- Markus Malti
What advertisers need to know about blockchain now
Aktualisiert: 17. Aug. 2021
The advertising industry faces many challenges — from fraud and lack of transparency to antiquated payment models. But blockchain technology will soon solve these challenges, rewriting the future of adtech.
There are already — and will definitely continue to be — multiple blockchains to serve the advertising industry. Different blockchains will serve different purposes, including consent management, tracking, payment processing, and contracting. In working with our advertiser clients, I can see countless use cases that would solve for data transparency woes, transactional payment headaches, and even the potential to mitigate fraud.
We’re at a crossroads, though: Solutions are emerging, but will brands push networks and third-party ad tech partners to adopt them? With education and awareness, and a bit of boldness on the part of these brands to come together and set new industry standards for blockchain-backed processes, we can realize this technology and its benefits for the ad industry.
Here are the ways blockchain can add value for advertisers and agencies:
Google, Facebook, and Amazon have all built walled gardens that hold cross-device data, media inventory and creative formats that work exclusively on their own platforms. The result is a real lack of visibility into the data and its trustworthiness. A public blockchain would enable advertisers and agencies to source a verifiable truth on the number of impressions delivered in a campaign, who they were delivered to, and where. Blockchain provides a system that runs in parallel with the existing supply chain and complements existing ad delivery, data targeting, and yield-management functions. With public blockchains, all parties in the system get a transparent view of the supply chain and a clear understanding of where advertising dollars are going. Private blockchains can also make sense if used by multiple parties, preferably by a larger group of actors.
Just as airlines band together in associations such as One World and Star Alliance, we could see publishers and adtech providers banding together to use the same chain, as well as individual players hosting their own program. Certain advertisers and publishers will respect and trust each other and share a blockchain, while others may choose to keep control and own governance. For instance, walled gardens like Google and Facebook may opt for their own private chains but make them publicly readable and replicable. To avoid the big players governing such chains, it is imperative that advertisers, adtech providers, and publishers start working together now to establish standards in public blockchains for the industry.
The Association of National Advertisers reports that 58 cents of every programmatic media dollar goes to a publisher, while the remaining 42 cents are consumed by supply chain data and transaction fees. With blockchain, all impressions could run through a smart contract that’s updated every day with the latest delivery, impression, or click data. It could even initiate payment when the campaign concludes, so that advertisers and publishers could transact instantly based on individual impressions rather than month-end results. Daily payments for publishers could reduce financial strain and fuel company growth.
A WPP study estimates that more than $16 billion of global advertising revenue was wasted on fraudulent traffic in 2017. Blockchain technology can provide a fully verifiable and immutable public ledger of transactions, which would allow all parties to independently check spend throughout the supply chain to combat fraudulent traffic.
Further, since blockchains are decentralized peer-to-peer networks, there is no single point of failure and no single access point for malicious hackers. Thus, it enhances safety and security for data.
GDPR and other data privacy regulations require that users consent to their data being used. Given the high penalties for violating compliance, companies are investing more into data management, and there is a critical need for consent management platforms that can track and provide information about consent on a by-user basis. This could very well be implemented using a distributed ledger, eliminating the need for a central management entity and resolving the question around ownership of such a consent management platform.
Brands, a call to arms
Blockchain technology offers a more efficient and reliable solution to many current advertising industry obstacles; however, success hinges on adoption throughout the whole ecosystem – from advertisers to publishers to adtech providers.
Advertisers can be a driving force for the walled gardens to implement blockchain technology, just as they have in the past with pushing for viewability and brand safety tags. Publishers will inevitably accept the universal audience tags required by blockchain if advertisers push for them.
Now is the time for a significant number of adtech players and advertisers to come together to put themselves in power regarding the governance of emerging public and private blockchains. If not, someone else, likely the bigger players, will set the blockchain standards in their own favor. By calling for the adoption of blockchain to safeguard their ad investments, advertisers will force the rest of the industry to fall in line according to those demands.
Markus Malti is managing director and founder of WeQ.