Web 3.0 can reach new heights with word of mouth marketing – It’s perfect for native blockchain protocols
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A company’s success is closely linked to its marketing strategies in a highly competitive consumer market. The CMO survey demonstrated that 72% of marketing managers felt that “the importance of marketing in their companies had increased” significantly in 2020-21.
He also pointed out that traditional advertising saw negative growth at -0.2% while digital ad spend increased by 17%.
The need for effective marketing is therefore obvious. But the final word on the best marketing strategy is yet to come. Perhaps there will never be an answer set in stone. Nevertheless, Word of Mouth (WoM) is a promising contender in this race.one of the most effective marketing strategies, if not the most effective.
To put things into perspective, the 2021 Nielsen Study on Trust in Advertising found that 88% of respondents worldwide prioritize recommendations from friends and family members over other forms of advertising. Corroborating Nielsen’s conclusions, 64% of marketing executives also consider WoM the most effective form of advertising. On the other hand, however, only six percent of these executives are familiar enough with WoM marketing to implement it effectively.
Some Web 3.0 protocols are therefore innovative, disruptive but practical WoM marketing solutions. This makes WoM more accessible to businesses, strengthening their marketing arsenal and their return on investment (ROI). Indeed, it’s as if WoM and Web 3.0 were made for each other.
The power of word of mouth marketing
The spread of information by word of mouth is perhaps as old as human civilization. Humans have a basic tendency to share opinions and offer advice on the most impressionable things around them.
Additionally, cultural practices like food, clothing, and customs often traveled from region to region by word of mouth. This innate connection to human existence makes WoM such a powerful marketing strategy.
Researchers have formed several theories to thoroughly understand WoM. Some explanations attribute its success to empathy or altruism, while others refer to psychological dynamics of influence and control. Based on this knowledge, market researchers experimented to find the best possible combinations to maximize marketing ROI.
In one such study published in harvard business reviewresearchers have found that the right incentive can encourage people to become effective marketers.
However, existing Web 2.0 compatible WoM solutions have several critical drawbacks. In general, there is a lack of transparency in the distribution of value among participating stakeholders.
As a result, companies often don’t pass rewards to WoM Promoters adequately and fairly, despite doing the hard work of onboarding new customers through WoM. There is also no effective mechanism to quantify a marketer’s contribution to multiplying a company’s profits.
That said, the problem goes deeper than the quantification and distribution of rewards. In 2021, US advertisers lost $15.9 billion to digital ad fraud by hackers and automated bots. This compromised consumer confidence in following someone’s recommendations.
They are now worried about losing money to scams instead of getting real feedback from WoM. Enter Web 3.0, where you don’t have to “trust” any company or project to get involved.
Web 3.0 word of mouth protocolsmarketing with a difference
Blockchain-powered Web 3.0 platforms have the potential to transform word-of-mouth marketing with tokenization of rewards, immutable preservation of on-chain data, and improved provenance of assets. The best partthese protocols directly reward marketers for their contribution to the growth of a business.
Users prefer Web 3.0 protocols over their Web 2.0 counterparts for several reasons. Trustless Web 3.0 ecosystems protect customers from fraud and hacks. Without an intermediary, marketers and consumers can directly share the benefits of the added value of the parent company.
Additionally, an on-chain ledger facilitates proper measurement of this marketer’s contribution while automating reward distributions.
Thus, decentralization has greatly improved the reward distribution process in Web 3.0. For example, in Web 3.0, when a marketer shares referral links through WoM, oracles can help trace and distribute rewards based on true value added on the blockchain.
Suppose Bob buys five NFTs or 100 crypto tokens using George’s referral link. Oracles can verify the purchase and proportionally distribute token rewards in a trustless manner to both for a successful referral.
Also, unlike web 2.0 platforms that offer static rewards, blockchain-based WoM protocols offer dynamic reward systems. The best-known examples are the staking and farming principles in DeFi. They incentivize marketers and early adopters with higher rewards than late joiners.
For token-based projects, marketers can also enjoy premium rewards if they convince others of HODL. These buy-and-hold incentive programs can also encourage marketers to onboard long-term customers, thereby promoting sustainable growth for the business.
By further expanding the reach of dynamic incentives, innovative protocols can offer new revenue streams through benchmark farming with single and multiple benchmark tokens.
Additionally, the blockchain-independent nature of the platform enables cross-platform WoM marketing. Besides native Web 3.0 protocols, marketers can also spread the word on Web 3.0 platforms like the Metaverse and social media like Twitter.
In summary, the future of a business depends on how well it harnesses the three Es of marketing.engage, equip and empower. Web 3.0 word-of-mouth protocols have the ingredients for this mastery, ensuring better sales and better customer retention.
Additionally, commensurate rewards can “equip” users to “engage” in the Web 3.0 economy, “enabling” them to become part of Web 3.0. This will usher in a robust advertising methodology and open up uncharted avenues of revenue generation.
Erwin Werring, CEO of To attract, has experience in multiple industries including finance and entertainment. He co-founded a video game startup and a data and solutions consolidation platform, which he sold to nine banks in 32 countries, before founding Attrace in 2018.
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Feature image: Shutterstock/Oleg Nebesnyy