Two Birds, One Stone: Blockchain Tech Kills Advertising Fraud And Middlemen

As an agency-like business, our teams are looking into ways how the Blockchain kills media- and advertising-pain points such as eliminating the middleman, fighting fraud and helping with reporting. Here’s a summary of the state of Blockchain tech in advertising (the story keeps developing).

The digital advertising industry, with its thousands of services, adtech startups and industry initiatives, meets the blockchain technology as a true competitor to the century-old media industry. 
In a few years from now, the technology can offer greater efficiency, reliable and high-quality data. New transactional use cases are emerging for the blockchain such as buying and selling digital or advanced TV ad inventory, fraud prevention, white listing authorized sellers of inventory, campaign reconciliation, enabling use of smart contracts to simplify the IO (in/out) process, validating advertising assets, etc.

These are all important use cases. However, we’re evaluating our project funding and the monitoring of Blockchain AdTech projects for these reasons:

  • Lowering Ad Costs: Blockchains can create a more efficient medium by which two or more completely anonymous or semi-anonymous parties can complete various types of transactions potentially at a low cost. It simply eliminates the middleman.
  • Preventing Ad Fraud: Since blockchains are decentralized peer-to-peer networks, there is no single point of failure and no single access point for malicious hackers. Thus, it enhances safety and security for data. This ability to keep a fully verifiable and immutable ledger or database that is available to all members of the blockchain provides a transparency layer that isn’t always available within media and advertising processes.
  • Transparency: While blockchain will not cure all of ad tech’s problems, it can be beneficial in situations where there is censorship and both sides of the supply chain (i.e. publisher and advertiser) are disadvantaged by not having access to that information.
    Our everyday example when running media reports is this: In campaigns today, it is common for a marketing platform to claim 20,000 impressions delivered over the course of the campaign while the publisher states there were 22,000. The advertiser might swear there were only 19,000 impressions. Who is right in this circumstance?
This is how the blockchain works but how would a decentralized ledger work for the advertising space?

Startups worth to mention:

Several projects are underway to use blockchain technology as a means to enhance and improve the digital advertising supply-chain. We monitor their activity based on readiness, efficiency and the number of possible use cases. Here are three promising ventures:

The adChain Registry app

(Blockchain: Ethereum)
The AdChain Registry is a decentralized application based on a community-curated list of ad-supported websites (domains). Community members use adToken to signal whether or not a website should be included or rejected from the Registry.

The AdChain’s thesis is: The purpose of curating this list of domains is to provide advertisers with a community-vetted stamp of approval on the websites best suited for serving ads. Current industry practices for curating registries are “pay-to-play” or arbitrary whitelists used by safety vendors. The industry lacks any explicit feedback from the general public about which ad-supported websites are legitimate and why.

XCHNG —Monitoring high-speed transaction

(Technology: XCHNG Token) 
Kochava and their parent company want to architect a new blockchain framework that is uniquely suited to high-speed transactions such as those that occur in digital advertising. They intend to open-source the code for this chain in 2019. The core value prop of XCHNG is that the insertion order, which governs all media transactions, can become a smart, self-enacting contract.

On XCHNG, the elements of a digital media buy are abstracted and simplified into five basic components or parties: Buyer, Seller, Measurement, Ratings, and Payment. XCHNG will hel facilitating the buying and selling of ads using smart contract IOs as well as enabling the related targeting and activation of audiences.

NYIAX — direct trade between buyers and seller

(Technology: 
We must admit, there’s a little bias towards this technology because NYIAX is developed in partnership with Nasdaq. 
The service enables direct trade between buyers and sellers. And, for the first time, it enables the possibility of re-trading inventory in a blockchain-enabled futures market.

“We will build and facilitate liquidity with the primaries in our exchange. The primary traders are publishers and buyers. We think of this as a contracts exchange…”

The NYIAX approach improves upon the current programmatic auction methodology by adding the critical missing component: Transparency! Buyer and seller agree on what they are trading prior to the transaction, including the fees they will pay to intermediaries and other parties.

…How’s the technology evolving?

As the technology continues to evolve, new iterations of the blockchain may offer more value to marketing and advertisers. Developers on the Ethereum blockchain, for instance, are currently developing smart contracts, which will bring greater transparency to transactions.

…About Readiness:

However, to-date there’s no advertiser friendly platform that could onboard a brand’s ad business in less than a week to run a demo or being productive. 
If you think, we’re wrong in our assessment, please reach out to us: steve.nitzschner {at} wildstyle-network.com

…About the author

Steve Nitzschner is Google Launchpad mentor, founder of digital-creative consultancy Wildstyle Network and several other technology startups in China, India, the EU and the United States. He angel-invested in a dozen new ventures through his WSN Angels & Startups fund and consults brands with their Digital Transformation initiatives.