Web3 will bring a certain revolution to media and marketing

Author: Justin Peyton

Translator: Block unicorn

While it feels like there is an endless stream of news, and the price drops of nearly every token continue to make headlines, what I’m focused on is how quickly the entry points into cryptocurrency are continuing to grow.

• Facebook and Instagram are reporting plans to integrate and support the sale of NFTs.

• Twitter has created a bridge that officially links the NFTs you own to your profile picture. It is believed this could further accelerate the trend.

• Coinbase is partnering with Mastercard to facilitate NFT sales.

• Walmart has filed trademark applications, marking their entry into the metaverse and digital products space.

• StockX has launched vault NFTs to facilitate trading and investment.

• Microsoft is acquiring Activision Blizzard for $68.7 billion to enhance its Metaverse capabilities and footprint.

• YouTube is exploring how they can embrace Web 3.0 and NFTs.

• Adidas Originals' project: Into the Metaverse's first NFT generated $11,391 ETH in trading volume, worth over $43 million on OpenSea.

• Samsung is opening a concept store in the metaverse Decentraland, partnering with Theta Labs to distribute NFTs to users who pre-order the Galaxy S22 and tablet S8.

In summary, large corporations and Web 2.0 giants are now building entry points to Web 3.0. It increasingly feels like all roads lead to Web 3.0, but even if that’s not the case, one thing is certain: these actions have the potential to significantly increase adoption rates.

Now let’s understand what Web 3.0 means for marketing and media.

The Web is Still in Its Early Stages

At least that’s how people perceive Web 3.0, NFTs, and the entire crypto market. With the crypto market valued at around $2 trillion (down from $3 trillion in November 2021), and NFT sales on OpenSea exceeding $4 billion this month, the statement "it’s still too early" may sound hard to believe, but that’s the reality.

I say this because while funds may flow into this category through new venture capital funds, acquisitions, and direct crypto and NFT purchases and investments, the reality is that most people (even many active crypto investors) still do not understand the role of Web 3.0, which will be unlocked as the Web 3.0 market matures.

This is likely because the media's focus on explosive NFT valuation headlines has drowned out articles and interest in Web 3.0 applications. In turn, we see the public primarily focused on NFT valuations and the launch of new NFT projects. (If it sounds critical of NFTs, that doesn’t mean I’m overly optimistic about their future utility, as shown below).

Compared to discussing valuations, the rest of this article will explore the potential (and likely) future impacts of Web 3.0 on marketing, media, and CRM.

There are several different charts that frequently circulate on Twitter and LinkedIn attempting to simplify the differences between Web 1.0, Web 2.0, and Web 3.0. All of these are correct, but none satisfactorily explain what this means for brands and the impact it will have on their communications.

This chart shows the evolution from a functional perspective, from read-only in Web 1.0 to read + write in Web 2.0, and then to Web 3.0, which allows read + write + execute. In short, the shift from consuming content to creating content, and finally to owning content.

The next chart is one of my favorites. It takes a more user-centered approach by showing how people will engage with and identify the digital applications and services they use. But unless you already understand the potential of crypto wallets becoming your digital identity, this chart may not mean much to people.

Even if you have a comprehensive understanding of crypto wallets and how they evolve, you may still only associate this chart with login and digital property/content ownership.

Thus, a third chart is needed, which I put together to outline what all this means for brands and marketers that rely on the coverage and targeting capabilities of Web 1.0 and Web 2.0 to connect with consumers.

Below, you can see how coverage and targeting have evolved from publisher-based media in Web 1.0 (the digital replication of how media was traditionally purchased offline) to probabilistic media in Web 2.0 (where platforms infer interests based on every action a person takes online to group them), to Web 3.0, where the shift to deterministic media targeting will fundamentally change the supply chain and value chain.

At the core of this change is identity. In the case of Web 1.0, individual-level identity data was never a factor; understanding broad basic demographic details was sufficient. Web 2.0 brought a focus on identity and the promise of increased relevance, targeting, efficiency, and effectiveness.

To drive and fulfill this promise, platforms need to track and attribute signals that can be connected back to people. From search history to movie view counts, to likes, shares, and more, these platforms create and own an information image related to our digital identities.

In contrast, in Web 3.0, individuals will own and control their identity data. Stored in crypto wallets and managed by smart contracts, this will form the basis of how the digital world understands people.

"I know half of my media budget is wasted; I just don’t know which half." ------ Every media manager in history has said this.

When you consider the prevalence of ad fraud, the challenges associated with end-to-end attribution (value attribution), and the excessive reach and margin of error accepted in probabilistic systems, what they say is likely true. This is precisely the deterministic issues that Web 3.0 capabilities will address.

To understand how to think about the various technologies and paradigms of Web 3.0:

Crypto Wallets

A significant shift for consumers will be the adoption of crypto wallets. I’ve written in past newsletters about why this will happen, but in short, it’s because your crypto wallet will contain:

• Your identity data - everything will be in your wallet: from government documents like driver’s licenses to medical records, to basic PII data like birth dates and addresses.

• NFTs as contracts for the digital properties you own - yes, we will all own digital property.

• NFTs as contracts for certain real-world properties you own - your car title will be an NFT, your mortgage will be an NFT, and so on.

• POAPs (Proof of Attendance Protocols) - which can serve as indicators of loyalty programs you belong to, events you’ve attended, and even restaurants you frequent. POAP versions may also capture details of your online behavior. Just like Google and Facebook track your behavior today, this will be done in the future Wallet.

• Access to decentralized finance accounts - in short, an agent for your bank account.

I could go on, but I hope you get the point. It’s important to know that, aside from the fact that "everyone" will have a wallet, it will be secure. Accessing all data through a single wallet may sound like a risk, but for the sake of practice, let’s accept that the information will be secure and managed by a combination of private and public keys.

1. Private keys manage access to identity and other sensitive, valuable, or confidential data, which can only be opened to third parties through an auditable permission system and smart contracts.

2. Public keys can provide access to behavioral data, POAPs, or other information aimed at enhancing reputation or communicating areas of interest.

Decentralized Ad Exchanges

Decentralized ad exchange platforms (DAEX) are to today’s ad exchange platforms what Uniswap is to centralized online trading platforms. Or to put it more clearly, DAEX is an application that directly matches parties using code, acting as a connector between supply and demand, allowing them to trade without the need for intermediaries.

This means that for media buying, advertisers will be able to directly purchase coverage and impressions targeted at people based on the data stored in their crypto wallets, without paying commissions to intermediaries.

This sounds great, but most people won’t connect their crypto wallets to every website they visit, so doesn’t this process simply lead to a significant reduction in coverage?

Yes, it does today, but that will change as security improves. The Brave browser has already integrated wallets directly into the browser, allowing for comprehensive data collection. This level of integration will soon become the norm, as will behavior data collection within wallets.

If the data is in a person’s private wallet, why would they share it with advertisers? After all, most people don’t even like ads.

Again, that’s true, but there will be incentives. Since brands pay almost no commissions to intermediaries, the funds currently associated with ad placements will be paid in tokens to the individuals receiving the ads. This early form of incentive structure is already in place: it’s called Basic Attention Token.

To better understand how a decentralized Ad Exchange works, I’ve put together this (deliberately simplified) chart. Or, if you really want to learn more, you can check out Alkimi Exchange, a pioneer technology in this field.

Personalization

Now that we understand the basics, let’s talk about something interesting: personalization.

Imagine you are a fast-food chain, and you want your ads to not only make people feel hungry but also remind them that your restaurant is just a short drive from their hotel. You could tell people how many locations you have nationwide, or you could simply show them ads that look like they were made nearby.

Advanced AI technologies like NVIDIA’s GauGAN2 will make this possible—regardless of where people live, this technology has already been able to create photorealistic landscapes based on simple language descriptions. Combined with geolocation data and access to image libraries from around the world, these systems will soon be able to simulate any location globally.

Or imagine you want the audience to see people they can relate to in the ads. Through the identity data in their crypto wallets, age, gender, race, income—even details about spouses/partners can be obtained. Technologies developed by Soul Machines will allow for the creation of virtual characters designed to resonate with individual-level audiences.

Image courtesy of Soul Machines

But we really start to have fun when we put together these digital landscapes and digital characters. Think of it as an NFT project, just not using traits to build 10,000 bored apes or cool cats; AI will use a combination of the identity data, geolocation data, etc., in your wallet to construct an infinite number of different ads.

Using the same strategies to build content as those used to build NFTs may sound strange. But whether it’s dynamic images or static images, it still boils down to digital backgrounds and digital characters. Therefore, as AI continues to accelerate its capabilities, this will become the norm—this will be the cheapest way to do things.

Attribution (Value Attribution)

One of the most valuable improvements Web 3.0 will bring to brands is attribution.

Currently, it is nearly impossible for brands to accurately assign value across media channels, touchpoints, and journey stages. There are too many different data sources, walled gardens, and measurement ideologies, all of which need to be combined for a detailed understanding.

After all, before your customer lands on your website and makes a purchase, they may interact with your brand and content across search, video, social media, mobile web, and even chat applications; that’s a lot of different partners and touchpoints to try and track people.

Brands like Liveramp are already trying to solve this problem by developing deterministic identity graphs. However, it’s not perfect, and their approach relies on stitching together data from multiple parties to build a partner data network that provides better understanding than any one party could have alone.

While I like to think of deterministic identity graphs as a tool, they cannot provide the integrity of data tracked across each touchpoint from a single source (the crypto wallet) (and the accuracy of outcomes).

Summary

While much of what I’ve outlined in this article discusses how the deterministic features of Web 3.0 will bring new promises to marketers and media buyers, the fact is, this is not the end of Web 2.0.

We always read headlines about the demise of television or the end of print. But many people still watch TV, and many people still read magazines. Yes—digital has sharply declined from its peak, but the world is not an absolute place with only one answer.

The deterministic features of Web 3.0 will share the stage with the probabilistic features of Web 2.0. In fact, in certain areas and use cases, Web 2.0 may still be the better answer.

But looking at the signals I’ve seen over the past 10 days, with Microsoft, Facebook, Twitter, YouTube, Mastercard, and Walmart all venturing into NFTs and Web 3.0, I suspect the invasion of Web 3.0 deterministic media will happen faster than most people expect.