Blockchain technology that will restore confidence in digital advertising

David Lastra

15 February 2018

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Blockchain is a disruptive technology. Perceived as “The Next Big Thing”, it is comparable in impact to what the TCP/IP protocol provided in the development of the Internet. In only 8 years, this technology has already been incorporated into every technological development of present and future innovation, from financial institutions (the World Bank amongst others) and insurance companies, to technological giants such as IBM, Cisco or Microsoft, as well as organisations from all kinds of industrial and public sectors. They consider that it has the potential to radically transform the traditional exchange of goods and services on the Internet.

Its benefits can be summarised into three main categories: it increases operational efficiency, enhances transparency and saves costs. Not forgetting a very important intangible: Blockchain generates confidence by reducing the perception of uncertainty and risk, thanks to its contributions in security, redistribution and reliability of data.

Today, the digital advertising ecosystem is made up of a large network of DSP, SSP, ad exchanges, advertising networks, DMP, ad servers and interagency negotiation environments. Millions of transactions are carried out daily between digital advertising buyers and sellers through real-time auctions. All these media buyers and sellers have to pay fees to their respective intermediaries, technology providers and platforms. A large part of the marketing budget is lost in these intermediaries, making it obscure for the client who has invested their money into the digital campaigns.

Adding to these transparency problems in transactions, there are also growing problems of advertising fraud that question the reliability of programming campaigns. Digital fraud is costing $1 for every $3 invested in purchasing digital ads. It is estimated that annually $8.2 billion is lost worldwide due to fraudulent activities such as bots traffic, domain spoofing, pixel filling and ad stacking.

Through Blockchain you can record how many times the ad is viewed, where it was published, and the nature of the traffic that consumes it. This improves confidence and transparency in the advertising purchase. This data cannot be altered and is unique, thereby avoiding any fraud of the results when it is transferred between intermediary nodes. MetaX has developed the first protocol, called AdChain, which uses blockchain technology to record and store ad impressions in real time in order to guarantee that advertisers are only paying for the ads they actually consume. AdEx (for video), RebelAI (for programming), NYIAX (for digital futures) and MadHive (for OTT and Data Management) are other companies that will be the subject of much discussion this year.

However, blockchain technology in the advertising market still needs to overcome some major obstacles. The first problem is its speed. For example, blockchain Ethereum – which is more advanced than Bitcoin – can process only 13 transactions per second. With millions of advertising impressions delivered every second, today’s technology cannot keep up with processing so much information and would require a huge increase in the number of available nodes to achieve such a computing speed.

Secondly, Blockchain is based on decentralisation or the fact that no individual or company controls the data. Currently, more than 60% of all digital advertising occurs on Facebook and Google. This means that some companies would need to adopt this technology in order to standardise it.

Despite the obstacles described above, which are common when new technology appears, there is no doubt that Blockchain and its digital advertising applications will radically change the marketing landscape over the next decade.