In part two of our four-part guest series from marketing veteran and blockchain expert Jeremy Epstein, we highlight four companies that are at the forefront of disrupting the $532 billion advertising industry.
For every dollar you invest in advertising, you only get 44 cents of value.
The Ad Maze report in the Wall Street Journal is only the most recent illustration of the number of middlemen (and resulting lack of transparency) between you and your intended audience. One Forrester analyst even claims that publishers who remove middlemen can increase cost per mille (CPM) from $1 to $5. To top it all off, bots also inflicted $7.2 billion in fraud last year.
Awareness is critical and advertising is a necessary component to driving consideration. You also know that the current model does not optimize your effectiveness or your return on marketing investment. Advertising legend John Wanamaker’s famous quote still rings true.
This next line won’t help with the popularity of agencies, but that doesn’t mean it’s not true.
“Any industry that is full of intermediaries loses a lot of value along the transaction path, and lacks transparency and trust, is an industry that is ripe for blockchain-driven disruption.“
It comes as no surprise that the first and most advanced wave of blockchain-based protocols and technologies seeks to upend how digital advertising is purchased, delivered, measured, and valued.
Expect to see initial traction from the first generation of solutions as early adopter CMOs and digital marketing leads begin to experiment in the next 12 to 18 months. You will hear of preliminary proof-of-concept implementations that reduce reporting time, improve reporting accuracy, reduce fraud, and reduce costs in the advertising supply chain. You may also see downward price pressure on traditional agencies responding to the competitive threat.
The field of contenders is starting to fill up. Here are some of the early contenders:
AdChain, built by MetaX, which offers a protocol for establishing trusted relationships for buying and selling advertising space via its own native token. That token will represent your right as a shareholder in the network. Together with the other shareholders, you will have an incentive to keep it clean from fraudulent or low-value publishers. In return, you will benefit by getting more ad value for your investment and verifiable campaign auditing through cryptographically-secure impression tracking. In late June, AdChain raised $10 million in 6 hours in its initial coin offering.
Using NASDAQ’s blockchain technology to combine a financial matching engine and trading concepts with advertising technology, NYIAX (New York Interactive Advertising Exchange) claims the world’s first advertising contract exchange. The goal is a transparent marketplace for buying, selling, and retrading of future premium advertising inventory as guaranteed contracts. They expect fees to lower as the number of intermediaries goes down to one.
A decentralized peer-to-peer market for programmatic advertising, AdShares gives advertisers and publishers the ability to trade directly without the need for centralized ad exchanges.
MadHive is a video advertising and data platform that allows brands and publishing partners to build audiences and target them across multiple screens and platforms. MadHive’s back-end product uses blockchain technology to allow brands and publishers to leverage the inherent trust and verifiability of a decentralized, peer-to-peer sharing network. MadHive is a founding member of AdLedger, the advertising industry’s blockchain consortium.
As these solutions start to come to maturity, you will have greater trust that your advertising investments are being placed as you intended. Wanamaker’s quote may not go away entirely, though you may be able to reduce the percentage wasted slightly.
According to The Attention Merchants author Tim Wu, “If we think of attention as a resource, or even a kind of currency, we must allow that it is always, necessarily, being ‘spent.’ There is no saving it for later. The question is always, what shall I pay attention to?”
As marketers, we sometimes take for granted that the attention of others comes without any cost to ourselves. Since others pay for attention, marketers have historically just done whatever they could to get it. Advertising has been based upon this paradigm since the first penny papers of New York and Belle Epoque posters of Paris.
In a blockchain-based world, this paradigm could change. Arguably, it is already changing as more than 600 million devices worldwide run some form of ad-blocking software.
In the future, if you want someone’s attention via advertising, you may end up having to pay the person for it directly. You certainly will not swipe a credit card every time someone sees your ad. However, you might pay them a small fraction of a cent. Micropayments for attention can only work at scale with a digitally-native currency.
Making and tracking these types of payments at scale is precisely one of the inherent strengths of blockchains.
Though it looks like another web browser on the surface, Brave offers a glimpse of this future. Built by the creator of JavaScript and the co-founder of Mozilla and Firefox, it is already a faster browser experience for end users, natively blocking ads and preventing cookies. However, it is in the “Payments” tab where the story starts to get unique.
Brave offers the capability for site visitors to directly make micropayments to a publisher via cryptocurrency for their content. You may not be willing to pay $200 a year for a subscription to The Economist, but you will pay a fraction of a penny to read an article. At scale, some of the most popular sites will start moving away from advertising as we know it.
The next iteration will come in the form of something like the Basic Attention Token (BAT), a function built by the architect of the Brave browser. The token is the mechanism through which an advertiser pays for attention-based mental effort by an individual. With Brave and the BAT, you will pay end users for their attention, instead of the 73% of all ad dollars going to Facebook and Google.
It’s radical and different, and possibly foreshadows the world where the CMO of the future must live. Brave may be destined for failure and there are valid critiques from very smart people that are worthy of attention (even though you will not be paid for it just yet).
Advertising will be one of the first disciplines to be disrupted by blockchain technology.
The good news is that you will have much greater trust in knowing that your advertising and outreach efforts are going exactly where you intended them to go. The bad news is that attention of others will come with a price tag.
For anyone who wants to dig deeper into this topic, you can download The CMO Primer for the Age of Blockchains, which explores the impact on advertising, loyalty, customer experience, data management, leadership, and branding.
Part three: Blockchain marketing: A look at the technology landscape and emerging players
