Is blockchain the answer for increasing trust in digital advertising?

2018 was forecasted to be a landmark year for digital advertising. According to Dentsu Aegis Network, spending in the industry is set to grow by 12.6% this year to reach US$ 230.6 billion, accounting for 38.4% of total ad spend and surpassing TV ad spending for the first time.

Amid the encouraging growth statistics, advertising research agency WARC estimates that in 2017, Google and Facebook accounted for 61% of global online advertising revenue between them. With Amazon added to the mix, alongside an opaque mess of intermediaries, the industry’s present infrastructure is clearly centralised, lacking in transparency and significantly disadvantageous to advertisers, publishers and consumers.

Global media and marketing services agency Mindshare recently announced a prototype of a blockchain-based solution geared towards providing transparency in programmatic ad buying.

While the online advertising oligopoly is a pertinent issue, the main problem is not so much the lack of advertising outlets as it is the manner in which campaign metrics are measured and presented. Poor reporting standards on campaign performance indicators often misinform advertisers. Rampant ad fraud is costing advertisers worldwide over US$ 50 million a day, according to a 2017 Juniper Research report.

Most notably known as the enabling technology behind Bitcoin, a blockchain is a transparent, immutable and distributed record of transaction data between all participants in a network. The inherent features of blockchain technology provide a unique opportunity to dismantle the digital advertising oligarchy by reducing the need for middlemen, improving campaign performance tracking and ensuring equitable outcomes.

More specifically, smart contracts mitigate all counter-party risk by autonomously executing outcomes based on predetermined parameters, enabling advertisers and publishers to transact directly and eliminating the need for middlemen. Campaign impressions are recorded on the ledger, providing auditable interactions for campaign reconciliation and prevention of ad fraud. The integrity of data is secured by elegant, tamper-resistant cryptography that links each block of data to its preceding block.

The technology also has the potential to reinvent how consumers are rewarded for engaging with online content. By giving consumers greater control over their data, advertisers can now opt to incentivise data sharing and ultimately derive more impactful insights from direct engagement with publishers and consumers.

However, let us not get ahead of the technology. Perhaps the biggest limitation for blockchain implementation in digital advertising will be its low transaction throughput capacity. Late last year, a virtual pet game built on Ethereum called CryptoKitties infamously brought the entire public network to its knees, coming uncomfortably close to bringing the entire blockchain to a grinding halt and sending transaction fees through the roof. Mindshare has teamed up with Zilliqa in this respect but scalability solutions have not been tested in uncontrolled environments as yet and may take some time before they are enterprise-ready.

Hundreds of thousands of digital ad transactions take place every second at real-time bidding auctions. The Ethereum network, for example, currently processes an average of 15 transactions per second, making it unfeasible for this purpose until such a time a suitable scalability solution can be reasonably implemented.

Beyond that, the user interaction layer of blockchain-based solutions is fundamentally unsuitable for mass adoption. Today, the interface for transacting with blockchain applications leave many of us afraid that we may have done something wrongly, or that we have inadvertently compromised security of our data in some way. Significant improvements to design and implementation around private and public keys to access assets within blockchain networks must be made.

One project making significant progress in this respect is Brave, a web browser that rewards users with its native cryptocurrency, the Basic Attention Tokens (BAT), for viewing ads. Users can also ‘buy’ ad-free browsing experiences with BAT. The company surpassed 4 million active users over the last month and are on track to reach 5 million by the end of this year, according to a tweet by the co-founder, Brendan Eich.

It is clear that the value proposition for blockchain technology in both upstream and downstream areas of digital advertising is catching on. With trends toward programmatic ad buying, issues around reconciliation auditing and fraud prevention can be mitigated by blockchain implementation. At scale, it remains to be seen how effective the technology can be as far as real-time interactions go.

George Hartley, CEO and co-founder at Sendy Network.

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