Blockchain in Digital Advertising: Combating Ad Fraud & Cutting Middle Men
This article is by Daniel Buchuk
Transparency and security are two essential pillars for any business. Over the past decade, the digital advertising industry’s reputation has been tarnished with a seemingly endless string of scandals, rising fraud, and finally misleading or dishonest campaign metrics. As a result of this, customers are turning to ad blockers, and concerns around privacy and information tracking are growing. However, it is important to point out that digital marketing spending has overtaken television advertising and is expected to reach in excess of $600 billion in 2018.
With digital advertising share expected to approach 50 percent of all advertising by 2020, the industry is ripe for change. It is also desperate to find solutions that will create a healthier ecosystem for customers, advertisers, and publishers.
Is blockchain the right solution to tackle ad fraud?
AdAge estimates that ad fraud takes $1 for every $3 spent on digital ads. In 2016 alone, marketers lost $7.2 billion to ad fraud. With a challenge of this magnitude, it’s no surprise that a recent poll showed that 78 percent of marketers cite click fraud as their top concern.
While not everyone in the industry believes blockchain holds the key to combating fraud, many industry leaders are hopeful and recognize its potential.
Blockchain technology can be described in three important ways that can solve ad fraud: it is trustless, permissionless, and decentralized.
Ad fraud is pervasive due to the opaque and complex network of publishers, platforms, and agencies. The new layer of transparency and accountability in a blockchain-driven advertising ecosystem can empower buyers and sellers to verify the placement of their campaigns and measure ad impression with no bias from intermediaries. However, since blockchain requires participation from all parties, publishers and advertisers would have to join forces to set the rules of the game and agree on a standard.
Businesses at the heart of the ecosystem are already taking steps. The newly formed Adschain Consortium — which includes iProspect, Futurs.io, Mondadori MediaConnect, as well as adtech platforms Smart and S4M — plans to address the problem of an increasing number of intermediaries in the programmatic supply chain jumbled in between publishers and advertiser.
WPP, the world’s biggest advertising conglomerate, has a similar blockchain consortium called ‘Project Proton’ led by Mindshare. It consists of MediaMath, Integral Ad Science and the Rubicon Project.
These consortiums are leading change in the industry, planning to leverage blockchain technology to bring more security to the entire programmatic supply chain by making the intermediary actors for each impression transaction transparent.
Can Blockchain Make Advertising More Transparent and Customer-Centric?
The digital advertising industry is dominated by centralized enterprises. The advertising duopoly — Google and Facebook — account for a quarter of all advertising sales. Google knows customers’ intent, while Facebook knows the demographics. David Petterson, suggested in a recent Forbes article that the missing piece in the puzzle is the customer — which ends up being a casualty in an advertising model primarily designed to serve the ad networks.
Blockchain technology has the potential to remove ad networks from the equation. These companies sit between brands and publishers, matching them and taking a big cut in return. In theory, blockchain could remove and optimize the system so it runs only between companies, publishers, and visitors. This would make advertising much cheaper for companies, but it could also make it better thanks to the blockchain’s immutability, which offers a tamper-proof record of everything that has taken place on the network.
Since it would be no longer the ad networks brokering, holding or sharing performance insights, both companies and publishers would have full access to a customer’s data. This was include information about the customer’s journey, campaign performance, and every metric regarding impressions and clicks.
This shift will help advertisers really take the customer’s best interest into account and avoid ‘spamming’ irrelevant people for the sake of impressions or clicks; impressions or clicks that ultimately don’t generate a strong ROI. What’s more, blockchain can also bring consumers into the transaction and make them aware of what value their personal data has to publishers and advertisers.
Are Brands Ready to Embrace Change?
Some early pioneers are doing remarkable work in this space. For example, Japanese car manufacturer Toyota announced last month a partnership with blockchain advertising analytics firm Lucidity to cut down on fraud when buying digital ads.
The result of their initial pilot for the auto industry’s first-ever verified programmatic ad campaign on blockchain were impressive — showing a 21% lift in campaign performance.
Other companies, such as Asian airline Cathay Pacific, are exploring the ways in which blockchain can help them manage its reward program. Cathay teamed up with Accenture to launch the airline’s first application of blockchain technology by issuing air miles to customers over a single distributed ledger. Thus, they allowed customers, airline partners, and the airline itself to manage member rewards in real time.
We will begin seeing more and more brands embracing blockchain technologies to optimize their marketing spend and build better relationships with customers. The time is now for the marketing and advertising community to lead the change — thinking creatively about how to make the most of the blockchain. Looking at the range of opportunities and the thirst for innovation to tackle some of the industry’s biggest challenges seems like it’s not a question of if, but when.
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