Blockchain is the topic du jour at marketing and tech conferences around the world. It has been written about in many advertising publications and blogs more recently that you might be forgiven for thinking that it’s a new thing.
I must admit it’s good to be having the conversation more openly discussed, rather than only on “techy forums” where I may have been found in 2009, headphones on blasting Jay-Z’s top charting “Empire State of Mind” and trying to wrap my head around cryptography and all things Blockchain.
Conference panellists, presenters and journalists are throwing the phrase around as if it’s inevitable that Blockchain technology will be one of the next big disrupters to our industry. Already, we’ve seen a wave of Blockchain adtech start-ups emerging across the globe, while agency groups The Marketing Group and Mindshare already have one foot in the door, and technical people like me have our heads in the possibilities ahead.
But, is the Blockchain one of the shiny new fads or should we take it seriously? Why is there so much excitement about Blockchain and should people in the digital advertising industry, a sector already drowning in technology, take any notice?
At the recent dmexco conference in Cologne, Europe’s largest digital marketing expo, one of the panels focused solely on this topic. Panellists, including Sizmek CEO, Mark Grether predicted that we can expect to see private Blockchains appearing next year and public Blockchains in 2019 and 2020 as the technology continues to evolve.
Grether noted that there are at least five potential applications for the Blockchain in digital advertising: more transparency, less fraud, better management of consumer-level data, the automation of bidding, and real-time auctioning. He did note that real-time bidding would not be the first use case, as the underlying infrastructure is not ready yet and I agree. With transactions on most Blockchains only able to process, and verify, a few transactions a second, much improvement needs to be made before it can be efficiently applied to solving for advertising’s challenges.
The most important application for marketers is to help solve transparency and fraud within digital advertising. Blockchain can help power this in large part because it works as an old school ledger, in a distributed digital format.
Without going super-nerd on you, the basic premise of Blockchain, is that all computers in the world are connected as part of a distributed network. Therefore, every computer could connect to the same distributed ledger, which helps to validate each transaction. This in-turn creates network effects that ensure stability within the network, as the more users you have participating, the more secure it becomes.
Every transaction that has ever occurred in a public Blockchain is recorded, and can therefore be accessed. Even though participants remain secure and anonymous, the transaction history gives marketers the confidence that these transactions are valid. This level of independent, open transparency is not readily available in today’s advertising ecosystem.
Blockchain technology promises to digitise, decentralise, secure and validate transactions. That last part, validating transactions, would alter the foundations of Internet transactions. It removes the middleman from the equation and creates a more democratic system, and ultimately builds trust.
Ad fraud would be reduced through the validation of these transactions within the Blockchain. The more participants there are in the network, the higher the security and the more fraud can be filtered out.
That’s one of the main reasons people are excited about Blockchain across finance, healthcare, logistics, automotive and a whole swathe of industries. I believe there will come a time when there will be very few industries it doesn’t touch.
Smart contracts, basically a set of rules that can automate the execution of contractual outcomes of events, takes it a step further by strengthening the Blockchain’s ability to serve as an accurate source of truth.
Applied to digital advertising, it could be the technology enabler that brings the publisher closer to the advertiser.
And similar to the way that programmatic trading of digital ads has splintered into different mechanisms, we could eventually witness the emergence of dedicated private and public Blockchains that focus on certain types of transactions and needs.
However, the current designs for a Blockchain system are simply too slow to match real-time bidding and programmatic systems. The performance is not there yet; but people are working on robust platforms, so this is likely to change.
In addition, people are still talking about what it could look like and so having the conversation is also an important part of bringing it to the masses.
This is why there are still some people wary about how it can be used within advertising. That’s demonstrated by the IAB Tech Lab in New York only recently announcing that they were looking into creating standards in Blockchain for digital advertising.
I would expect the next phase will focus on scale, standards, applications, and managing out the complexity. We will continue to watch with interest. It’s no fad and it is here to revolutionise entire industries, including our own. Let’s, however, be realistic with our current expectations for it to solve all of our problems right now.
In the meantime, I’ll keep blasting my headphones and watching the exciting next steps to follow.
Trent Durfee is Sizmek sales engineer, Australia and New Zealand. He can be found tweeting @trentdurfee.