Brave’s Brave Attempt to Reform Digital Advertising — Brave and The Basic Attention Token Explained
Digital advertising has grown out of control — at least that’s what the team at Brave believes. The browser they have built blocks all advertisements and trackers by default, eliminating the need for any kind of ad blocking extension. This creates a browsing experience that is twice as fast as other leading browsers and keeps your privacy fully protected.
Publishers should not be quick to condemn Brave for stripping them of their revenue generating ads. There is a much more ambitious plan in the works to re-establish harmony once again between advertiser, publisher and user. If Brave’s plan is successful, users will be happy to support their favorite publishers and view ads.
Brave loads websites 2 times faster than Chrome and Safari on average. With no ads to download, the browser only has to load content which creates a much leaner and zippier experience. This also has direct monetary benefits for mobile users — who spend an average of $23 in data costs a month downloading ads and trackers.
However, some may view blocking ads as an aggressive move that violates the basic agreement between publishers and users. Publishers deliver content to the user for free, in exchange for the user viewing advertisements on their websites and apps. This funds the publisher’s business and allows them to keep delivering content to users free of charge.
But Eich and the Brave team thinks that publishers and advertisers are breaking their end of the deal. Advertisers have developed sophisticated methods of profiling and tracking users across the web which threatens users’ privacy. Brave also claims that blocking ads and trackers reduces the chance of encountering a malware infection introduced through contaminated advertisements placed by nefarious actors.
Many users seem to agree with Brave’s position. Ad blockers are on the rise and it is expected that 27.5% of web users will employ some kind of ad blocker by the end of 2017. Publisher revenues are declining as a result and there’s no reason to believe this will slow down. This is why Brave is proposing an alternate solution.
Brave wants to reel in the overbearing advertising ecosystem and level the playing field between users, publishers and advertisers. The proposed plan is a multi-step approach, that requires both the Brave Browser and the Basic Attention Token.
The Basic Attention Token
The Basic Attention Token or BAT for short is an ERC20 Token based on the Ethereum Blockchain. Blockchain is the underlying technology behind Bitcoin.
If you are not familiar with blockchain technology, just think of BAT as a digital currency that represents user attention. But also know that BAT can be bought, sold, and exchanged just like other cryptocurrencies such as Bitcoin and Ethereum.
If you want to go down the Ethereum rabbit hole, CoinDesk offers a great guide and Reddit user CryptigoVespucci wrote a great summary for newbies here. For further reading on ERC20 tokens, check out this CoinDesk guide.
Brave wants all advertising revenues to be based on BAT. Advertisers will pay for ads using BAT and users will be compensated for viewing ads in BAT. Users being paid to look at ads? Yes, you read that right, and it is a key component of the BAT system that we will touch on in a bit.
Brave distributed BAT tokens in what is known as an “ICO” or initial coin offering. Think of this being similar to a company doing an IPO except that instead of buying shares of a company, you are buying the currency on which the BAT system will run.
So much like if you think a stock will appreciate after an IPO, BAT tokens will theoretically appreciate if the system is adopted. If more and more advertisers want to acquire BAT so that they can run ads, the price will appreciate because the demand will be higher than the supply.
Although, Brave is quick to point out that BAT is not a currency:
BAT is not a digital currency, it is a utility token. It can be used as a unit of account between advertisers, publishers, and users on the BAT platform, and can be utilized to directly measure, exchange, and verify attention
This drives home the point that BAT is meant to only be a currency within the the BAT ecosystem. However, BAT can be bought and sold on cryptocurrency exchanges for fiat currency (USD, Euro, etc.), so it has actual tangible value like other cryptocurrencies sold on exchanges.
The 1 Billion BAT offered in Brave’s ICO sold out in 30 seconds achieving a value of $35 million collectively at the time. Brave retained 200 million tokens themselves which immediately puts much needed revenue into their coffers to expand their business. That expansion starts with the implementation of a feature called Brave payments.
Brave payments is a system in which the user can directly donate money (BAT) to publishers frictionlessly just by browsing the web. Brave has a built in “wallet” that holds a user’s BAT and distributes it proportionally to all the websites that a user visits based on usage. The browser tracks your web browsing and distributes BAT in proportion to time spent and engagement with each website.
In addition to the 200 million BAT that Brave held to expand their business, they also reserved 300 million BAT for a “user growth pool” that they are distributing to early adopters of the Brave browser. Each user is distributed 5 BAT that can only be used to distribute to publishers through Brave Payments. Users will not be able to use this BAT for any other purpose than donating to publishers (they cannot sell it on exchanges).
Brave is offering the Brave payments system as an alternative to users who are rejecting the current advertising ecosystem but still want to reward publishers for creating great content. Any publisher and even individual YouTube creators can participate in the Brave payments program — by simply creating a Brave publisher account and collecting their monthly distribution of funds. Publishers can then convert these funds to their currency of choice through Brave’s financial partner, Uphold.
Whether users of Brave will willingly donate money to publishers remains to be seen. The model has already been proven through companies like Patreon, which gives creators a platform in which to accept donations. Many users have shelled out their hard earned money to support their favorite creators. But will enough people donate to support the current publishing ecosystem? Probably not. Enter Brave Advertising.
Brave wants to implement an advertising ecosystem that keeps user data private, eliminates ad load and even pays users to view ads. These value propositions sound great on the surface, but how will Brave actually pull it off?
The first problem they would like to solve is protecting user privacy. When you visit a website, there are most certainly multiple trackers following you around the web and building a profile of your browsing, searching and shopping habits. These trackers are used by advertisers to build detailed profiles of each user they to want to target with their advertisements.
If I know you are a 30-year-old mom, with a new baby who just purchased a stroller online then I can assume with a high degree of certainty that you are probably in the market for diapers. The more flushed out my profile of you becomes, the more precisely I can target you with advertisements.
If the publisher has a deal with the advertiser to share user data, then your data is sent the moment that you touch that site and every other page load after that, without your consent, with no compensation to you. Brave thinks this is a privacy problem, which is why they block trackers in the first place. But they also understand that advertisers still need to be able to precisely target users, otherwise single 22-year-old childless men may start seeing advertisements for diapers instead of beer.
So instead of advertisers doing the tracking, Brave takes care of that. Brave tracks your browsing, search, and purchase data to build a profile of you. The key difference of Brave’s tracking is that this data stays locally on your device. All of this tracking data is never shared with advertisers so you stay completely private and anonymous. This means that you will still see ads relevant to you without losing any of your privacy.
Now that you know your privacy is safe, what about this whole pay me to view ads thing? Even though the donation model Brave has built out is clever, it still may not be enough to supplant a publisher’s traditional advertising revenue.
When it is launched later this year, Brave Advertising is another option that, like Brave Payments, a user has to willingly opt-in to activate. Once enabled, a user would start seeing ads in their previously ad-free Brave web browser.
This is the point where one might ask, why would a user ever willingly choose to turn on ads in a browser that does such a great job blocking them? The answer is multi-faceted.
First, it will be understood that ads will be vetted for malware and overall ad load on the page will be carefully controlled.
Second, by activating ads the user will be willfully donating their attention to publishers in exchange for free content. This is a great option for the users who understand that making content is not free, and they want to compensate publisher’s accordingly but don’t want to donate money directly. Instead, they can donate something that is monetarily free — their attention. This attention can then be converted directly into actual revenue for the publisher.
The third and possibly the most important point is that users will be paid to view any advertisement that appears in the Brave browser in the form of BAT. Instead of the ad revenue simply being paid by the advertiser to the publisher, the user will also receive a share. The split is set to be 70% to the publisher, 15% to the user and the remaining 15% to Brave.
The BAT received by a user could be sold on an exchange for cold hard cash, but Brave is not openly flaunting this possibility. They explicitly state:
The utility tokens are intended for use on the BAT platform, a new Blockchain-based digital advertising and services platform. Ownership of the tokens carry no rights other than the right to use them as a means to obtain services on the BAT platform, and to enable usage of and interaction with the platform, if successfully completed and deployed.
Now Brave may emphasize this for a number of legal or financial reasons, but the fact of the matter is that BAT can be exchanged for any type of currency if an exchange supports it. However, they do envision a world where publishers offer premium services in exchange for the BAT that the user earns by browsing the web. Think of access to exclusive articles like ESPN insider or enabling additional features similar to how Reddit Gold functions. This opens up even more revenue streams for the publisher.
Brave also thinks that they can increase the amount of revenue a publisher receives by cutting out all of the middlemen that live in the advertising ecosystem.
Ad servers, data partners, SSPs, DSPs, DMPs are all entities that anybody working in ad tech knows very well. They all serve a functional purpose in the ad delivery process but they all also retain bits of revenue that eventually percolate from advertiser to publisher. With Brave handling all ad serving, data management and publisher negotiations, none of these middlemen have a place in Brave’s new world.
So when will Brave’s master plan come to fruition? Well, there is still much work to be done and many questions left to answer. Brave Payments is available now to any user of the browser, but Brave Advertising is set to come later this year. Even after Brave unleashes their new advertising system they will still need to recruit publishers to participate, establish acceptable ads and ad placements, and continue improving their audience targeting.
As this work unfolds, we will discover whether users will either donate money or willingly view ads to support publishers. Paying users to view ads will certainly drive interest in Brave Advertising, but Brave hopes that the added promise of protection from malware, privacy violations and overabundance of ads will help propel both Brave Advertising and Brave Payments to mainstream adoption.