Blockchain: Bringing Integrity Back to Ad Buying

Tackling Ad Tech’s Biggest Challenges With the Technology Behind Cryptocurrency

In 2017, marketers will spend $83 billion in digital advertising, an increase of 15.9 percent from the previous year. As the market has grown, advertisers, publishers, and users have all faced growing pains as a result. A solution has emerged from an unexpected place that could reduce ad fraud, deliver better targeted ads, and reduce wasted ad spend among other issues – Bitcoin.

Despite any feelings you might have about Bitcoin, the underlying technology, called Blockchain, has captured the imagination of entrepreneurs and established businesses as a revolutionary technology with implications far beyond cryptocurrency.


What Is Blockchain?

Blockchain is a distributed ledger that was invented to support the Bitcoin cryptocurrency. Here’s how it works:

Blockchain is revolutionary because it requires no middleman to facilitate transactions, and it’s more secure because copies of the ledger are verified and must be agreed upon across the system. In simpler terms, since no central authority “owns” the ledger, each party involved can track the progress of their transaction and trust they’re all seeing the same, correct information.

In Bitcoin, each block is a financial transaction, but with Blockchain, these individual blocks could be anything. What’s more, each block can be “programmed” to adhere to rules, creating some interesting automation opportunities. A great example of this is a “smart contract,” where a Blockchain-based contract between two parties could automatically pay out funds when the conditions programmed into the contract are met. Think about how a vending machine works – it self-executes code to release a particular item (a drink) when a condition (payment) is met.

A few marketers have been working hard at understanding how this disruptive new technology could be used to solve the advertising industry’s most pressing issues. We’ll explore a few of those initiatives and help sort out the hype from the true opportunities for all parties involved below.


An Alternative to Ad Blocking

The Basic Attention Token (BAT) is a recently announced open-source initiative from one of the founders of Mozilla. It proposes a system that “radically improves the efficiency of digital advertising by creating a new token that can be exchanged between publishers, advertisers, and users. The utility of the token is based on user attention, which simply means a person’s focused mental engagement.”

Here’s how it works: “In the ecosystem, advertisers will give publishers BATs based on the measured attention of users. Users will also receive some BATs for participating.” Put simply, it cuts out middlemen like exchanges and puts control of user data back in the hands of the customer, verifies actual attention through integration with the browser, and connects advertisers and publishers directly.

BATs have the opportunity to give consumers something they have been wanting for years in the digital advertising space – better control over the ads they see. Without control, consumers are currently turning to ad blockers, costing publishers more than $22 billion. Through Blockchain technology, BATs provide an alternative – allowing publishers to be paid for their content and consumers to be paid for their attention.

Imagine this scenario – a kitchen appliance advertiser wants to advertise on a mainstream food and lifestyle website. The advertiser pays out BATs to the publisher to have an ad placed in a prominent position on the site’s homepage. A user then engages with the ad and receives a few BATs from the advertiser for paying attention to them. The user’s BATs are then used to purchase an article on the publisher’s website that normally requires a subscription. In this exchange, all parties are rewarded in a way that improves the experience from start to finish, all through BATs.

While the BAT initiative may seem like science fiction, it’s very real and has already launched in beta. In addition, it has some serious talent behind it, including Brendan Eich, the creator of JavaScript and co-founder of Mozilla. It is a long-term initiative, but represents the kinds of disruptive solutions that Blockchain enables.

The BAT rollout has already begun with the beta release of the Brave browser, an open-source, privacy-focused browser. Initially, BAT will launch on the Brave browser, but could be extended to other browsers, and even other platforms like messenger apps. Imagine a user on the messaging app Telegram receiving BAT tokens in exchange for viewing an ad.


Transparent Ad Purchasing

When an advertiser purchases digital advertising, it generally must run through a third-party vendor who is responsible for taking the ad, putting it on the right site, and paying the site owner to put the ad there.

The rise in programmatic buying has automated this process, but it’s also created some challenges. Advertisers don’t have a clear line of sight into who’s receiving their ad dollars, and publishers sometimes see only a fraction of the money paid by the advertiser. Blockchain can provide more transparency and trust for these transactions.

Over the summer, Digiday announced members of the programmatic ad alliance Pangaea, including Reuters and CNN International, joined a project to create a supply-side platform (SSP) prototype using Blockchain to improve the transparency of the entire ad-buying process. Essentially, the project would be able to provide publishers with an itemized bill showing exactly how much money an advertiser started with, where and how that money was distributed (or kept by the third party), and ultimately how much the publisher receives. Simply put, the goal of Pangaea is to “root out any potential fee-skimming within digital ad transactions so publishers and buyers can see exactly where the money is going.” This means a more fruitful relationship as advertisers make sure their ads are going to the right place, and publishers are delivering the ads most relevant to their audiences.

Another promising initiative developed in partnership with NASDAQ is The New York Interactive Advertising Exchange (NYIAX). This initiative, launching in Q4, goes another step forward by creating the world’s first guaranteed advertising contract exchange. This new exchange connects the worlds of ad tech and financial tech by allowing publishers and advertisers to buy, sell, and trade advertising inventory in an open market. By using Blockchain technology, these trades can be done more efficiently and with full transparency between all parties involved.


The Real Blockchain Opportunity in 2018

In an episode of Forrester’s “What It Means” podcast, Principal Analyst Martha Bennett compared the current state of Blockchain to that of the Internet in the 1980s, full of opportunity as well as hype.

Here are a few very real ways for forward-thinking brands to get involved in 2018.

Learn More About Blockchain
The first step is to get a better understanding of Blockchain and how it can be leveraged for your business and industry. Blockgeeks is an online educational resource full of articles, training technology, and avid Blockchain fans and users ready to answer questions. It’s a great first step to not only understanding the core mechanics of Blockchain technology, but how brands, publishers, and advertisers can take advantage. For a broader perspective, Epicenter is a weekly podcast covering the rise of decentralized technologies including blockchain, cryptocurrencies, and other distributed systems.

For more hands-on learning, the Linux Foundation’s Hyperledger has a free online course you can take covering blockchain and distributed ledger technologies as well as how you can start using its technology for your business.

Participate in Blockchain Tests
For users, the Brave web browser is already available for download. In addition, publishers can already begin setting up accounts, and ad testing will begin at the end of this year, according to the BAT road map. Blockchain initiatives in ad tech will need advertisers and publishers to volunteer in these promising new tests.

In addition, the Interactive Advertising Bureau (IAB) has a nice summation of the most compelling advertising Blockchain initiatives. It has also created a working group to focus on evaluating the Blockchain opportunity.

Build Your Own Blockchain Initiatives
Those ready to start building their own Blockchain initiatives should look at Ethereum, an open software platform based on Blockchain technology that enables developers to build and deploy decentralized applications. On Ethereum, brands and advertisers are already building everything from hotel booking platforms to smart contracts.

One final thing should be made clear – the excitement that surrounds Blockchain comes from its potential to move our industry forward in a time of confusion. Those who want to tackle our most serious issues should not shy away from the uncertainty implicit in these early days. Rather, they should embrace the excitement and possibility of this new technology.

The post Blockchain: Bringing Integrity Back to Ad Buying appeared first on The Richards Group.

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