burgeoning field of Big Data analysis is dependent on this trail we leave. Privacy concerns aside, it doesn’t seem right that consumers are creating a value they do not get to benefit from. Blockchain technology has the potential to allow individuals to retain control and to benefit from the trail of value they are leaving behind as they negotiate a digital world.

Of course as a research supplier I can also see Blockchain as a threat, as suppliers are middlemen between clients and their customers. Blockchain has the potential to replace, or at least enhance, any third-party relationship.  But, I envision Blockchain as being beneficial to smaller suppliers like Crux Research. Blockchain will require suppliers to be more value-added consultants, and less about reliable data collection. That is precisely what smaller suppliers do better than the larger firms, so I would predict that more smaller firms will be started as a result.

Blockchain is clearly in its infancy for marketers. Its potential may prove to be greater than its reality. But, just as we saw with the rise of the Internet, a technology such as this can grow up quickly, and can transform our industry.