A Blockchain Approach to Targeted Advertising

The problem for Enterprise

The world has evolved significantly since the “Mad Men” era of the 1960s. Gone are the days when corporations could plaster single page advertisements on billboards or posters and expect people to become informed and excited about their products. Our technologically adept society has shown us time and time again that there are simpler ways to do things, and that is why huge internet companies like Google and Facebook are making millions of dollars in profit off of generating targeted advertisements.

These targeted advertisements sound amazing on paper: companies pay to only show their content to people who have already been confirmed as interested in their product. Google, Facebook, and other middleman companies are paid vast sums in exchange for utilizing their big data and information on users to only display relevant advertisements for each individual. This data could include age range, gender, race, search history, or even social media interests.

As great as it sounds, there are two fatal flaws in this system. Firstly, users have no direct incentive to interact with these ads. The middlemen are immensely profiting while businesses are losing money and customers are not receiving anything on their end. The distribution can be altered to allow for a more profitable solution on both sides while cutting the middlemen out altogether. On top of that, many privacy concerns come with selling consumer data. Doing so raises many ethicality and legality questions about the processes used to sift through this data to produce targeted ads.

What is blockchain technology, and how can it help?

Think of a blockchain as a decentralized database. Incoming and outgoing transactions and messages are all stored in an immutable history that connects every user on the network without the need for a governing body. Currently, blockchain technology is most well-known for being the backbone of cryptocurrencies such as Bitcoin and Ethereum. However, these cryptocurrencies represent only a fraction of its potential use cases. It can be applied to supply chains, law enforcement, cybersecurity, education, and (you guessed it!) advertising. A blockchain typically has the sole purpose of streamlining an industry and cutting out the middleman. In the case of advertising, it can address both of the flaws with the current targeted ad system.

Google could be wholly eliminated from the equation by utilizing a decentralized search engine built on a blockchain to gauge consumer interests through public big data algorithms. Companies would be able to interact with consumers directly and pay them to interact with these ads. This would be far cheaper than using an intermediary and produce much better results since consumers would be explicitly incentivized to view the content. It’s simple game theory: if someone pays you to do something, why do it for free?

Of course, we still inherently run into the issue of privacy in this kind of targeted ad model. However, blockchains are designed to be pseudonymous. Each interaction can be traced to an address rather than a name. The address string is always randomized through the use of a hash function and can never reveal any information about the owner. Additionally, if a system were implemented in which users could choose which search data they wanted to be public and which data they wanted to remain private, that would go an extra step in ensuring that this targeted ad system is both legal and ethical.

Utilizing a blockchain is a beautiful approach to an otherwise nonsensical model. Funds should not be placed in the hands of intermediaries, but consumers themselves. Without the economic incentives of the blockchain approach, companies will end up losing millions of dollars to a far less efficient system.

So why isn’t a blockchain-based solution being used already?

Actually, it is. With BitClave’s decentralized search engine, powered by blockchain, users have complete control over their data. A successful search experience in the BitClave ecosystem is in no way dependent on sharing data — however, if users choose to reveal data to businesses as part of their search, businesses can respond to the search with highly targeted, relevant adverts — which users are then compensated for. By removing the middlemen BitClave aims to provide value and transparency for all parties in the digital advertising market. Now users and businesses can have a mutually beneficial relationship that both consent to — users keep control of and are compensated for their data while receiving ads that they actively want to see while businesses know that they are actually targeting relevant and willing users while having the transparency and traceability of blockchain for complete accountability.

Users get paid in BitClave’s token (which is currently undergoing a fundraising crowdsale) called CAT, or the Consumer Activity Token, which they can then either keep, convert to a government-issued currency, or convert to another preferred cryptocurrency. BitClave is scheduled to release a functional beta of their platform sometime in the coming months.

The future of targeted advertising

Our current advertising model is entirely unsustainable. The wrong people are making all of the money and the companies involved are not getting the results they need. Targeted advertising is a great concept in itself, but middleman corporations like Google and Facebook have taken over and made it something disastrous. Blockchain technology is incredibly necessary; it has the potential to overhaul the advertising industry completely. The concept of targeted ads, paired with BitClave’s execution of a decentralized, pseudonymous search engine, will very likely turn out to be an incredibly effective tool for both consumers and small and large companies alike.