The Future Of Loyalty Marketing Is Crypto Enabled
Issue 1
In the last decade, blockchain technology and crypto have been laying the foundations for an alternative reality in which humans interact and organise themselves without the mediation of a third party. Crypto currencies are a US$2T asset today and billions of dollars are being traded globally without the need of a bank or intermediary, with transactions secured on blockchains. NFT’s (Non-fungible tokens, currently valued at over US$500M), fuelled the democratisation of the art world and provided a proof-of-concept that crypto enables wider communities to transact pseudonymously. The discovery, storytelling, evangelism, transfer of ownership in exchange for monetary value, is taking place seamlessly in the decentralised world, without a single dollar being spent on advertising. There is no central owner or authority directing this phenomenon.
Just think about that for a minute.
Web 2.0 fuelled the creation of tech utilities that made every life easier with maps, health monitors, SAAS services, AI powered e-commerce at our finger-tips, but there wasn’t an economic layer that allowed people to transact with a universal currency.
Crypto, is that economic layer for an open internet, powered by Web 3.0. It’s poised to grow and unlock opportunities that didn’t exist before. Digital wallets comprising of stable coins (USD backed crypto currency), CBDCs (Central Bank issued digital currency) and other crypto currencies will be on hand and ready to take on global trade.
Now, with this impending reality, let’s come back to the present day.
There is an increase in user privacy-centric regulation, GDPR compliance requirements and the strengthening of antitrust laws to protect customer data. Large tech companies are adjusting their ad targeting mechanics and polices to comply. Consumers too, are more aware of their personal data sacrifice for the free usage of platforms and not in the mood to become products for advertisers. We are at a new frontier of permission-based advertising and community marketing, where the customers are no longer passive, but want control of how brands interact with them and are more willing than ever, to be a part of the creative process.
Content creators are increasingly showing signs of dissent towards platforms that are capturing a large share economic value, sharing very little or no revenue with the original owners. Creators want more skin in the game and they are gearing up to leverage on the independent monetisation advantages that Web 3.0 offers through tokenisation of their personal brand on blockchains, without any reliance on external agents, companies or platforms.
Enter DeMar (Decentralised Marketing), powered by Web 3.0, blockchain and crypto.
DeMar is the network effect that a business accrues through independent actions that customers, creators, and communities take on a blockchain by engaging with the brand or its products, contributing their opinion, creativity, or content, in exchange for economic incentives delivered by smart contracts.
To explain the potential of DeMar, here is a use-case of how it it can be applied to supercharge loyalty marketing, empower fans, drive product engagement and solicit product feedback via blockchain.
OTT streaming platform Gimmeflix has over 200M paid subscribers globally, with an annual revenue of US$25B. Their market position is being challenged with slower than expected growth in certain markets, rising content production costs and growing competition. They are on a race to turn cash-flow positive, gain new customers at a higher ARPUs (average revenue per user) and retain their existing user-base strongly. Their advertising budget is US$20M per year and they have just brought in MarketMaven as Chief of DeMar to work alongside the company's CMO. MarketMaven has several years of experience in traditional marketing and a deep understanding of blockchain.
The three goals that MarketMaven has signed up for:
Adoption of a private blockchain, customer digital wallet implementation, token distribution and transactions enabled via smart contracts
Floating a customer DAO (Decentralised Autonomous Organisation) through an internal incubation program, backed by economic incentives to drive customer feedback and create ownership opportunities
Devising DAO membership privileges and distributing them via NFTs to continuously fuel customer involvement and drive engagement
After spending six weeks in the role and understanding the company structure, MarketMaven is ready with crypto-native solutions to be presented to the management. Here is an extract from the beta plan submitted for approval, testing and implementation.
A). Enhancing the Gimmeflix user experience with blockchain
By adopting a hybrid blockchain model using a public (Ethereum) and private blockchain (Hyperledger), Gimmeflix will be able to empower a beta set of subscribers, the ability to manage their own digital identity through digital wallets. They will be able to vote and participate in decision making (through the Gimmeflix DAO) and receive loyalty benefits through self executing smart contracts.
The process begins by asking customers to download a Gimmeflix digital wallet that enables them to receive their personal private and public cryptographic keys. The private key contains personally identifiable information like location, age, credit card payment information etc that users keep on their own devices, but authorise Gimmeflix access as needed. The public keys contain pieces of data such as content watched, number of hours, time of day, time value of the customer etc that is visible to all members on a managed ledger system. The public key data informs Gimmeflix’s AI and its internal research as well as forms a part of the DAO member profile database. The role of the digital wallet is to contain the Gimmeflix token - $FLIX that constitutes loyalty points and, NFT’s that Gimmeflix plans to distribute from time to time.
B). Driving continuous product improvement and innovation through feedback received from the Gimmeflix DAO incubator
Floating a DAO by advertising the idea to select highly engaged, long-term Gimmeflix customers. The goal is to find and recruit at least 100 true fans, crypto-savvy customers who have a basic understanding of NFT’s, digital wallets and tokens. Upon opting in, these customers receive an initial airdrop of Gimmeflix’ native token, $FLIX into their digital wallets.
$FLIX assigns voting powers on decisions that Gimmeflix needs the DAO to take. It cannot be traded on crypto market places (yet) and the only way to own it is to through token sales or awards offered by Gimmeflix on the DAO. Each $FLIX token bears equal value and is fungible. Some examples of tasks that can be sent to the DAO include, showing preview trailers to the DAO for content acquisition decisions, planning content release calendar, comments on new advertising campaigns, branded merchandise design etc. As the DAO matures, it can also perform more complex tasks such as funding or co-funding a series or an original production alongside Gimmeflix.
DAO structuring and governance is key to this process. All DAO members agree to an initial set of governing goals which are devised by Gimmeflix, approved and accepted by the DAO creators, set-up on-chain and self executed via smart contracts. The DAO comprises of a board, staff and community members.
Board (1% of DAO): A mix of Gimmeflix staff, investors, community members who are tasked with the DAO governance, strategy and management of the DAO treasury. They are the main liaison between Gimmeflix and the DAO.
Staff (9% of DAO): Are elected representatives by the board who receive project briefs, lead and execute them within the DAO. Staff leads report to the board and are incentivised by receiving a commission on every completed task in the form of $FLIX.
Community Members (90% of DAO): Holders of $FLIX who contribute their time and ideas, provide feedback and, receive enhanced loyalty benefits by being a part of the DAO.
The DAO essentially is Gimmeflix’s focus group - decentralised in nature, self governing, participatory, performing micro tasks that are incentivised through tokens and loyalty privileges. They are poised to become the ultimate fans of Gimmeflix, acting as community leaders, advocates and ambassadors for the brand.
Fuelling brand loyalty by creating unique DAO privileges and rewards via NFTs
DAO community members can redeem their tokens and/or receive exclusive NFT drops, that may comprise of the following:
Concert tickets and behind the scenes passes
Premier show invites, special screenings and movie tickets
Behind the scenes content or first-dibs on new releases
Meet-ups with talent and production team members on set or virtually
Sound-track releases and digital album artworks
Branded merchandise
Rewards can be pre-programmed on smart contracts within NFTs, available for redemption via digital wallets. In order to raise awareness and the market value of Gimmeflix NFT’s, they can be viewed on marketplaces but they can only be bought by Gimmeflix’s native token $FLIX. The only way to own $FLIX is to through token sales or airdrops offered by Gimmeflix to the DAO.
What does the future crypto pathway look like for Gimmeflix?
The Gimmeflix DAO can vote to create several DAO’s within the core infrastructure. For instance they can be region specific DAO’s, investor DAO’s to rise and manage funding of content, freelance talent and resource DAO’s etc.
Gimmeflix management can decide to list and offer $FLIX on crypto exchanges for it to be traded in the open market. $FLIX can be used to purchase Gimmeflix NFTs on market places thereby opening access to more potential subscribers, fans and creators.
$FLIX can be a media crypto coin where partner lifestyle, retail, media and content providers can collaborate to pool benefits for owners of the $FLIX token, redeemable through NFTs and digital wallets.
Vignettes, popular scenes or moments from Gimmeflix original productions can be sold as NFTs with other exclusive incentives built into it like artwork, sound tracks and branded merchandise.
DeMar is a different mindset in that builds on the traditional brand building process, utilising the potential of Web 3.0. It’s a breakthrough in the way marketers can approach loyalty marketing.
The future will see the centralised world and the decentralised world working in tandem. DeFi (Decentralised Finance) has already shaken up the banking and financial industry and is currently worth US$100B. Crypto brings a tremendous amount of opportunity to harness technology and drive greater efficiencies in the customer management process by elevating the entire brand experience. Decentralised communities and fans have been super-charging brand engagement organically for a last few decades. It’s now time to hone in on the network effect, reward efforts, create new ownership models, approach this from a new strategic crypto lens and drive business growth.
Welcome to the exciting new world of DeMar!
This article has been minted as an NFT on Opensea. View here
I welcome your thoughts and ideas on this article. I’d love to also hear from you on other DeMar topics that you’re interested in exploring or co-writing with me.
Please send me a DM on my Twitter handle: @anjkapoor or comment below.