Digital Advertising Landscape: Existing Problems.

Hello,
Well Wishers & CEC Supporters around the world,
We are software developers at Cloe LLC. You may have heard that we are collaborating to solve the very expensive problem of fraud in the web advertising industry. We’ll release a smart contract, to resolve the coordination and incentive problems at the root of ad fraud. In advance of that, we want to share our view on the existing landscape as we see it. Perhaps you can think about how you would use a blockchain to solve these problems as demonstrated in our whitepaper. You are welcomed to discuss these issues with us when we issue our proposal.
Cheers!
TERMS
Ads served by programmatic marketing campaigns comprise the vast majority of ads users see while browsing the web. Consequently, programmatic ad buying comprises the vast majority of revenue in the web advertising ecosystem.
Internet advertising can be abstracted as interactions between three parties.
They are:
USER: who browses/navigates the internet and various desktop and mobile web pages.
PUBLISHER: who owns and controls the web pages and generates content that users consume.
ADVERTISERS: who desire to get the attention of users and pay publishers to place ads on their web pages.

How Web Ads Are Served
The creation and delivery of digital ads is an involved and detailed process involving many parties. In order for brands and advertisers to negotiate and execute advertising deals, or ad campaigns, there are several intermediaries involved, many of which provide overlapping services. Advertisers often use ad agencies to create marketing campaigns and campaign assets called creatives. These ad campaign creatives are served from Demand-Side Platforms, or DSPs. On the supply-side of the industry, where publishers sit, there are SSPs, or Supply-Side Platforms. A common way to buy and sell ads is through an exchange, which is an aggregated marketplace of DSPs and SSPs. This is where things get complicated.
Ad networks aggregate publishers and work with SSPs to solicit ad campaigns in exchanges and with large DSPs directly. Publishers may work with ad networks, SSPs, exchanges, DSPs or directly with brands and advertisers. Publishers often work with ad tech companies across all categories in the ecosystem simultaneously in the effort to monetize 100% of their advertising inventory. Conversely, advertisers and agencies typically work with several different exchanges, SSPs and publishers to reach their target demographic at scale.
As an example and from the perspective of a unique creative element in an ad campaign, an ad’s journey to a user’s browser begins when the CBSs embeds a video player in their homepage.
When a web video ad is served on the CBSs front page, a large number of tracking beacons are served along with it; in general one tracking beacon per supply-chain entity. These tracking beacons assess, among other things, whether an ad was viewable and whether its viewability was sufficient to log an impression. Payments in web ad supply chains generally happen per 1000 impressions, which the advertising industry calls a CPM (cost per mille, where mille is French for thousand).
In some instance, the CBSs’ tracker may assess that an ad was viewed in its entirety, whereas the advertiser’s safety vendor (another common supply chain entity) may report that while the video did play, it was not in an active tab and so doesn’t count as an impression. Or the safety vendor may suspect a bot viewed the video; fraud of various types is a $10 billion+ problem in ad tech annually.
Because of the opacity of web ad supply chains, at the end of a settlement cycle the CBSs may expect to collect 100,000 impressions worth of revenue and are surprised to learn the advertiser is only willing to pay for 5,000 impressions on the basis of data from their safety vendor. This dispute can only be resolved following a costly and time-consuming negotiation.
Exchanges
Ad exchanges match bid requests on ad space placed by publishers to bids on ad space placed by advertisers. The utility of an exchange in web-scale advertising is to rationally allocate available ad space to the advertiser to whom it is most valuable. Because there are many ad exchanges, the supply and demand sides are both fragmented and the rational allocation of available ad space is impeded. The proliferation of exchanges also helps to keep DSPs and SSPs in business by creating yet another barrier to entry for advertisers who might like to place their ads directly.
Ad Exchanges: Zero Transparency
Ad exchanges have great latitude to misbehave in modern web ad supply chains. Web ad exchanges do not actually expose the same degree of information about the state of an ad market which a financial exchange for securities or commodities might. Data pertaining to exchange volume and average sale prices, for example, is generally unavailable. In order to develop an image for the state of a market, buyers on the demand side need to probe the exchange with high-frequency bid responses for ads they do not intend to actually serve. This inefficient practice cannot perfectly expose the state of a market, as ad exchanges may push floor prices upwards arbitrarily and undetectably
Supply-Side Platforms
Just as advertisers’ core competencies are not in the actual placement of ads, publishers’ core competencies are not in selling ad space. The CBSs is a journalistic organization, not a sophisticated exchange arbitraging outfit. Publishers therefore contract with SSPs for similar reasons to those advertisers contract with DSPs.
Fraud: The $10+ Billion Problem
The online advertising industry has evolved to become a tangled mess of algorithms, virtual real-time platforms and exchanges all competing for consumers’ fragmented attention. Long gone are the days where an advertising executive could pick up the paper and see the full spread ad they purchased the week before on page 12. There is no more paper trail. Old school broadcast media knowledge and strategy has not translated to the digital space. We now live in a complex automated world where online advertising is programmatic and it is cheaper than ever to evaluate the real-estate on publishers’ websites.
Vertical Integration: A Solution With Side-Effects
In 2017 a duopoly captures upwards of 60% of the programmatic ad market’s total revenue. This duopoly’s large audience, combined with their deep targeting data about that audience is an extremely valuable commodity. The ecosystem these giants of ad tech play in is largely vertically-integrated and comprises more than just the supply side: they own their entire supply chains, and the only means to serve ads to their audiences require passing through that infrastructure.
The online advertising industry outside of the duopoly is free, open and increasingly peer-to-peer thanks to emerging header bidding technology. It is suffering, however, under the burdens of mistrust, fraud, supply chain opacity and absent accountability. The Cloe infrastructure of advertising on the blockchain technology is a coordinating mechanism to unite it and address these issues.
https://cloecoin.io
http://www.blog.cloecoin.io/?thread=digital-advertising-landscape-existing-problems
