Blockchain is an exciting new technology, and its evangelists expect it to solve a plethora of ad tech problems for brands, agencies, publishers, and platforms. Looking beyond the hype, blockchain technology has the potential to solve particular problems in the advertising industry in the near future, but only if the industry works together and is realistic about what it enables and how it should be used.

 

Marketers are enamoured with the potential of blockchain technology for advertising, but still not quite sure how to apply it to reap the full benefit. A decentralised ledger, or blockchain solution, is not always the most efficient or best way to achieve marketers’ goals; it may just replicate other solutions in-market, with little to no incremental value to the advertisers, but additional technical costs and complexity. Additionally, most companies are still in alpha or early beta stages with no live global offerings.

There are, however, two big problems that blockchain can help tackle right now: ad fraud and supply-chain transparency. If we focus on these, we can begin to solve issues that marketers handle on a daily basis, and provide a proof of concept for using blockchain technology in advertising.

Supply-chain transparency will probably take longer for blockchain to tackle than ad fraud, but a solution is still within reach. Buyers and sellers are talking about using blockchain as part of the billing and reconciliation process. However, we see a huge opportunity for blockchain to create a new standard for supply-path transparency: if every member of a supply chain authenticates each step in the programmatic buying process, the opportunity to transfer hidden fees will be eliminated. Using blockchain technology to make all fees explicit will identify inefficiencies in the supply path and deliver immediate value to marketers. It will also help to identify valuable partnerships, expose the good and bad players in the marketplace and create true supply-chain transparency from consensus.

Tackling ad fraud and transparency

Ad fraud is a major issue for advertisers and costs them US$7bn annually, according to the Association of National Advertisers. Blockchain can help tackle ad fraud by using encryption technology to make it nearly impossible for fraudsters to spoof domains, by locking each bid request and requiring an encryption key from the legitimate publisher to unlock and serve each ad.

In this example, only the publisher and the advertiser have the key and the ad will only serve when they match, demonstrating how a decentralised immutable ledger can help identify non-human traffic more effectively. Blockchain proof-of-concept experiments like this can increase transparency and the quality of advertisers’ paid digital media. If blockchain can eradicate domain-spoofing and other forms of ad fraud, it will immediately add value to the supply chain.

Now what?

Beyond ad fraud and supply-chain transparency, we expect some applications for blockchain technology to become viable for our industry much more quickly than others. Transaction settlement, for instance, is unlikely to move quickly. Because of the scale and complexity of the media business and the number of parties involved in it, the necessary alignment between players could take years to complete.

For now, most of the buzz around blockchain in advertising will actually make ad tech even more complicated, by adding another layer of technology. The industry needs to focus on the problems we can solve today with blockchain, to provide a proof of concept for its effectiveness in tackling the industry issues of tomorrow.

For this to be a reality at scale, the marketplace needs an end-to-end test of blockchain solutions for ad fraud and supply-chain transparency, which would require participation of independent SSPs, DSPs, and marketers that are willing to share their results and make the entire advertising ecosystem better. It is only through industry collaboration that blockchain innovation can solve real marketers’ problems.

A version of this article originally ran in MediaPost

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