Web 3.0 Is Changing Marketing: Is Your Franchise Ready?

The internet is going through yet another major transformation: Web 3.0, an age of decentralized data and increased privacy.

December 30, 2022

It’s been 32 years since the internet became widely available in American households. But in 1995, there were plenty of people who thought Web 1.0 was just a fad. In the now infamous Newsweek article, “Why The Internet Won’t Be Nirvana,” the internet’s relevance was roundly dismissed. Since then, the internet has evolved and transformed the way we shop, read, watch TV, do business, and communicate with our family, friends, and strangers. We’ve transitioned from Web 1.0 (the age of static websites) to Web 2.0 (the age of social media, interactivity, and user-generated content). And now, the internet is going through yet another major transformation: Web 3.0, an age of decentralized data and increased privacy.

Web 2.0 Economics

At the core of our current internet system (Web 2.0) consumer data is the product. Companies like Facebook, Google, Amazon, and Apple, track consumers, collect information about what they’re doing online and use that data to make a profit. These apps also extensively track consumer behavior offline (e.g., location tracking) so that when a consumer goes into a store, they might begin seeing ads for that store (or competitors) in their social feeds. Businesses benefit from this system because it makes it easier to target the right consumers with their ads. However, this system is facing a major disruption.

Web 3.0 Disruption

There are many aspects to Web 3.0 (e.g., cryptocurrency, blockchain, DAOs, and dApps); but in this article, we will exclusively focus on data decentralization and privacy. Under a Web 3.0 system, middlemen like Facebook or Google no longer own consumer data. Information about what the consumer is doing online remains with the consumer, and only the consumer decides who gets access to it. And as more Americans become aware of how their data is being used by Big Tech, the demand for more online privacy has increased exponentially. According to a 2019 survey of internet-using American households, 73% of them had concerns about online privacy. As a result, millions of Americans have begun using browsers that don’t collect consumer data (e.g., DuckDuckGo and Brave). DuckDuckGo, founded in 2008, controls 2.65% of the U.S. search engine market; while Brave, founded in 2016, controls 1% of the global market. Both of these companies have grown based on their commitment to respecting consumer privacy, and they both earn revenue through advertising.

DuckDuckGo website statement:

We make money from private ads and affiliate partnerships on our search engine. On most other search engines, you are targeted with ads based on creepy profiles made up of your personal information, such as search, browsing, and purchase history. Since we don’t track our users, we don’t have any such histories. So, search ads on DuckDuckGo are just based on the search results page you’re currently viewing instead of being based on you as a person. For example, if you search for cars, we’ll show you ads about cars. It’s that simple.

Brave also makes money through advertising but they share the revenue with the people who use their browser.

How it works:
Advertisers pay to place ads on the Brave browser and consumers can decide to look at the ads or not. If consumers choose to look at the ad, Brave will pay them in BAT (Basic Attention Token). This token is a digital asset that’s created on Ethereum’s blockchain and it can be exchanged for money or it can be held in a digital wallet.

In a nutshell, there are two things happening:

  1. Consumers are now empowered to hide their data from businesses.
  2. Consumers are getting compensated for engaging with ads and sharing their data.

Just like how Netscape Navigator eventually went defunct, it’s possible that companies like DuckDuckGo and Brave will go defunct. But the concepts on which they’re built may live on, especially since consumers are demanding more privacy when browsing. This is part of the Web 3.0 evolution. When given a choice, will most consumers switch to browsers that don’t collect data? According to a 2021 Consumer Reports article, even Big Tech is beginning to move away from intrusive tracking (e.g., cookies) as consumer privacy expectations have changed.

How Small Businesses Benefit

Web 3.0 could be beneficial to small businesses in the following ways:

  • High engagement.
    When consumers give businesses permission to send them ads, they are more likely to look at them.
  • Higher conversion rate.
    When consumers engage with ads they want to see, they’re more likely to make a purchase or at least join a mailing list.
  • Better cybersecurity.
    Our current system is fueled by tracking and data collection, which can make business data vulnerable to hackers and viruses. When company employees use browsers that don’t track them or download cookies, the business data is safer.

How To Prepare

If businesses want to be ready for the Web 3.0 transition, they should do the following:

  • Gain knowledge.
    Get a basic understanding about what Web 3.0 is and how it will change the internet. This article is a good starting point but you should spend some time reading the latest news about this transition. There is more to Web 3.0 than centralized data and privacy, but it’s too much to cover in this article.
  • Educate your team.
    As we make this transition, you don’t want your employees caught in resistance mode. Consider allowing them to test out alternative browsers and explore other aspects of Web 3.0.
  • Get involved.
    Consider experimenting with alternative browsers, like the ones mentioned, so that you can understand the user’s experience.
  • Take it for a test run.
    Consider running a small ad or two on an alternative browser to experience Web 3.0 as an advertiser.
  • Strategize.
    Work with your marketing team to brainstorm how you can leverage Web 3.0 to your company’s benefit.

The transition to Web 3.0 is already underway but just like any change, it will continue (alongside Web 2.0) for several years until it becomes the dominant system. Use this time to get educated and strategize about how you will get Web 3.0 to work for your business.

West Coast Franchise Law

If you have any questions about franchising, please contact the experienced franchise and business law attorneys at West Coast Franchise Law today at (206) 903-0401 to discuss your situation. Nate Riordan is a 2023 Franchise and Bankruptcy Super Lawyer with over 20 years expertise helping clients achieve their business goals.