Emerging TechnologyBlockchainBlockchain for ad tech: an anti-fraud panacea or placebo?

Blockchain for ad tech: an anti-fraud panacea or placebo?

A lot of buzz has been devoted to blockchain in ad tech this year, but marketers are still uncertain how to separate what’s real and what’s not.

The state of ad fraud revealed overwhelming statistics during the last couple of years. According to them, billions of ad spend regularly goes to waste because of the bot-traffic, click-fraud, and installs hijacking. As a result, brands barely receive 44 cents out of one dollar investment they make in digital advertising. Recently, digital ad fraud has been called the most profitable criminal activity that brings no less than 2500-4100% returns to fraudsters.

Meanwhile, an increased interest in blockchain has been vivid on all kinds of media, social networks, and economic forums so the subject inevitably penetrated ad tech. However, as Google Trends illustrates, the real rise of the topic’s popularity could be observed starting from 2016 until the time when the first blockchain-based ad platforms were launched on the market.

Since then, ad techies and marketers have been relentlessly discussing the opportunities that, in their opinion, can drastically change the ad market, clearing it from intermediaries, fraudulent traffic, and inflated prices.

Despite the obvious hype, so far blockchain ad solutions are still rather a rarity than a common trend. Is the topic way too overestimated, or is the advertising world standing on the threshold of finding a real panacea? In order to answer this question and steer clear of myths, first of all, it’s important to understand the core of technology and the stage of implementation progress.

The place of blockchain in advertising

To start off with, blockchain ad platforms are really different because of the information storing capacities. Blockchain ledger operates on the principle of an accountant’s book where every action is registered, and every new one is not approved until each participant agrees on it. After the action is committed, there’s no way to change or modify it.

Such work order makes it impossible for the fraudster to obtain the money for the transaction which was never committed in the first place. It also becomes easy for the advertiser to verify if the ad was actually placed on the website, or it was faked.

The issues that blockchain can solve are closely related to this principle, and, first of all, it helps to guarantee trust. In fact, the blockchain technology replaces trust with encryption, so there’s no need for paying third parties and traffic quality arbitrators, like Google. This opens an even broader gateway of opportunities for the brand owners whose budget is limited and who look for money-saving decisions. Cutting off unnecessary intermediaries also means the elimination of information breaches, since companies will no longer have to process their data somewhere else.

The issue of trust in ad tech is fundamental. So far, the advertisers are experiencing hardships even at the stage of ad campaign delivery due to the lack of transparency. Just to illustrate the point:

● KPIs (Key Performance Indicators) in the media plan should be clearly explained to the advertiser.

● The advertisers need to be able to verify that their ads have been viewed.

● The advertisers need to know that their ads were viewed by real people (not by bots).

● The process of the ad delivery should clearly inform the parties about money allocation inside the programmatic chain, including commissions to ad tech providers.

Each information block in the blockchain is the evidence that registers all the essential facts in the fraud-resistant database in-time, so it’s safe to think that for all of the above-mentioned problems the ad tech holds the great solution promise.

Looking at enhanced safety of the blockchain technology, many companies are trying to figure out how to make the ad tech ecosystem more transparent and scam-resistant. For example, recently IBM iX created an ad tech consortium based on the blockchain, quickly attracting such partners as Unilever, Kellogg’s, Kimberly-Clark and others. Working in such a decentralized system, as creators point out, helps the brand to become the part of the network rather than to be a payer, who isn’t supposed to know what’s going on inside the chain.

The token-based advertising became the second turning point of ad tech evolution. For instance, the co-founders of Mozilla and Firefox designed the web browser called “Brave” with built-in security and privacy functions. The solution prevents an automatic collection of user data, cookies, and pop-up ads, tracking only the user’s attention patterns anonymously.

The other example involves the number of mobile platform solutions built on utility tokens, such as Ethereum, many of those are regularly represented on TechCrunch Startup Alley. The utility tokens are automatically credited upon the action confirmation inside the system and can be used as an internal currency by the supply and demand parties for financial operations. The users in their turn, also obtain payment for their attention in Basic Attention Tokens.

Is there a soft spot left?

So, if the supply and demand parties can trust a decentralized repository of information and it cannot be falsified, can we absolutely trust the data in it? Not so fast. The data is still put into the database by people or by the IT-systems, therefore, distortions are possible at this stage. As a result, the blockchain is not a universal remedy for all problems, even if they are related to trust.

Tech education of the next generation of marketers, top-level management, and ad market participants is the first step that should be taken towards a deeper technology understanding and such problems prevention. The challenges of implementation and the fear of transition to safer but new collaboration schemes, is what makes decision-makers still opt for the good old traditional ad buying schemes.

Informing people about technology core at larger scale will help to ensure that all parties, the advertisers, publishers, and marketers, understand the logic behind technology work and how it can help to solve their problems. For this, general nomenclature and taxonomy should be developed for the legal basis of technology functioning. Without such regulation, the market will not be able to turn into an actionable mechanism. In such circumstances, many projects risk ending up as highly promising but absolutely dysfunctional pilot versions of ad solutions.

Apart from this, innovations require funding. When the legal basis will be developed, it will be easier to develop and clear up the mechanisms of the return on investment in Blockchain projects which will replace existing ones. The second part of the year 2018 will signify more confident transition of programmatic projects to the blockchain technology as a large cluster of them are currently going through beta testing. The next year is supposed to bring widespread introduction to platforms while the market develops a legal framework for their functioning.

IAB (Interactive Advertising Bureau) is also not standing aside with blockchain initiatives. The Blockchain working group has been specifically created by IAB Tech Lab to address the challenges associated with technology integration into the ad tech sector. The working group is developing a set of programs which uncover the implementation and testing subjects and outline the best practices for robust blockchain-based solutions functioning. The initiative also involves a curated list of sources that raise awareness and provide an in-depth understanding of core blockchain mechanisms and the legal aspects that need to be taken into account while building blockchain-based products.

Wrapping it up

Today we’re witnessing how ideas are turning into actions, and the blockchain projects are finding their fruition in the ad tech. Recently, built blockchain-based ad tech decisions demonstrate that big ad sphere players are ready to start receiving the benefits from the technology. On a company level, it will ensure transparency of complicated ad tech operations. As well as, it will establish trust among partners, save funds and substantially ease their work letting every party benefit. Will the blockchain completely reshape the face of the ad industry? Nobody knows, but it has all the chances if we know exactly what to expect.

Ivan Guzenko is an ad tech visionary, blockchain enthusiast, and CEO and co-founder of SmartyAds.


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