Blockchain is a buzzword but so was dot-com. At the height of the dot-com bubble only 14 percent of British households had access to the internet and yet the value of companies associated with it exploded. The subsequent implosion of many of the speculative dot-com start-ups was a result of mass adoption of the underlying technology by existing retailers.
They spotted the opportunity for increasing efficiency and adapted. Nineteen years on it is almost impossible not to sell your services online, use social media to build a brand presence online and of course advertise online. I have used this analogy as it is almost impossible to talk about Blockchain while avoiding the subject of crypto-currencies, the prices of which have skyrocketed based on speculation and subsequently collapsed. However, as with the dot-com bubble, the underlying technology will live on.
Blockchain is a means to store data in a transparent and unalterable way. It is a distributed ledger which ensures that everyone working within a network shares the same copy of information. This information cannot be altered without the consensus of the entire network and any changes made are subsequently visible to everyone, thereby guaranteeing transparency and removing third-party manipulation. Furthermore, the need for collusion in order for the ledger to be updated, as well as the decentralized nature of the ledger, means that there is no central point that is susceptible to exploitation such as hacking or fraud.
The Flawed Media Buying Model
It is the transparency and security of blockchain technology that can revolutionize media buying. The current media buying process involves multiple stakeholders and large amounts of paperwork, the bureaucracy of which creates disconnect between advertisers, media agencies and media owners. Within the current system clients are not always privy to negotiations between media agencies and media owners. This encourages a media buying business model based on kickbacks and pre-existing deals which limits the service that larger media agencies can, or are willing to, provide their clients.
Additionally, and specifically relating to digital advertising, media agencies have little oversight over where their client’s ads are ultimately being served and are reliant on outdated measurement tools for ad verification. This has created a digital media landscape rife with fraudulent impression delivery. Digital ad fraud cost advertisers an estimated $19 billion in 2018, representing 9% of total digital advertising spend. A 2016 investigation by The Guardian, in which they purchased their own digital inventory, found that only 30p per pound of ad spend went to the publisher. The complicated network of AdTech platforms associated with the ad delivery was extracting up to 70% of advertisers’ money.
Reducing Ad Fraud & Brand Risk
By building digital advertising networks such as Google Adsense on a blockchain, advertisers, media agencies and media owners would have a transparent record. This would show where each ad was served, how much each impression cost and would manage payments through a pre-agreed set of smart contracts which would release payment as performance criteria were met (such as a confirmed impression). Payments could not be released unless the impressions delivered met the pre-agreed verification requirements set out in each contract. This would provide advertisers with transparent media buying and concrete ad verification while reducing digital ad fraud and the brand risks associated with sponsoring toxic content.
Blockchain technology is still a long way from revolutionizing the social and digital media landscape. Transaction speeds are still far from adequate enough to handle the confirmation volumes required by digital media auctions in order to execute smart contracts. However, there are organisations such as Fenestra offering blockchain solutions which can vastly improve the traceability of digital ad spend. Using tags, they can monitor the complex network of AdTech platforms and log exactly where spend is being extracted.
The reports that are subsequently generated can inform the digital media buyer’s strategy. It allows them to narrow down the number of middlemen AdTech platforms being used and subsequently increase the value of media being delivered to clients and revenues generated by publishers. Many of the big media buyers have little to gain by adopting these new technologies. However, smaller agencies who have a business model based on transparency are already starting to offer these early transparent media solutions to their clients.
Content of this article was courtesy of Keaghan Bruce.