When we last checked in a year ago, the blockchain marketing technology landscape was projected to quadruple.
It’s been 12 months, and that hasn’t exactly been the case. It certainly grew — from 88 companies to 290 as of February 2019, according to research from Brave — but underlying issues with blockchain’s design means that it’s not quite the problem-solver the industry had hoped it would be. At least not yet.
As a distributed ledger technology (DTL), blockchain has the allure of building trust among cautious marketers by limiting the number of third parties in the media planning process.
But since it’s still a relatively nascent tech with questions around latency and cost, established companies are only going as far as the testing phase while the 200-plus startups battle each other.
Mark Pearlstein, chief revenue officer of DoubleVerify, sees the potential. He said blockchain has the ability to provide value across the board.
“Blockchain is interesting because it acknowledges that the industry is a team sport, there are multiple intermediaries at play, and if everyone commits to transparency and commits to entering into this immutable ledger, it provides valuable intelligence to both sides,” said Pearlstein.
However, he said, DoubleVerify is in “evaluation mode” about implementing blockchain in its brand partners’ marketing strategies.
So, let’s evaluate.
What it solves
GroupM recently released a report outlining the efficacy of blockchain in marketing. It focused on three key implementations of the technology: facilitating reconciliation, managing consumer data openly and securely, and optimizing measurement standards at an impression level.
“Blockchain is attractive to technology players and systems integrators because they see it as a powerful catalyst modernizing clunky, inefficient, and often only partly digitized processes. It also represents the opportunity to engage with clients around big, complex, and, ultimately, lucrative projects,” the report read.
GroupM predicted that by 2020, all major corporations will hire consultants to see how DLT will cut costs, though every dollar spent on the tech will see another $20 spent on updating internal systems.
Jack Smith, chief product officer, investment, at GroupM, said the company is testing blockchain internally and with some third-party vendors at the client level. He added that GroupM is looking at deploying blockchain to mitigate reconciliation discrepancies between publishers and vendors.
“It's mechanisms like [blockchain] that will reduce the number of emails we're now sending back and forth with publishers to try and figure out what the root cause of the impression difference is,” said Smith.
Smith added that blockchain — because it’s an immutable open ledger that transparently stores information — could serve as a platform where consumers can “control their own data and have it link to a device.”
Leigh Christie, director of Isobar’s NowLab America’s, said blockchain can help solve the “erosion of trust between the consumer and a brand” by making the supply chain more transparent — whether that’s how a company uses customer data or where it sources its product materials.
Christie added that Isobar’s innovation lab is investing in blockchain martech, and that “multiple brands” are working with the testing group.
When it comes to integrating blockchain into programmatic buying strategies, GroupM’s report recommended that a simple or distributed database-led solution is often enough.
What it doesn’t solve
Part of the reason blockchain isn’t ready to be wholly implemented in programmatic strategies is because its latency issues make real-time buying a near-impossibility.
Gartner analyst Andrew Frank doesn’t expect blockchain to be fully operational across marketing for another 10 years, saying: “There's obviously a speed and scale problem when it comes to thinking about the rate of transaction processing required by things like real-time bidding markets.”
Analysisshows that the average blockchain transaction time takes 1.5 seconds. Because digital advertising requires transaction speeds of 10 milliseconds, Pearlstein said DoubleVerify would be “stepping backward” with advertisers if it implemented the tech.
Because blockchain can track ad dollars, Pearlstein likened it to ads.txt as they both serve as transparency tools. But like ads.txt, blockchain isn’t a catch-all for fraud, especially because its latency issues can cause brand safety concerns, for example, by exposing advertisers to domain spoofing.
“We're not anti-blockchain, but even when it's fully deployed it's still only going to solve a part of the problem by definition of what blockchain does. It's not that it's bad; it inherently can't do everything a brand is looking for,” said Pearlstein.
As an immutable distributed ledger, blockchain is great at serving as a transparent data house, but that can come at a cost.
“Blockchain is designed to be immutable, meaning you can't really delete the data, so it grows and grows and grows. What does that mean for cost? And, it wouldn't potentially be just us holding or owning that data; it would be others that we're participating with, maybe in a consortium,” said GroupM's Smith.
Pearlstein echoed this sentiment, saying the challenge is around finding a financial incentive for building out blockchain capabilities that work in real-time “because once a single company takes ownership of the ledger, it's no longer this neutral third-party distributed ledger.”
There are public blockchains and private, centrally controlled blockchains, but as Christie said, “in many cases, when people are talking about centralized, private blockchains, they're really just talking about a slight variation on a traditional database, but leveraging the hype around the term blockchain.”
So brands either save on cost by owning a distributed ledger but negate blockchain’s transparency benefits, or they participate in an open ledger that tears down their coveted walled gardens at a potentially exorbitant financial cost but with friendly returns in brand equity from consumers.
For blockchain to really find footing in marketing, Pearlstein said, “There would need to be some agreement in-market on a funding method that's ubiquitous to anybody that wants to play in blockchain that'll fund the ledgers and the speed of the ledgers.”