How The Blockchain Can Help The Advertising Industry
3 simple reasons why the blockchain is perfect for the advertising world
Bitcoin, the world’s first cryptocurrency, has captured a lot of attention, but the blockchain, the cryptographic technology behind Bitcoin, is even more important. Despite its importance, the blockchain is one of the least understood topics in the world of distributed computing.
You’ve probably heard of the blockchain before, but it’s helpful to review the key principles of this technology. To keep it simple, here is an attempt by Deloitte to clarify the original intent of the blockchain in fewer than 100 words:
You (a “node”) have a file of transactions on your computer (a “ledger”). Two government accountants (let’s call them “miners”) have the same file on theirs (so it’s “distributed”). As you make a transaction, your computer sends an e-mail to each accountant to inform them. Each accountant rushes to be the first to check whether you can afford it (and be paid their salary “Bitcoins”). The first to check and validate hits “REPLY ALL”, attaching their logic for verifying the transaction (“Proof of Work”). If the other accountant agrees, everyone updates their file… This concept is enabled by “Blockchain” technology.
One important point that’s missing from this description is that every record in a blockchain is permanent, and will last as long as the copy of the entire blockchain exists. Overall this definition may be overly simplistic for some, but it’s a good starting point to understanding the concept.
To understand why the blockchain is so important, beyond just as a way to create decentralized currencies like Bitcoin, imagine the power of an open-source technology that allows fast, secure, and transparent peer-to-peer transfers of digital goods, including money and intellectual property, applied to traditional industries.
It’s already — steadily — disrupting institutions like government and healthcare. So what’s the next ideal candidate for blockchain technology? Advertising, one of the largest markets in the world! Here are 3 reasons why the blockchain is perfect for the advertising market:
More Trust and Transparency
Many ad agencies and business owners have lost confidence in the transparency and honesty of the advertising ecosystem. They don’t know if their ads are actually getting served to their intended target, or if they’re just paying for for clicks from click farms, bots, or spoofed domains.
While publishers work hard to show marketers the real-world impact of their advertising, and not just how many people clicked or saw their ads, it’s impossible to know if those stats are accurate, and as a result, ad buyers and their marketing clients have convinced themselves that it’s normal to not know exactly where their ads are running. When the promise of digital advertising was that you could track every single thing about how your marketing dollars were spent, it’s crazy to think that this has become the norm!
“Advertising on the world’s biggest tech outlets is like a box of chocolates. You don’t know what you’re going to get.” Mike Shield — Business Insider
All hope is not lost however, as the answer may be found in the addition of blockchain technology.
Because the blockchain is transparent and encrypted, both the advertiser and the publisher can easily determine if the people viewing their ads are actually members of their target audience. Thanks to the nature of a public ledger, all of the data is encrypted and protected, such that no single party has the power to manipulate any information contained within. Blockchain’s decentralized, open-source technology builds trust in the network, which is one reason why it’s sometimes called the Trust Machine.
Removing the Middle-Man
When you buy digital advertising, you’re often not only paying for the ad itself, you’re also paying a number of different vendors for services they insert into the buying process. These middleman make millions in revenue, but don’t help prevent you from buying bot-driven traffic, pixel-stuffing, or other forms of click fraud. In fact, they’re probably making it worse! Studies have shown that less than 50% of all online ads may even be seen by a real human being.
With a blockchain-based protocol, these intermediaries are replaced by the collective verification of the ecosystem, offering a huge improvement in traceability, security, and speed. This leads to more accurate data on the ad tracking front — and thus better returns overall. Ad buyers would not only save tremendous amounts of money, but they could even use the blockchain to pay their targeted audience to view their ads. That’s a big improvement!
Better Audience Targeting
Advertisers garner information about their customers from disparate (and often not so reliable) sources, trying their best to identify age, gender, interests, and hobbies to create a profile of their customers. In addition, much of that data is collected without the user’s knowledge or approval, including where they came from, how long they stayed on a particular page, and what other pages they visited. Networks like Google and Facebook have integrated themselves into so many pages that almost every aspect of someone’s online behavior can be tracked.
Blockchain-based advertising networks will limit the dispersion of demographic information. Because it’s public, this data will no longer be sold without authorization, and consumers may even be able to own and sell their information to authorized companies. It will put power back in the hands of the customers themselves, allowing them to decide which marketers they wish to hear from, and who can collect their data. And they may even get paid for it!
With better targeting, ad buyers will be able to pay for actual user attention — not just estimations of (human?) clicks, page-views, unique monthly visitors, or other metrics like the time spent on a page.
Conclusion
This is all part of a massive movement! If implemented effectively, blockchain could be the most groundbreaking change to the advertising industry since the emergence of the smartphone.
With no centralized controller of data, and no single point of failure, the blockchain can enable a kind of advertising democracy. As many companies work to unravel the complexity of the blockchain, we look forward to exploring ways of leveraging the technology to improve efficiency and value in the digital advertising industry.
