In the first part of our interview with Jeremy Epstein, founder and CEO of Never Stop Marketing, we covered the current state of compensation for marketing agencies and brand marketers.
This second part of our interview will cover the future state of marketer and agency compensation using Blockchain as an efficiency driver.
We’ve transcribed and tightened up the interview for your reading pleasure below. Feel free to watch the video at the top of this post as well.
Mike: In our first part of this interview we spoke about the current state of compensation for agencies and brand marketers. That was a foundational block of our conversation today. Now I’d like to introduce Blockchain into our discussion, which is your area of expertise. For those who are not familiar with blockchain, can you explain it in 30 seconds or less?
Jeremy: For the first time ever we have a way to transfer items of value. We have a way to transfer value securely, with lower risk, lower cost, less friction than any current system we currently have directly between two people. Everyone in the network as well as those part of the transaction can have confidence that that transaction actually transpired securely without the use of any third party intermediaries.
The fact that now you can trade anything of value; a car, house, stock, money, gold, whatever to any other person and not involve going through another entity. Just think about it. You're flying from New Orleans to New York. Is it faster to fly direct, or changes planes in Atlanta? Is it faster pay a middleman to process a transaction or just eliminate the cost with that middleman?
All those things get stripped away. There are a lot of businesses that are based upon being that trusted third party provider, and they're in the crosshairs of this thing [blockchain]. And that's what I think is both intimidating, but also really really exciting and ultimately beneficial for most people because you get more value for your trade money or whatever asset that you're trading.
Mike: For our viewers and listeners, one of the reasons why I reached out to Jeremy and wanted to do this interview is because it's taken me almost a year to get even a little bit comfortable with the idea of a decentralized system with no financial institution (e.g. a bank) in the middle. Other examples include PayPal or Venmo (they are forced to work with a centralized banking institution to clear their transactions).
We're going to start talking about compensation using blockchain for marketing firms now. What really got my interest is something you wrote Jeremy. On one of your blog posts you mentioned if you're a search marketing firm, and your contract is to go from whatever position to the first position for a certain keyword, you can write a blockchain powered smart contract. Instead of “you the brand” going every day and checking google and saying "Are we number one for cat food," I'm assuming that it's Petco in this example. "Are we number one for cat food," the smart contract can just execute on its own and check everyday at a certain time, and as soon as you do achieve that result, because you're talking about outcomes earlier, the value, bitcoin in this case, would be released to the provider of that value.
Jeremy: You nailed it! Let's say I hire you guys to make me number one for blockchain marketing. I hire you and I say, "Mike, you guys are the best. If anyone on the planet Google’s ‘blockchain and marketing’, I want Never Stop Marketing to be first." You're like, "Alright. Give us two months, no problem," and you say, "Jeremy, pay us $2,000, or two bitcoin, or whatever it is just to get the job done," because I realize you have some cost, "But if we get the job done, it's worth $8,000 to Jeremy, or eight bitcoin.”
So I'll take my ten bitcoin and I'll put it into an escrow account, in a digital escrow account, and I will sign it with my cryptographic key. And I'll assign the contract, and you'll say "Yep. I understand." And then we use something called an oracle. Not the database company, but an oracle that says "We both agree that on this date two months from now, June whatever it is, we're going to query Google.com and if this comes back number one for this certain time, then the remaining $8,000 gets released."
Now what happens normally is your firm emails me and says "Hey Jeremy. We got the job done." You screenshot, you send me a link, and I respond with "Great! Send me your invoice." You send an invoice to me, I put it to accounts payable, who sends you a check, 30 days later. That’s way too much back-and-forth and takes too long to exchange value.
The only people who aren't happy are the accounts payable, accounts receivable, and all the lawyers who now aren't adding any value whatsoever. So they're not happy, but the rest of us are really happy. And you got more value, I had lower cost. In fact I could probably even pay you more because I don't have all the back office costs associated with just managing the transaction, and it's less time. So less friction, less cost.
To whoever wrote the smart contract maybe I pay him or her 0.1% bitcoin or whatever it is just to manage it. So he gets a little bit of a fee, but he's just reusing code so the cost of processing the contract is much lower. You get more money. You get faster payment. I get outcome based payment and value compensation.
Mike: Being on the brand side you mentioned working for Sprinklr. I can think of a couple clients that we have worked with over the years that probably wouldn't want to go with a smart contract. They're going to have some pretty particular terms around payment timing, processing, procurement and all that. Do you think that some of these smaller startups can come in and disrupt a brand?
Jeremy: These things are going to take a while. This week I was reading the Wall Street Journal and it was talking about all these retailers closing and the number of stores. You probably saw this. And I'm thinking, "This is not a surprise." Anyone who's really thinking about this saw this 20 years ago. Inertia, momentum, these things take time, but why is everyone surprised? It was obvious if you understood how this was going to play out.
To me, the same things happening. The pace of life when it comes to information; it's instantaneous. You're in New Orleans. I'm in DC. Yesterday I made a list. I had a crazy day. I talked to people in eight countries, and four states by four in the afternoon, and I do it from my house. And that's normal. We all expect that. We can send information everywhere. But think about it: a bank transfer still takes three to five days. Probating a will takes six months. Selling your house takes 90 days. That’s crazy!
The companies and institutions that figure out how can I start shaving off time and making it less friction. If time is really money, freeing up capital. So the company that says, "You know what? Put it in a smart contract." And I'll do it for cheaper if you put it in a smart contract because I get my payment instantaneously instead of 30, 60, 90 days. Well, if I'm an executive at a company, "Mike, you know what? Sure. Give me a 20% discount and I'll put it in a smart contract and whatever." Bang. Done. Fantastic. I'd rather have the cash now.
You can make those decisions, and then the talent will start saying "I want those cycles to go through faster." They'll gravitate towards the company, so the big brands will get the third tier, fourth tier marketing services firms and they won't ever be able to hire you because you're too busy.
Mike: Big question now. We're marketers, right? We've established that today. You heard this question from marketers about CRM tools and marketing automation platforms like Marketo: I don't know how to code. I'm not an engineer. How on earth am I going to use blockchain? Am I going to have to rely on smart contract provider? If I can't actually write the code for this contract, or arrangement, how do I bring blockchain into my world?
Jeremy: That's a great question. My answer to that is it's not your problem. You don't need to know that TCP/IP is the protocol that makes email work. You just need to understand email is faster and cheaper than faxing or direct mail. It doesn't matter how it works, it matter that it works. And I think what you need to start thinking about is "Okay. Blockchain is just infrastructure. What does the arrival of blockchain technologies mean for new business, new value creation, for marketers?"
So what are some of the givens of marketing that are going to go away? Identity is going to be sovereign. I'm going to control my identity. So what does that mean for CRM databases? What does it mean for advertising? Advertising is the first one that's going to get tackled. It's already happening with ad chain and meta X. The New York Advertising exchange and the brave attention token. So again, you don't need to understand how does it all work. You're just like, "Okay. I understand the implications in terms of reducing cost, reducing friction, direct access, payment for people's attention. Now how do I start thinking about the capital 'M' marketing that we started off with, which is understanding customers, delivering value, building relationships. Those types of things which are eternal, but then just using this new capability that's now available to us in order to drive those outcomes that we talked about. Does that make sense?