Blockchain is hailed as a more secure, faster, and highly flexible network over which data can be transmitted. Because trade promotion has typically and traditionally been managed over highly segregated technologies, behind the corporate firewall, transaction speed and security have not been much of an issue over the years. But the advent of cloud-based technology has seen several major TPx vendors move to a cloud platform. Even with the advantages in cost and performance in the cloud, many major CPG companies still restrict the sensitive information that consists of trade funds, expenditures and performance to on-premise databases and processing technology.

Although still a major concern, there are several developments in Blockchain technology that have focused on security and reduced vulnerability to hacking; so, it is a good time to review and refocus.

The conceptual operational view of Blockchain has some merits for trade promotion.  For instance, the use of smart contracts, for trade promotion plans presents an interesting use case, because it could be a way to encapsulate the often rigorous and voluminous tactical activities, business rules and performance requirements for each promotion committed by the supplier and the retailer. Using a standard format could enable far more consistency, easier compliance verification and a more detailed set of data that A/R, settlement and deduction managers can review to offset deductions taken off-invoice for trade promotion.

For consumer durables, fashion, high technology, consumer electronics, automotive aftermarket, and household products industries where cooperative advertising and market development funds are transacted based on the receipt and audit of proof of performance documentation (claims), this could represent a more efficient and certainly faster method of reimbursement process.  These are all major headaches for both the channel and supplier companies.

Blockchain and its prophesied future inevitability is on everyone’s mind, as are the problems and inherent dangers that are more than widely articulated across the spectrum of global business. However, the ship is slowly turning toward relevance and acceptability, even among the most conservative views of banking and financial services.

Several technical issues in Blockchain could impact trade promotion, but any attempt to jump into the blockchain operational use today would be a continual battle with updates and changes even more than with the early TCP/IP infrastructure of the internet in the 80’s and 90’s.

Considering the financial exchange element of trade spending, the use of Blockchain also presents the opportunity to create new cryptocurrency for promotion settlement. Many now believe that the scope of trade channel promotion presents one of the best opportunities for the creation of a new cryptocurrency specific to promotion spending.

Downstream data is critically important in trade promotion today. POS data has become the mainstay for both retailer and supplier companies to understand immediate impact of trade promotion execution. Blockchain could transact POS data in real time with significantly higher capabilities to carry critical promotion, sales, inventory and consumer marketing data to deliver real-time insights into consumer shopping activity, promotion response and supply chain optimization.

Blockchain is a foundational technology; so, the question of the applicability of cryptocurrency as a future trade spend option is a bit further out.  Prepare – you are seeing the future unfold!

Rob Hand

Author Rob Hand

Consumer products industry domain expert specializing in trade promotion management and execution. Experienced data and analytics professional focused on how your company can improve the ROI, reduce failure rates and improve overall value for the money you spend on trade promotion, co-op advertising, consumer marketing, demand planning and retail execution. When your company is ready to move to a new vendor, develop a more advanced data and AI capability, improve the collaboration with your marketing department and retail accounts, I am the best contact you can make. Independent, reliable domain knowledge and a long history of success will ensure your own successful results.

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