TMW #069 | The marketing of Web3, is Google search deteriorating? And how Big Tech is entering the CDP market.

Jan 16, 2022

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Here’s the week in Martech:

Marketing in Web3. The best thing going for the “Web3” movement is its marketing.

The deterioration of Google Search. Are we finally ready for something new?

Big tech enters the CDP market. This was always going to happen.

Everything else: Google’s role in misleading advertisers, the roaring 20s of digital publishing, how leaders do attribution, the lost money in programmatic, the rise of the “machine customer”, and Ding! You’re being tracked!

✍ Commentary

The brilliance of Web3 is in its marketing. I was convinced that the most effective marketing organizations in the world were not-for-profit charities. What other kind of brand can convince people to spend money on things that give them nothing in return? Now I’m convinced that the greatest marketing organizations in the world are represented by a ramshackle and messy amalgam of NFT collectives and crypto-centered startups that brand themselves as “Web3”.

If you can get someone to:

  • Buy a record in a database (an NFT) stating that you own a JPEG anyone can download
  • Acquire a volatile and speculative currency to make the transaction
  • Pay hundreds of dollars in gas – the crypto equivalent of a transaction fee
  • Instantly turn them into marketers, sharing the project with whoever will listen

Then, congrats you should be crowned marketer of the year. Everything in this list is extremely hard for the regular person to do, and to most of us there’s no logical path in which doing so makes any sense.

It’s one thing to ask people to contribute funds to victims of a natural disaster or a humanitarian cause. It’s a completely different thing to ask people to spend hundreds, thousands, or even millions on assets, that, at this point, provide no tangible, real-world value for anyone on a speculative bet that it could be worth something in the future. Despite this rationale, Web3 projects, namely NFTs, have ballooned from a $94 million industry in 2020 to $24 billion, increasing the amount of spending by 262 times.

This week there have been several high-profile rejections of the concept of Web3 across the web from Scott Galloway to the CEO of messenger app Signal, Moxie Marlinspike. Because of this, my inbox has been filling up with people asking me what I think about what seems to be a sharp change of direction in the sentiment around the tech trend. Above and beyond if you think that Web3 is a good or bad thing, there’s no escaping that what we’re witnessing is some of the most brilliant examples of marketing and branding for digital products.

What is Web3 anyway? The further we go down the rabbit hole of this hyped-up movement, the more confusing it becomes. The way I understand it is it represents a trend toward a decentralized internet, moving from Web 2.0 which has been dominated by big platform monopolies to a more interoperable, transparent, and user-owned future.

The reality is that Web3 is just an assemblage of NFT startups, decentralized finance companies, crypto traders, meme coins, DAOs (decentralized, autonomous organizations), and different kinds of tokens. All of this is future-leaning, visionary, exclusionary, and concentrated to a surprisingly wealthy few.

Almost everything to do with Web3 has to do with blockchain technology. The argument goes that in the world of Web 2.0, apps and services operate in the cloud, which is dominated by three owners AWS, Google, and Microsoft. This makes these services “centralized” because the technology is owned and operated by a corporation that has a CEO, a board of directors, and product managers that control who gets to use the services and facilitates the feature sets and capabilities for companies building on top of them. They can also de-platform people at will.

The blockchain represents an inverse and potentially liberating idea. Distribute the computing and storage across a network of computers, with shared access, accountability, and community control over who gets to build apps, currencies, and content on top of it. This should in principle put the power of ownership in the hands of many instead of the few with a promise of unlocking economic opportunity for more people as they build new platforms in collective ownership.

The interesting thing here is that the promises of the blockchain to facilitate this kind of industrial change are not the only technology to do so. Do you remember LimeWire? Or Kazaa? What about Pirate Bay? I’m sure many of us participated in downloading those Blink-182 and Black-Eyed Peas albums back when we were teenagers (don’t worry I won’t tell). The principle is effectively the same – everyone hosts content on their computer, and everyone downloads from each other in a massive peer-to-peer (P2P) platform distributed over a network. The value of the network is determined by how many computers can host media.

Today P2P networks are centralized around streaming services like Netflix and Spotify. Sometime in the mid-2000's, we replaced the illegally distributed networks of many computers with legal server farms that are owned by corporations who let you tap into them for a monthly fee. With Web3, we’re effectively going back to the future with the idea that blockchain technology will facilitate this kind of change from centralized control to community ownership.

Despite all the craziness of Web3 hype, brands are rushing into it at unprecedented speeds. Over the past six months, we’ve seen major companies invest significantly in Web3 projects from almost all verticals. From fast food to hotels, beer, fashion, entertainment, finance, sporting, kids toys, and consumer technology, these brands are entering the space by the dozens. This begs the question as to why so many brands have decided to invest their marketing budgets into Web3 projects - what do these marketers see in it?

The business case for launching a brand-focused NFT or token project is far more about engaging fans in specific market niches than it is about selling things. In other words, I’m sure that most CMOs are looking at anything to do with Web3 as an expense line item in their spreadsheet and not necessarily as an income stream – yet. But the best examples of marketing efforts in this space do both, generate brand marketing while earning some coin on the side.

The types of investments brands are making into Web3 are diverse. Nike’s entrance into the space came in the form of acquiring a crypto startup RTFKT, while Adidas partnered with established collectives like BAYC, Visa bought a cryptopunk, while McDonald's immortalized the McRib as an NFT, Shopify launched a low code NFT eCommerce solution, while Samsung recently announced NFT trading capabilities on a new line of smart TVs. You could argue that we’ve never seen this much unregulated and unfettered creativity coming from so many household names.

Most of this kind of experimentation is about building new marketing channels. Visibility in an OpenSea marketplace could be as valuable to a brand as it would be to appear in Google search results or in a YouTube pre-roll ad. For the brands participating in this kind of experimentation, it’s analogous to launching product-specific merchandise - people want it because it’s either ironic/funny or says something about who you are as a person.

The same dynamic applies here with NFTs. It’s a way, as Scott Galloway puts it, to signal status and virtue. Brands are tapping into this because of the audience, branding, and channel value, not because of some virtuous crusade to decentralize the web or to create economic opportunities for content creators.

I’d argue that marketers should be exploring Web3 as it’s their job to transform changing consumer attitudes to increased shareholder value. So, it’s not surprising to see so much freewheeling investment into the space, with little to no regard for returns at these early stages. If marketers can somehow partially tie the economic fates of thousands of fans to their brands, this is an unparalleled opportunity to turn customers into brand advocates.

Here’s how NFTs work as a marketing channel. Participation increases the value of branded crypto assets, so in turn, their asset holders are incentivized to recruit more asset holders, with the residual effects of increased brand marketing from passionate customers, for free. This is what we’re missing in the dialogue about whether brands should be investing in Web3 projects – the real value lies in the social engineering over the technical or financial.

Yet despite all the interesting branding opportunities of Web3, there are plenty of reasons to avoid it all together. The first, and clearly obvious reason is that Web3 projects have become a hotbed of fraud. In 2021 more than $5 billion US dollars spent on cryptocurrency projects was lost to theft. Like almost every other technological advancement on the internet, the early adopters are usually the shady folks who find ways to get people to lose their life savings. Web3 has no shortage of bad actors.

The counterfactual is that marketers overall, have no problem with advertising on platforms which increasingly facilitate societal harm, as the recent Facebook Papers project from the WSJ has highlighted. The big difference here is that marketers are asking customers to invest in something, which significantly increases the risk profile if the network or underlying chain somehow disappears overnight.

Brands take decades to build, and all it could take is one bad NFT project to take all of that away. Playing in an unregulated financial domain that’s filled with pseudonymous actors with mixed incentives seems to be exactly the kind of storm in a teacup situation that will lead to a whole host of headlines, and some very unhappy customers.

The other challenges of Web3 are the incredibly inefficient nature of most blockchain technologies. The cloud brought us tremendous capabilities to scale online experiences, from seconds to milliseconds to nanoseconds. Being able to stream a live event to hundreds of thousands of fans at once or being able to email ten million customers with a promotional offer instantly are all examples of the kinds of scale and speed marketers get to enjoy with centralized cloud services.

The blockchain is different in that it’s incredibly slow and expensive comparatively. Just yesterday I was interested in buying an NFT for about $250 USD in Ethereum, I was shocked when I realized that it’s going to cost me $88 USD in Ethereum in Gas Fees to make the transaction. Who in the world would want to pay a 35% transaction fee? If you put the compute speed of blockchain technologies side by side with a standard cloud machine, the differences are stark, building an app on the blockchain is like going back to 2001 dial-up speeds. What kind of developer would want that?

The other side of this is that blockchain technologies are not built around interfacing the experience part of the internet. Moxie Marlinspike points out that you still need centralized services to interface a blockchain with mobile apps and the browser. It’s also worthwhile to say that the apps that are facilitating the experience for everyday users in this space are VC funding private corporations that are highly incentivized to centralize portions of Web3.

OpenSea is just eBay but for JPEGs, Coinbase is just Etoro but for crypto trading. The decentralized promise of Web3 doesn’t play nice with the way people use the internet today, and if mass adoption is the goal for some of these startups, then centralizing core aspects of the industry will be the only viable path forward. All the gatekeepers of Web 2.0 are still very much involved.

There’s a strong use case for enhancing what your brand is already doing with digital assets like NFTs, or specialized tokens. But what brands are starting to realize is that’s it’s legally and technologically ambiguous to create or participate in an unregulated asset class.

After all, the only value in most Web3 projects is in their speculative value – what it could fetch you in the future, which means they have no real-world application. In fact, asking consumers to participate in these types of services will mean they will have to make more decisions and learn more things, and customers hate having to learn things so they can buy things.

The counterfactual to Web3 decentralization is that the last decade has shown us how much control people are willing to give away to online platforms. We’re totally happy to let Amazon recommend products to us, allow Google search to tell us what products are worth our attention, or let TikTok decide what we should be watching in the infinite scroll. Less control means less stress and when we take away agency from people, they seem to be happy about it.

Web3 in this sense means it needs more of a revolution than a renaissance in customer behavior. And if the tech isn’t that great, and if the environment is riddled with fraud and by no means truly decentralized, then it’s the marketing of Web3 that is making all the difference. Links: Who is Web3 good for?Signal CEO’s first impressions of Web3. Scott Galloway on Web3. The crypto plan for world domination. Why it’s too early to get excited about Web3. Crypto fraud reports.

📈Chart Of The Week  

Is Google Search deteriorating? A study into the quality degradation of search, which has mostly become a public good at this point. There’s an increasing sentiment that consumers are wanting something new and more accurate than Google Search and are even willing to pay for it. Link

📰 Latest Developments

Google’s role in misleading advertisers. This has mostly to do with how Google communicates the pricing of ad auctions. The revelations were taken from newly unredacted court filings from a December 2020 court case. Expect more of these kinds of reveals. Link

Big tech is finally entering the CDP market. I’ve been waiting for this. Links: AWS, Google Cloud.

mParticle acquires Indicative. This is solving two challenges in the customer data infrastructure space for mParticle. The ability to manage “data entropy” as teams scale and the capability to analyze data from the perspective of the customer journey. Link

📚 Reading

The roaring 20s of digital publishing. From 2005 to 2020 every publisher has suffered disruption from big tech and the devaluation of content in the “free information” internet. This article argues that we’re about to enter a long-overdue cycle of media innovation. Link

Marketing attribution – what the industry leaders do. Something to think about – “attribution is something you do, not something you buy.” Link

Did the 2021 Martech predictions come true? Link

🔢 Data & Insights

The lost money in programmatic. Bob Hoffman’s take on where a single dollar of investment is likely to go in the programmatic advertising supply chain. Link

Voice tech and shopping for groceries. Consumers want to use voice apps to do their shopping, but the nature of the devices makes it hard to know what kinds of data are collected and used. Fixing this could be a big unlock for these kinds of devices. Link

The BBDO futures report. There’s a wealth of demographic data here for marketers in the APAC region. Link

💡 Ideas

Asynchronous ideation. A primer, a guide, and an apology. Link

The rise of the “machine customer.” Gartner thinks that this industry could be worth more than a trillion dollars in the next decade. We talk a lot about how to automate marketing, but how will customers automate their spending? Let’s see. Link

Decentraland. A helpful write-up from the Generalist on a fast-growing metaverse project. The first of which to successfully build a 3D world around cryptocurrencies. Link

✨ Weird and Wonderful

“Can’t Help Myself” The sad dancing robot. Link

Ding! You’re being tracked. Link

Wendy’s vicious tweets. Link


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Want to share something interesting or be featured in The Martech Weekly? Drop me a line at juan@themartechweekly.com.

Juan Mendoza

Marketing technology strategist at The Lumery, I analyse marketing, data, and technology trends for some of the most well-known Australian and global brands.

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