By Dan West (Digital Strategy Director), Francis Guinto (Ad-Ops Optimisation Senior Technologist) and Qassem Naim (Data Strategy Director)
Blockchain has been the buzzword over the last year, and its intrigue it has only increased with Bitcoin’s recent surge in value. Increasingly, blockchain has been heralded as a potential saviour to some of digital advertising’s biggest challenges. In fact, a 2017 study by the World Federation of Advertisers and Dataxu showed that, despite only 3% of advertisers having researched how it could help reduce advertising fraud, more than 20% planned to make blockchain a major business priority in 2018.
Before we delve into the many fantastic things blockchain can do, however, we first need to establish what it is.
Simply put, blockchain is a list of records (often described as a ledger) which are distributed across a network of computers called “nodes”.
As new blocks (records) are added to the ledger (chain), millions of nodes corroborate them cryptographically, with the network’s power together exceeding that of the world’s 10,000 largest banks combined. These nodes maintain what amounts to the “blockchain,” a model of distributed ledger which allows for transparent consensus without putting any central party in charge.
So how does this affect the marketing industry?
Reduction in Ad Fraud
It is estimated that ad fraud will cost brands around $19 billion worldwide this year, according to Juniper Research. This is in part due to the current black box publisher model that puts middlemen between brands and consumers, and allows these intermediaries to profit from each advertising dollar. Ad fraud is also driven by high volumes of invalid traffic (such as bots and spammers) that soak up impressions and waste media spend.
Blockchain applications would allow brands to access a central record of all ad impressions and transactions, enabling independent verification of advertising delivery and brand safety. This record could show brands where their ads ran, who saw them, who was paid, and exactly how much the activity cost.
A further benefit of blockchain’s distributed ledger structure is the democratization of brand safety metrics and technologies. The current centralized model comes with fixed technology fees and a lack of transparency around the vetting process (i.e. nobody can challenge decisions made by these vendors). This puts a disproportionate amount of power in the hands of a few ad tech companies. A distributed ledger would enable a self-governing ecosystem of buyers and sellers, granting full transparency of brand safety metrics.
Privacy is a huge data management issue, and Comcast believes that blockchain has much to offer in this area. Comcast announced last year that they are developing a Blockchain Insights Platform “aimed at improving the efficiency of premium video advertising, resulting in better planning, targeting, execution and measurement across screens” for those businesses using the platform. All of the data offered by the businesses participating in the Blockchain Insights Platform would remain in their own systems, meaning they control the security of their consumers’ data, and the shared ledger would let “participants in the platform ask questions of each other’s data without having to access or take possession of anyone else’s data”.
With all this in mind, 2018 is shaping up to be the year of the blockchain app gold-rush, with investment in blockchain-related start-ups on track to out-do 2017 by a significant margin. Recent research from Crunchbase estimates that as of late February, capital investment in Bitcoin had already exceeded the total 2017 investment by more than 40%.
What’s more, the size of the deals are growing, and applications are broadening in scope beyond finance to also include topics such as logistics and freight. Every week, new start-ups are launching, seeking to disrupt a wide variety of industries—including marketing. We are excited about the possibilities that come with having a safer and more transparent transactional ecosystem, advertising or otherwise.
New Forms of Payment
Payment through crypto-currencies offers a number of interesting new business models. One notable example is the Basic Attention Token (BAT), which has gotten some attention of its own (as well as significant ICO investment) from recent attempts to establish a model wherein users are directly compensated for their active attention. The claims are ambitious: those behind the model predict that BATs will fix digital advertising, offering a better experience for users, publishers, and advertisers alike. However, disrupting entrenched practices takes time.
Outside of advertising, Maersk and IBM are using blockchain to add transparency and trust to their global supply chain: using blockchain, users can see every point in a product’s journey to their hands. Starbucks are already putting processes in place to service a cashless society, including accepting digital currencies. And the online publisher Salon has looked into launching functionality allowing users who employ ad blockers to let Salon mine cryptocurrency (a process called crypto-jacking) as an alternative to readers disabling their ad blockers.
However, blockchain doesn’t come without its challenges. Transferring everyone onto this technology will be no mean feat. Moreover, the new GDPR privacy rules in Europe require sites to erase user information under certain circumstances. This presents an opportunity for business to transition into blockchain technologies if they are required to overhaul current processes around creation, storage, and deletion of customer records.
The IAB predicts that a wide range of blockchain applications will be rolled out across digital channels this year, and that this will also affect some offline channels like TV. However, despite the ongoing introduction of these applications, and notable events like the blockchain agency Truth participating in the race to win the UK Government’s £140m media business this year, the real applications of blockchain are still in their nascency so it’s unlikely that blockchain will have its greatest effect on media in 2018. Nevertheless, with pressure from brands both locally and globally to improve trust and transparency, we should keep an eye on these technologies as they develop. Businesses need to start looking into the possibilities of blockchain and prepare a strategy for it. As Anthony Di Iorio, co-founder of Ethereum, predicted in a recent interview, blockchain “will be more important than the internet.”