An Advertiser’s Guide To Blockchain
How the blockchain technology will impact ad tech and media buying
The blockchain technology employs mathematical complexity to ensure the contents encoded on the blockchain stay immutable and transparent to all. In terms of digital advertising, the blockchain serves as an encrypted central repository for everyone’s data, and the partners can only activate that data through smart contracts and access it with secure keys. This kind of distributed trust that blockchain technology can bring will be a strong antidote to the fraud, measurement, and transparency issues plaguing the digital marketplaces.
Industry Snapshot
Blockchain-powered cryptocurrencies have long caught the attention of the financial industry, which has been eager to co-opt the disruptive power of the blockchain technology to improve network security and efficiency. Investment in Bitcoin-specific startups grew from 2012 through 2015, but the growth seems to have slowed down since last year, whereas investment in blockchain technology is still rising steadily year-over-year.
Currently, two major open-source “Blockchain as a Service” (BaaS) platforms that are being developed for enterprise use, one being the IBM Blockchain built on Linux’s Hyperledger and the other being Microsoft’s Azure, which utilizes a private Ethereum-based chain. Both platforms have the support of the major banks and major players from other industries, and there’s even some overlap between participants between the two. Both platforms are aiming to build a Blockchain that holds a multitude of data points from varying industries to make help transact externally.
Potential Impact On Advertising & Ad Tech
The distributed ledger design of blockchain can be applied to democratize the management of customer data and facilitate secure data exchange on a global scale. Instead of having a central institution to verify transactions and track measurements, all transactions are logged into the blockchain and therefore available for all parties involved to access and audit. This is set to bring a paradigm shift to media buying and how audience data is bought and sold.
1. Transparency
With a distributed database, advertisers would be able to access more audience data in a secure and anonymized way across the network, and using that to secure viewability via a distributed ad network. With a distributed database, advertisers would be able to access audience data in a secure and anonymized way across the network.
In addition, blockchain technology can also help facilitate secure and anonymous data sharing among brand advertisers and media owners. Using blockchain as a means to log data transactions and using smart contracts to automate transaction management on a blockchain, data owners will be able to know exactly when and which of its available data assets are used by their partners.
One media company that is set to test blockchain in ad buying is Comcast. The media conglomerate’s advertising arm announced in June that it is planning to develop a Blockchain Insights Platform in collaboration with Disney, NBC Universal, Altice USA, Channel 4, Cox Communications, and some European media companies. The new platform is aimed at improving ad targeting and measurement across screens by enabling marketers and networks to match their own customer data anonymously. This way, media buyers can be matched to the programs that will produce the best results for their ads.
2. Anti-Fraud
The distributed trust that blockchain technology can bring will be a strong antidote to the fraud, measurement, and transparency issues plaguing the digital ecosystem. By using a private blockchain to store data such as impressions and audience segments, advertisers can access a shared whitelist of verified publishers and media buyers, with all transactions and data exchanges encrypted and broadcast to every participant in the blockchain for verification. Applying blockchain to ad networks helps secure the supply chain from malicious intermediaries that manipulate inventory, thus eliminating unauthorized sellers and domain spoofers.
3. Efficiency
By eliminating the need for a central authority, in this case a DPS or a bank, to verify the ad buys, blockchain technology can considerably streamline the ad buying process and remove liability for agencies. The use of blockchain-based smart contract could also help ensure smooth execution of performance-based media buys. By incorporating the kind of micropayments that digital cryptocurrencies can handle better than centralized banking systems, media owners would get paid for each impression they deliver in near real time. If widely adopted, cryptocurrency tokens could become the currency that media buyers use on blockchain-based ad exchangers to expedite the execution, feedback, and payment of media campaigns.
Limitations & Challenges
However, blockchain does have some limitations due to its current inability to scale and validate quickly enough to support verification of real-time trading. Scaled ad platforms like AppNexus or DoubleClick Ad Exchange process millions of ad calls per second, but confirming transactions on a blockchain ledger takes 10–30 seconds due to its distributed network design. This is why the current applications of blockchain technology in ad tech tend to focus more on data sharing and campaign planning than actual media execution.
Regulatory uncertainty may also hinder the adoption of blockchain technology in ad tech. While there won’t be much regulatory hurdles for ad companies to adopt private blockchains in their ad operations, the future of blockchain applications in ad tech inevitably involves the use of cryptocurrencies or digital tokens, which authorities and regulating bodies have not settled on how to regulate yet.
Conclusion
All in all, the blockchain technology is a revolutionary force that will decentralize and democratize the way data and value are distributed and managed. Although the implementation is mostly focused in the cryptocurrency space at the moment, there are many companies outside the financial industry that are starting to experiment with blockchains. As a blockchain ecosystem starts to take shape, the industry foresees a development and implementation period of five to ten years. In the meantime, marketers should pay close attention to the development in this area and be open to exploring the numerous applications of blockchains.
Although blockchain tech has a steep learning curve, an increasing number of platforms are adopting several of its core principles, aiming to make digital advertising more efficient and transparent. Beyond the two aforementioned blockchain platforms, a number of startups are eagerly experimenting with applying the distributed network design to other industries. Here are a few potential partners that IPG Mediabrands is exploring a broader partnership with:
- MadHive is already attempting to build a blockchain-based ad exchange. There is a focus here on the prospect of future’s transactions. The challenge is that they operate in a closed platform and will likely struggle to integrate into existing technology.
- Amino is focused more on bringing transparency to the current real-time bidding infrastructure through a payment mapping dashboard and direct integrations with existing supply-side technology.
- NYIAX is another potential partner that is focused on the concept of utilizing a private distributed ledger to bring about transparency and a futures marketplace. They have an exclusive partnership with the technology which powers the NASDAQ exchange.
Special thanks to Justin Browne from UM Worldwide, as well as Jon Mansell and Luke Stillman from MAGNA for the contribution to this article.
