Online Backpacking

Welcome to another edition of In Transit. Our band of people exploring the fringes of entertainment and technology continues to grow.

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Key Takeaways: 

• Wallets allow carrying digital assets, changing internet experiences.

• Declining third-party cookies require new marketing approaches.

• Wallets personalize merchant-customer interactions; customers control data.

• Wallets redistribute value, like Brave browser's BAT token and ad network.

• Blockchain and wallet integration offer unique marketing opportunities.

One exciting aspect of web3 is the new consumer internet experiences that wallets unlock. This will be more important as the structures that existing digital marketing and online customer relationships are based on start deprecating.

Let’s explore.

Summary of wallets

With a digital wallet we can interact with blockchain networks to store crypto tokens and digital assets like NFTs. We can also use it to securely sign transactions, and authenticate our identity on these networks.

I prefer this analogy:

Wallets are like online backpacks.

The internet is a massive online world. We travel from destination to destination, but for the most part, we can’t bring our stuff (data) with us from one place to the next. Our stuff is kept by the companies that control the different destinations.

Your friend graph is stored with Instagram/Meta. Your music preferences are with Spotify, and so on.

Backpacks (wallets) enable the internet destinations and our experience to shift. We get to put stuff in our backpacks and travel hope between destinations while bringing our backpack.

This unlocks a huge new design space for online (and offline) experiences.

Why Marketers Should Care (a Lot)

Let’s look at a highly practical and actual example of where wallets will come in handy in the very near future.

I wrote in a previous post that “the internet runs on user-generated content” (in “UGC, Upgraded”). I want to adjust that statement:

The internet runs on UGC and third-party cookies.

If you work with online marketing, it’s likely that your strategies and tactics are highly dependent on third-party cookies. They’re the lifeblood of every online ad network.

You know when you search for a hotel on Expedia, and later hotels for that destination show up in your social feed on Facebook/Instagram? Third-party cookies make it happen.

The problem is that third-party cookies are privacy challenged. Ad networks are built on the idea of collecting our data and monetizing it.

This paradigm is coming to an end and will alter the digital marketers' stack and strategy significantly.

Early this year, Google started blocking third-party cookies by default for 1% of its Chrome browser users. This will eventually become the default for 100%. Apple has been battling cookies for a few years already.

For marketers and brands, it’s wise to start planning for this cookie-less future sooner rather than later.

One such path leads to web3-enabled customer experiences, and wallets are key in that value proposition.

Wallet-Powered Experiences

Wallets make online experiences more human-centric. As a merchant, you don’t collect data about your customers (directly or indirectly via third parties like ad networks) to utilize. Instead, the customer owns her data and you have to create appropriate incentives and value propositions so that she wants to share some of that data with you.

For instance, a retailer can give a customer the opportunity to collect an NFT when they buy a product. This token then becomes an identifier between the retailer and customer. The customer can identify with their wallet later; the retailer reads the NFT and offers a related discount.

Since this all lives on a blockchain, a public ledger, it’s completely untethered from specific platforms. It can work across different ones, and across online and offline destinations.

In the past few years, we’ve seen a surge in consumer brands experimenting with web3-based, wallet-powered loyalty programs. Fashion and lifestyle brands like Adidas and Nike, coffee powerhouse Starbucks, and many more have all explored this avenue. Only a few weeks ago, Visa launched “a web3 loyalty toolkit” in partnership with SmartMedia Technology. The plan is to eventually enable all merchants on the Visa network to build their own loyalty solutions.

This is the beginning of a meaningful shift in how the internet works, including how companies use it, the business models we deploy, and how we experience it as consumers.

Unlocking New Value

Ownership of digital assets is the core unlock of wallets (or backpacks). What’s in your wallet, you own. This goes for data, and for money, but can extend beyond that to other kinds of value.

As we’ve discussed in “Onchain Fandom” and “Investing in Internet Culture”, this technology has the power to make intangible value tangible. The world is full of intangible value that’s difficult to define and measure, like brand value.

We’ll revisit this later in a high-level thesis on intangible/tangible value, but for now, let’s consider this:

The smartest consumer brands will leverage this power to bring their customers closer, to blur the lines between passive consumer and active participant – owner.

Redistributing Old Value

A wallet-enabled internet doesn’t just unlock new value, but can also distribute existing value in new ways. The Brave browser is an interesting example to consider. It’s a privacy-focused web browser that comes with a built-in wallet for every user.

Based on this foundation, Brave has built a decentralized ad network. It’s powered by an Ethereum-based token, BAT.

The browser blocks traditional ads, but users can opt in to see privacy-respecting ads from this ad network. When a user does, she will receive BAT tokens as rewards for engaging with ads.

Let’s pause and consider this.

In the ad-based internet economy we’re used to, the users – us – are not part of the value creation from ads, even if those ads would have no value without us.

It creates an interesting dynamic where users browse the web, accrue BAT tokens as they go. These tokens are owned in the in-browser wallet. Users can then use these tokens to tip content creators and pay for services.

It’s a very interesting proof of concept for a few different reasons:

• Redistribution of value

• Turning intangible (time) to tangible (BAT tokens)

• Fluid, integrated online commerce (no need to whip out that Visa card and punch digits!)

(You can also exchange your BAT tokens for dollars and spend them elsewhere)

The Marketer’s Opportunity

This is how the internet will work in the future. Marc Andreessen (founder of Netscape, now of venture powerhouse A16Z) has said that the original sin of the internet was not to build economics into it.

Blockchains and wallets fix this, finally.

For marketers, this is a generational opportunity. This impacts both strategy, tactics, and tools. And it will create a massive gap between those “that get it (early)” and those that will chase later.

I still vividly remember when I worked for a design agency early in my career. My job was to design and build websites. Most agencies in our region did not have the capacity to do that in a cost-efficient way. And that differentiator created a lot of business for us as everyone realized they needed websites, ecommerce, and so on.

This is the same kind of opportunity. Maybe bigger.

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