How Blockchain Can Benefit Advertisers
TL;DR — There is massive speculation about how every industry from health care to housing will be affected by blockchain advancements. In the marketing and advertising space, the biggest swell of interest is in transparency and tracking.
Where Are We Now?
At the time of this writing, a single Bitcoin is worth $6,923, a single Ether (Ethereum’s currency) is $421, and many people still think of blockchain technology as only a way to transfer money or host smart contracts. In the meantime, Google and Facebook own at least 63% of the digital advertising investment, effectively creating a duopoly of the digital market. So the ability for a company to have more control over their spending and find new ways to cut out the middleman seems very appealing, and with the excitement and buy-in of blockchains, the advertising industry has a chance to shake things up.
How Can Blockchain Help?
Transparency
Blockchain is basically a massive, distributed, and public ledger. With that in mind, advertising industry can benefit first and foremost from that transparency, whether it be for buying advertising space or actual products. By registering products via blockchain ledgers, consumers can get a guarantee that the item they bought is legitimate. In the same way, advertisers who want to guarantee that they are not marketing to bots or buying fake ad space are looking to leverage blockchain to guarantee legitimate sites and views. This can help reduce fraudulent advertising and manipulated inventory, hopefully increasing the effectiveness and legitimacy of impressions that advertisers are actually paying for.
Targeting
Web tracking and demographic targeting already play a huge part of paid media strategies. After all, who wants to spend money only for no one to buy anything. Given how public blockchain is, and that everyone has specific addresses they use to receive tokens, the potential exists to build out more granular profiles of consumers. This would allow advertisers to know more than simply age, sex, and location, but where they like to eat, what ads they actually look at, where they are spending their money, and more.
Cutting Out the Middleman
When it comes to blockchain buzzwords, this is one of the most commonly heard. The concept of being able to reach the consumer immediately by buying inventory without going through any exchanges or regulators is immensely appealing. More importantly, blockchain technology could boost the trust between advertisers and publishers by becoming verified for content and ad relevance, along with making sure that inappropriate advertisements do not show up on legitimate sites. If everyone is verified on the public ledger, ad buys could occur quicker and cost less, as there are fewer intermediaries and checks that need to be done.
Is Anyone Already Working On This?
Although it would be nice to say that all the areas blockchain could impact marketing are original ideas, that is not the case. Companies are already working to utilize blockchain technology to improve digital advertising, whether it be through understanding data, trying to create recorded whitelists for companies, or working on micro-transactions for advertisements and impressions. Below are just a few in the space at the moment:
Claiming to be “the first blockchain ecosystem dedicated to advertising”, MadHive’s platform uses blockchain to “provide smart contracts and cryptographic keys for the sale and use of first-party data” (Nasdaq). The company focuses on OTT advertisements, and by using blockchain they can track which users watch, look at, and interact with the presented ads, giving potentially more useful data. Their goal is to offer private and secure use of first-party data, built and stored on their own blockchain instead of building off of Ethereum. The focus on OTT makes MadHive somewhat limited at the moment, but given the rise of online viewing, MadHive might be in the right place for changes to come.
The adChain Registry, unlike MadHive, is built on top of the Ethereum blockchain and acts as a “decentrally-owned domain whitelist” for advertisers to understand who is and is not a legitimate publisher. This whitelist is built through publishers purchasing adTokens, the native utility token to the Registry, and using them to submit their application to the Registry. AdToken holders can challenge the applications of domains, and if they are voted fraudulent or “low quality” they can be kept from the registry, but if domains are unchallenged or approved they become accredited. The listings in the Registry are also only valid for a finite amount of time, so domains and publishers have to keep their site up to date and renew their status. This kind of Registry can benefit advertisers having a constantly updated and public list of valid sites, so they know more about who they are buying space from.
One of the companies that is investing in the building of adChain, MetaX seeks to “give sellers total control and the ability to retain integrity and full value of their content to attract premium ad spend” (MetaX). By using the adChain, their goal is to offer full transparency, auditability, verified impressions, and universal data in the advertising supply chain. According to a Forbes article, MetaX is looking to provide a dashboard to access the adChain and build DApps on top of it.
AdShares is looking to position themselves as a decentralized P2P market for programmatic advertising. They seek to cut through all the middlemen involved with programmatic ad buying to link the publisher and advertiser together. By creating their own API and using blockchain to crawl publishers’ inventories, adShares seeks to decentralize the market allowing for greater transparency and significantly lower costs.
While the other companies listed here are still very much in the start-up phase, they offer examples of real shakeups in the market. Comparatively, Nasdaq, Inc. (the first electronic stock exchange that has its own blockchain) created the New York Interactive Advertising Exchange (NYIAX). This blockchain-based exchange will act like a ledger to be traded and bidded on. Like the other companies mentioned, it seeks to use the blockchain to reduce fraudulent impressions and websites, along with trying to make re-trading and forecasting more tangible and reliable when it comes to ad buying.
What Are The Limitations?
All of these startups have the potential to radically disrupt the digital advertising space, but as with almost all blockchain companies at the moment, there are some massive limitations to them. First and foremost, there has to be a significant amount of buy-in from other companies in order to validate the networks. If publishers choose not to buy adTokens and invest in getting verified on the adChain, then adChain and MetaX have no business model or viability. In the same way, users will have to download app extensions to their browsers to make sure that sites are registered before entering.
More importantly, blockchain technology is still working through speed and scalability issues at the moment. Just as an example, an ad platform such as AppNexus can process millions of transactions per second, whereas AdShares, at its highest scalability at the moment, can maybe hit 100K per second. Ethereum, as a platform, can presently only handle 15 transactions per second.
So What’s the Takeaway?
Buy-in and speed are only two of the limitations of blockchain, but they are two of the bigger issues. That said, it is important to understand that despite the buzz, blockchain technology is still very much in its infancy. The skyrocketing prices of Bitcoin and Ethereum have gotten a lot of people interested in blockchain as a currency and a potential disruptor, but there is a lot of work to be done before these blockchain-based companies can take on some of the more established ad exchanges and threats to digital advertising. Yet the potential for disruption is there, and the opportunities for greater transparency and reliability for a market as rapidly changing as digital advertising should not be ignored.
Disclaimer:
These articles are not to be used for investment or partnership advice. They are strictly based on research for understanding and exposition to the possibilities of blockchain technology.
Further Reading
Forbes — 10 Ways Blockchain Could Change the Marketing Industry This Year
Medium — Blockchain Gears Up to Conquer Ad Tech
AdExchanger — The Marketer’s Guide to Blockchain
The Chart Guys — How the Advertising Market Benefits from Blockchain Technology
