Advertising on Web3 – Data wallet is the solution
Advertising will find its way into Web3, whether we like it or not. But now we have the ability to control what it looks like, says Shiv Malik, Founder and CEO of Pool.
The guide suddenly stopped among the ruins of the ancient Greek city of Ephesus and pointed out the strange series of carvings on the slab in front of us – a foot, a woman’s portrait and what looked like a handbag .
“Here,” he intoned, “it’s the oldest advertisement in the world.” “It’s for a brothel that was just around the corner.”
Looking down the marble path, the lessons were clear. Even 2,000 years ago, you had to market yourself to thrive. And with the exception of keeping brothels, advertising is perhaps the oldest business in the world.
Many millennia later, advertisements are still something people would rather hurry over. Even though delivered in far more sophisticated and breathtaking ways than anyone could have imagined just 30 years ago, the ads are viewed with weary disdain; a common annoyance but nonetheless a fact of life.
Tech chases are of a different breed, of course, and have tended to have a much more visceral relationship with their Mad Men counterparts. At the start of the Internet in the early 90s, we imagined that everything would be free. Programmers would altruistically create distributed open source software at zero marginal cost, and there would be no need for the evils of marketing. Such commercial greed would ruin all that was good and pure in online digital communities. Capitalism would be refused to plant its greedy mouth in the trough of utopia.
Advertising is here to stay
It didn’t take long for the ad to catch on. (Spoiler alert: she always will be). In the mid-90s, banner ads and email spam were pretty ubiquitous. A decade and a half later, free social platforms were capturing networks of tens of millions of people and monetizing them ever more effectively. The main assets of the digital age have shifted from interactivity and content to attention and data. If you could hook the people on screen and also knew who those people were, you could create a unicorn almost overnight.
Like Web1 thirty years ago, Web3 is at a similar crossroads. How does it handle advertising? Resist? Kiss? Or just ignore it in the hope that it will go away? Of course, crypto, unlike Web3, loves nothing more than advertising. Few tokens make it big without garish marketing and the sneaky nod of a top influencer.
You can find crypto shamelessly shilling on the streets of London at Lima. This year’s Superbowl was dubbed “Crypto bowl” because the ads were so ubiquitous (but still as annoying as ever).
But from a technological point of view, the blockchain has not yet found an accommodation. Advertising is not served natively in all but a few blockchains or dApps. Blockchain really added nothing to what Web2 had already mastered.
Of course, most protocols, like for example Uniswap or Ethereum itself (which doesn’t have a “frontend”) don’t need to be ad-supported. They effectively opted for a user-funded model. And maybe that’s how it stays. If payments, which blockchain does best, are smooth enough and users are willing to pay for Web3 services, then why bother integrating annoying ads into the process? Who wants a Walmart message in their wallet to save gas?
There are of course exceptions to this. Chief among them is the Brave Browser which pays you for your attention. Other smaller projects are now building on this “seek to win” model. But it’s unclear if the ad industry itself really wants to embrace such open bribery. Brands are also using NFTs to do their marketing. But are there other innovative ways to integrate advertising into blockchains that could actually improve ad delivery for everyone involved?
If there is an almost deliberate resistance to advertising in the Web3, it is the most obvious reason: marketing attacks privacy, one of the central tenets of this movement.
To advertise well, marketers need to know who you are. To uncover your unmet needs, what economists call latent demand, advertisers need to know what motivates you. They need to know what you’re thinking, what decisions you want to make without you realizing it.
As the founder of the Internet himself warned in 2008, to give in to the uncontrolled aims of advertisers is to give up privacy. You have to reveal yourself to the seller to be sold, which is not a bargain Web3 builders are willing to make.
There is a way out. The solution lies in separating control of these two main assets, attention and data.
Currently, the tools of surveillance capitalism, such as cookies and data-sucking mobile SDKs, serve those who seek to create and then control consumer attention and information. Google, Facebook and others. now possess both of these assets, giving them their outsized power.
What if Web3 could leverage decentralized storage, messaging, and payment networks to help users control the data side of the equation? Imagine then a data wallet that allows users to keep not only their tokens, but also their data from many multiple sources. They could control who can read this information using the same private key that controls payments.
This aligns with the vision of a decentralized social identity, practically realized with “soul-bound” tokens that Vitalik Buterin, Glen Weyl, Puja Ohlhaver and others have recently launched.
Aligning both payments and digital stories like this make for great KYC and identity solutions. But knowing someone’s holistic digital story is also exactly what ad tech has wanted for decades. Except that when a user has control over their data, they can also take advantage of that control. Either in exchange for payment, for fewer ads (but hopefully higher quality ads), or simply for privacy.
All of this could work using the much underrated “Connect with Ethereum” protocol. With a data wallet, you can log into any website and then ask if the site host can read your data wallet. You choose.
Imagine logging into an insurance marketplace website that could automatically figure out which deals were the best without you having to tediously fill out forms for 20 minutes.
Imagine not having to change your cookie preferences anymore, because any site could “know” what your personal preferences were, because you once stored them in your data wallet.
By simply securing personal data with a private key, it’s a future where the power, value and control of data is redistributed to billions of people around the world.
It’s also an ecosystem that advertisers would be desperate to adopt because it provides them with so much more information than they currently have, knowing that it’s also consent-based.
So perhaps there is a way forward, where Web3 can offer advertisers and digital citizens alike, rebalancing interests that have long been out of balance. If nothing is done, advertisers will still find a way out. And if the last two thousand years of marketing have anything to teach us, we’re probably not going to like the results.
About the Author
Shiv Malik is the founder and CEO of Pool, the infrastructure and technology solution that fuels the growth of data unions.
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