The power and potential of Web3 – Q&A with Ben Putley, Alkimi Exchange
At ATS London 2022, Ben Putley, Co-Founder and CEO of Alkimi Exchange, gave a keynote address focusing on the benefits of decentralization and the potential offered by web3.
In this follow-up Q&A, Putley describes the evolution of the Internet from web1 to web2 as we know it today, and highlights the opportunity web3 presents for building a better online advertising ecosystem.
What does the move from web1 to web2 mean for advertisers?
Web1 was the foundation of the modern Internet – it enabled the connection and transfer of data between databases for the very first time, providing Internet users with unprecedented levels of access to information. Web2 arrived and extended the application layer established by web1: it gave people the ability to interact with a website in a much more user-friendly way. With web2 came the advent of the smartphone, which combined saw applications evolve from a desktop to a mobile environment. This, in turn, gave rise to some of the behemoths (like Meta, Twitter, and Spotify) that have become part of our daily internet usage and have become new arenas for online advertising.
The shift from web1 to web2 enabled online advertising as we know it today. Advancements in application layer technology have allowed users to interact with websites and applications in ways not previously possible, providing the basis for the ad units we see on the internet today. today.
What implications has web2 had on the privacy of user data?
Technological means of sharing data didn’t really exist before web2, so we can’t make a strictly apple-to-apple comparison. However, overall user privacy has unfortunately been made worse by web2.
The basic premise of internet users sharing their preferences was that it would make the internet more useful by providing them with more personalized online experiences, including showing them advertisements for products and services that are more relevant to them. This was (and remains) a key aspect of the value exchange envisioned behind a free Internet. However, it was market players’ decision to use and resell data to advertisers that caused the all-too-common privacy breaches we’ve seen in recent years, leading to the introduction of a new legislation to protect online users.
What opportunities are advertisers already exploring in the still nascent Web3 space?
Web3 marketing is still in its infancy if you only consider it from a Web3 perspective. The gaming industry has proven that people believe digital assets are a store of value, whether monetary (for example, on Fifa Ultimate Team) or social (like Balenciaga skins that Fortnite players can buy for their characters).
The problem so far is that games are walled gardens and these digital assets have been locked away in a “metaverse”. However, web3 will enable the transfer of these assets across the web, opening them up as new opportunities for brands to engage with their existing audiences and connect with new ones. And, in turn, people will be rewarded for their brand loyalty with things like access to events, presales, discounts, and cashless experiences.
What potential does web3 have to improve people’s online experience?
Web3 will create an Internet with fewer, more attractive advertisements that reward users for interacting with them. This, in turn, will increase the flow of money to publishers who create value in the marketplace, allowing them to continue to deliver higher quality content (and less clickbait, the salacious titles we too often find online) on much faster loading pages.
Additionally, the thicker protocol layer that will come with web3 will give users greater autonomy over how their data is shared on the Internet and allow people to interact with each other online without having to go through a centralized database (which has the disadvantages of security and poor data privacy).
Does web3 have the potential to reset the online advertising value exchange? If so, how?
Put simply, yes: the plethora of problems facing the advertising industry have been caused by the industry reaching the limits of the underlying infrastructure that currently supports the ecosystem, and that has made that the intended value exchange of the free internet has been largely abandoned.
Right now there are too many ads online. Users are deterred from returning to a particular website where they are inundated with advertisements, as these disrupt their experience. This forces publishers to work harder to make more money, and to do so they sell more ads – and so the vicious cycle continues. In addition to creating a poor user experience, higher ad volume means poorer ad performance and higher risk of fraud.
Web3 will bring a source of truth, where all transactions that have taken place in a particular marketplace are recorded on a single ledger, removing the current, convoluted ecosystem and the fees that come with it. And with a more substantial protocol layer, web3 will enable more types of interactions, both between users and between people and brands (like peer-to-peer payments, ownership verification, loyalty rewards and data transparency). Therefore, web3 will foster a more efficient ad buying process that will allow publishers to deliver a better online experience and provide new ways to deliver real value to users when they use the Internet.
What advancements do you see becoming more important in web3 in the near future?
I think people connecting their wallets to traditional web2 sites will become commonplace. By doing so, Internet users will be able to access protected content, be rewarded for revealing their data, and have complete control over who can access their personal data.
I think it’s also important to recognize the success that NFTs have had in building communities in a way that brands haven’t been able to do in some time. These elements, which will become increasingly important in web3 and the advent of the metaverse, offer a new way for advertisers to interact with Internet users, and for Internet users to interact with brands. We have already seen some brands (like Gucci, Balenciaga and Nike) build on the audience building potential of these web3 innovations, and I expect more to follow in the near future.