Will Blockchain Transform the Ad Tech Industry?

'Blockchain' is coming up more often in the world of ad tech, an industry that loves their buzzwords. But is there any validity to blockchain’s use in advertising? Writing exclusively for ExchangeWire, Jeffrey Seah, board member, Gravity4, talks about how blockchain is already being used in other industries, and how it has the possibility of combating ad tech’s ad fraud and transparency issues.

The term 'blockchain', and the ground-breaking theory behind its technology, was first propelled into the spotlight in 2008. Yet its unveiling, and subsequent development and industry vertical implementation, has always remained shrouded in a bit of mystery.

As most of us understood it to be, blockchain was first used in a whitepaper released by Satoshi Nakamoto, an alias for a masked person or group of people. The mystery of blockchain’s true value and application is still, more than 8+ years later, being uncovered; yet it remains one of the most talked about innovations in technology, with limited trial applications outside of the financial sectors.

And for good reason. Blockchain as a concept is startlingly logical, and its technology has the potential to truly transform a plethora of industries. With the boon in global commerce and trade, requiring multiple players to interact in business transactions, we have created a swath of disparate ledger systems to execute work at hand. This is particularly true within the piecemeal architecture underpinning media transactions within the marketing and advertising industries.

Before we delve into how advertising innovators are using blockchain to solve transparency issues in the supply chain and ad fraud, it is important to have a base level understanding of the underlying technology.

What is blockchain?

Blockchain is a largely misunderstood technology – as its applications are still being moulded and explored by various industries. The one thing that most analysts and leading technologists agree on is that, if this theory can turn into practice, it is going to increase productivity in every industry.

Blockchain is a digital ledger, which by recording every touchpoint of a transaction or business interaction in a public and chronological fashion, provides transparency, security and, by process protocol, trust.

The basis of most business is the movement of a sale – an exchange of value – through business protocol or a supply chain. By creating a shared form of record keeping, that is distributive, permissioned, and secure, every player in a transaction is fully aware of who touches what, and when. Everyone can see the ledger. No single person has ownership of the records. No one can change, add to, or delete from the ledger without it being permanently recorded. Whether it be hundreds of steps in a supply chain, or a single transaction, on the blockchain, the information is put into a block, blocked together, and fingerprinted. This transparency opens up all transactions to scrutiny; and it also instils implicit trust and accountability within business dealings.

Being from productivity-focused Singapore, most recently we saw Singaporean shipping giants partner with IBM to explore and trial blockchain technology for its supply chain networks.

Early innovators in the space have been predominantly focused on building out applications for industries that have traditionally relied on manual or poorly managed ledgers to execute work, such as the real estate, finance, or insurance industries. However, 'established disruptors', such as Gravity4, are using blockchain innovation to build a more transparent and efficient online marketplace for the advertising industry.

How will the advertising industry benefit from blockchain?

The challenge arises when the advertiser, trying to make sense of their ROI, feels they might not have full visibility into the buying models. Visibility should have a more positive stance than is being parlayed by the pitch consultants and audit firms in the past few years. The buying industry is not as sequential as perceived, especially with increasing amounts of data available for surrogate measures, and is not easy to fathom when the industry has always been focused on outputs (e.g. GRPs, spots, click-through, tweets) rather than outcomes (e.g. sales, lead generation, etc.).

There are two key ways in which I believe blockchain technology will benefit, or in my productivity-focused opinion, bring process and mindset changes to the digital advertising industry.

Firstly, let’s look at how it will dramatically improve advertiser and agency relationship (some will say trust) issues that have surfaced the last few years. Businesses seeking advertising opportunities entrust large sums of money, often millions of dollars, to their advertising agency as their partners who manage its investment on their behalf.

Jeffrey Seah, Board Member, Gravity4

With focus on output, the incrimination falls on the process of buying. Some marketers start to question whether they are truly getting value for money, when all of the costs are lumped into non-transparent billing structures. To gain a sense of comfort, we are increasingly seeing clients ask for these to be broken out; which, until blockchain, has been a laborious task to audit and analyse all of the costs incurred over the media supply chain.

By deploying blockchain technology, every member of the supply chain will then be operating with the same information. This transparency, and clear audit of interactions and metrics, means that the conversation between clients and ad tech providers will thus centre on outcome-based ROI, not around ROI-surrogate outputs (or doubt and blame).

Secondly, blockchain might just reduce ad fraud and enhance data value for the industry, if the industry joins hands for the greater good.

Ad fraud has increasingly beleaguered the advertising industry as programmatic ad technology has become increasingly mainstream. Most anti-fraud systems try to avoid, circumvent, or innovate around ad fraud. What we commonly see, however, is that most companies end up creating new centralised ventures that only add friction by placing increased fees on their customers, or create a new target around which potential fraudsters will gravitate.

By stopping the user behaviour of circumventing ad blockers, we will actually be enhancing the end users digital experience. Humans are connected to consumer content online, because they want to be in the know. Self-censorship diminishes the value of our connected world.

The future can become brighter as the industry awakes from its productivity stupor

Publishers’ prices are going down and consumers are unhappy with their ad experience, so the use of ad blockers has drastically increased. Brands might feel that they are also getting scammed by ad fraud. Digital ad fraud is expected to cost brands USD$16.4bn (£12.4bn) globally this year. The industry needs to find a solution before we’ve gone too far down this road and consumers’ perception of advertising changes forever.

Blockchain can be the answer.

Blockchain will establish transparency and trust by implementing a central and secure way to record, review, and execute every deal, proving a better ecosystem for both publishers and consumers. While it will not solve everything, it will take ad fraud head-on.

We need to keep this conversation (and our transformation momentum) going, because the industry revolution moment we desire might have finally arrived.