Will Regulation Turn Mad Men into Sad Men?

As a nation, we don’t trust anyone — or anything — anymore.

And for good reason. Fraud and bad actors sometimes seem as though they lurk behind every corner. We are urged to share online, only to have our social media accounts hacked. We follow the news — only to find out we’ve been exposed to misleading Russian “fake news” accounts during a critical election year, or we might be one of the latest 50 million hacked Facebook users. We purchase items online — and our personal data is stolen by bad actors hacking retail giants.

Survey after survey finds trust in governments, trust in industry and business, and trust in civic institutions have plummeted and remain at record lows.

The advertising industry is not immune to this distrust — both from consumers and from stakeholders who are a part of the industry itself. With rampant fraud and a lack of transparency throughout our system, the recent revelation in the Wall Street Journal that the FBI is investigating potential criminal fraud lurking in the opaque supply chain that stretches between marketers and publishers is unsurprising.

It’s not surprising the FBI is choosing to take a hard look at the advertising industry — but it is also not surprising the FBI is choosing this moment to do so — after all, they are joining a growing cadre of policymakers and other opinion leaders pointing out what many of us have known for some time — the digital advertising model in the US is overdue for a serious overhaul, one that will inject transparency, metrics, data, and confidence into the system.

Solving this problem now — cleaning up the industry’s house now — before regulators step in in a major way — may be the best thing we can collectively do in this moment.

Cryptography and blockchain technology offer the best tools for the industry to take advantage of now. Integrating these new technologies into the marketing model means creating a new level of transparency — offering a clear view into the supply chain that stretches between marketers and publishers. The technology also allows marketers to better target their audience, power campaign performance, increase impression views and more. And the proof is in the pudding: Brands are already beginning to pilot it to verify impressions, protect consumer data, eliminate fraud and decrease costs.

Cryptography can also secure, encrypt and seal personal data. Consumers can be served contextually relevant ads at appropriate times, without being specifically targeted on a personal level. Cryptography can give marketers the ability to know an anonymous consumer is interested in purchasing a minivan, without knowing that consumer is John Smith, new father of triplets, living in St. Paul, MN. Perhaps most importantly, it can curb data leakage and theft — something the industry continues to struggle with.

This isn’t just a better way to operate — integrating innovative tools like cryptography and blockchain into our models now will ensure the advertising industry is ahead of the curve when regulations are being written. After all, when you have privacy at the core of marketing, GDPR compliance is automatic — not to mention compliance with future regulations.

According to our sources, over 50% of brands have already invested in full-time, internal resource dedicated to developing blockchain capabilities in-house or with the support of external vendors. And the likelihood of the other 50% following suit in 2019 is extremely high. If these trends continue, ‘mad men’ may be facing disintermediation which will almost certainly leave them ‘sad men’. The pace of change is speeding up every day — and looks like the balance of power may be shifting along with it.

As an industry we can pretend there is nothing wrong and spend millions to fight regulations. Or we can use new tools available to all of us, and take action to provide the transparency across the supply chain that is needed to demonstrate that we are able to prevent fraud, waste and abuse on our own. The choice is ours.