How Blockchain Reshapes Online Advertising: Trends
Online advertising industry needs profound upgrades to become efficient. Blockchain tech might be the solution.
The hype around Blockchain is expanding further as more and more use cases become apparent to the wider business community. Even though it started off as a decentralized substrate for a single virtual currency (Bitcoin), it soon became clear that the technology is applicable far beyond just one cryptocurrency and even beyond financial transactions altogether.
There are on-going attempts to bring Blockchain to the complex industry of online advertising. Nearly 40 percent of all ads in the world are delivered online on the Internet, and no modern company can neglect this massive medium, proven capable of promoting products and services more effectively than the traditional advertising channels.
Privacy, bots, metrics, ad-blockers and other problems
There are numerous problems inherent to the current technologies used in online advertising.
The number one issue troubling the general community is the privacy of user data. In most cases, ad publishers take pot shots at search queries by users in order to show them relevant ads. But the problem goes beyond that.
For instance, Google has been automatically scanning user mail to retrieve data that is later used for targeted advertising. Many people rightly find this disturbing and even though the corporation recently announced it has put this practice to a halt, most experts suggest the move was caused by a sufficiency of gathered data, not by privacy concerns.
Another issue the professional advertising community experiences results from dishonest practices by hackers and shady market players that cause multimillion dollar losses for both advertisers and publishers.
A well-known and somewhat recent instance of such a problem is Methbot, which mimics human behavior and is used specifically to create clones of popular websites to trick publishers and advertisers into placing and paying for ads that nobody actually sees. Experts believe that the bot was successfully making between $3-5 mln a day in ill-gotten gains for its fraudulent work.
For the professional advertising community, there are other problems invisible to the end user but deeply rooted in the architecture of centralized ad markets. For instance, online campaign reporting uses lots of different metrics that, when combined, completely confuse advertisers, make them unable to cross-reference their results and therefore assess the efficiency of their campaigns across different platforms.
Finally, there is the issue of ad-blocking. In 2016 alone, nearly 615 mln devices around the world were using ad-blocking software, which effectively shielded their users from most of the ads and, therefore, from advertisers hoping to reach them.
This certainly is owed to the generally poor quality of online ads and their persistent and intrusive behavior that no end user likes. This, in turn, leads to serious losses for advertisers and publishers. Moreover, some ad-blocking software providers essentially extort money from advertisers by offering them inclusion in a whitelist of permitted ads.
Solutions: Blockchain-based platforms and browsers
With all these existing problems, Blockchain seems to offer a solution for most if not all of them. The thought of applying Blockchain in the online advertising industry might have seemed like a wild fantasy even five years ago, but today multiple solutions are offered by numerous companies from old whales of big business to fresh marketing startups.
North American telecom giant Comcast, for instance, has partnered with other entertainment giants like Disney, NBC, Mediaset Italia, Channel 4 and TF1 to develop a Blockchain-based platform for ad campaigns, dubbed Blockchain Insights Platform. The developers claim that Blockchain technology will make managing ad campaigns more transparent and efficient while ensuring the thorough protection of user data.
Another example is New York Interactive Advertising Exchange, which in early 2017 partnered with NASDAQ to develop a Blockchain-based platform for selling ad contracts. The platform would enable webmasters and advertisers to buy and sell ad contracts while ensuring the same transparency and security of transactions thanks to Blockchain.
As for startups, in early 2017, the Los Angeles-based MetaX, in cooperation with ConsenSys, started to develop a Blockchain platform that coordinates digital ad campaigns in a scalable, reliable and secure way. The platform, dubbed adChain, uses Ethereum smart contracts and enables all parties involved in online ads to harmonize their activities.
However, there still are not many projects working with the online advertising market in a way that engages the public as the main source of fundraising. All the aforementioned solutions are backed by corporate investment to deploy those solutions. Prominent exceptions that opted to raise funds for development from a crowdsale campaign are Mass Network and AdEx Network.
The former brought together Blockchain and advertising experts in late 2016 to develop a solution that monetizes user attention while creating fair and transparent rules for all parties involved in the process using Bitcoin’s Blockchain. The community could participate in an ICO for the project by purchasing its pre-mined tokens.
AdEx, on the other hand, seeks to create an ad exchange fully integrated to the Ethereum Blockchain that has the potential to replace most of the existing centralized solutions. The developers of AdEx Network claim that their project is capable of tackling the existing problems that plague the traditional online advertising industry. AdEx shares a very different vision compared to Mass Network.
Decentralization as a leading global trend
With the abundance of Blockchain-based solutions for the online ad industry, it seems inevitable that the notorious imbalance and complexities of today’s industry will evolve in the next few years.
Decentralization of technologies is gradually becoming the leading global trend and the online ad industry is poised to enjoy its advantages. With the problems digital advertising faces now, it is in desperate need of a complete overhaul, so it’s no wonder there’s such a supply of new solutions being offered.
Regardless of which projects prevail in the end (as there’s no assurance that only one of the current solutions is going to be the answer), the commonality of these solutions is undeniable: focus on transparency, simplification of business processes and - what is most important for end users - protection of consumer privacy.