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The role of blockchain in digital advertising

Ari Derman Associate

Over the past few years, the digital marketing and advertising landscape has grown by leaps and bounds. Compared to the days of analogue advertising, it offers brands more insight into who their customers are, how well their campaigns are performing and the value for money they get from their spending.

Yet the consensus is that publishers and digital companies could do more to be transparent about the results brands get from their spending and the way that they use their users’ data for targeting. Scandals such as Cambridge Analytica’s misuse of Facebook data have undermined people’s trust in how their digital data is collected and leveraged.

For brands, digital ad fraud remains a major concern. Juniper Research estimates that digital ad fraud will cost advertisers $44 billion globally in 2022, more than twice the $19 billion estimated for 2018. There’s also the question of unreliable publisher metrics and wasted, inefficient ad spending that reaches the wrong users.

Enter a new potential solution in the form of the blockchain, the distributed ledger technology that powers cryptocurrencies such as bitcoin. There is a great deal of hype about this technology because people in sectors as diverse as financial services, manufacturing and healthcare believe that it could bring new levels of transparency, trust and efficiency to their industries.

Juniper Research estimates that digital ad fraud will cost advertisers $44 billion globally in 2022, more than twice the $19 billion estimated for 2018.

Before looking more closely at its potential applications in media, let’s look at the technology, how it works and its advantages. Blockchain is a distributed electronic ledger that can be used to securely record transactions, contracts, and other data. Multiple records of each transaction are stored on multiple independent computers within a decentralised network.

The benefits include the following:

  • Transparency: Records are updated across multiple computers in real-time when a transaction takes place. More than one party needs to verify a record before it can be changed, and each change is time-stamped in the ledger. For example, when one person sells some bitcoin to another, everyone’s copy of the ledger is updated in real-time and both parties need to approve the transaction.
  • Immutability: Transactions cannot be altered or removed from the blockchain record. One party to a transaction cannot deny that the transaction took place or attempt to reverse it. If you want your bitcoin back after you sell it, the buyer will need to agree to sell it back to you.
  • Security: The blockchain uses strong cryptography to ensure the integrity of each transaction. Only the intended recipient will be given the key to access to the record or the financial value that it stores.
  • Smart contracts: The utility of the blockchain can be extended by means of smart contracts that allow transactions to be settled when certain conditions are met. For example, if one person sells a concert ticket to another, the funds could be released to the buyer only after the ticket’s authenticity is validated.

Put this all together, the blockchain has great potential to facilitate efficient business-to-business, business-to-consumer and consumer-to-consumer transactions. As we can see in the cryptocurrency market, for example, people are able to transact directly with each other without a payments gateway as an intermediary.

You don’t need to trust or know the person you are transacting with because you trust the security, veracity and transparency of the blockchain. This helps to reduce the opportunities for fraud and deception as well as the need for intermediaries such as lawyers, clearing houses or payment gateways.

So how could this play out in the advertising and marketing sector? We think it could bring levels of transparency, trust and efficiency to the marketplace that will be transformative for the sector. This is best illustrated by looking at a few examples and use cases:

Blockchain could take some of the intermediaries like ad exchanges or search engines out of the picture, in the process increasing the transparency of interactions between brands, consumers and publications. For example, an ad contract could be fulfilled on the blockchain directly between a brand and a publication.

Look at BitClave, a decentralised search ecosystem built on the blockchain. It uses smart contracts to connect consumers to businesses. Customers can get competitive offers and rewards for sharing their data. But they also have the assurance that the offers they receive are authentic as well as transparency about how their data is used.

Smart contracts could eliminate duplicate ads, reducing wasted spending for brands. A smart contract could be initiated after someone clicks on an ad, so that they don’t see it again. The same principle could be applied in email marketing. After the user receives an email for a product and buys the product, he or she could automatically be removed from the mailing by the initiation of a smart contract. Smart contracts could also be used for the fulfilment of coupons and vouchers.

For now, the technology behind blockchain is immature and regulations and standards are in flux. We will need to see the industry come together to drive standardisation before we see large-scale adoption of blockchain in the digital marketing industry.

But over the longer term, blockchain holds enormous promise as a means of bringing more trust, transparency and efficiency to an industry that needs it.  

About The Author Ari Derman - Associate

Ari joined Acceleration in October 2016 and works closely with Royal Caribbean and AARP, launching marketing campaigns. He believes in the importance of smooth-flowing processes in ensuring marketing campaigns are accurate and effective for deployment. He has over 5 years’ experience in web development and digital marketing for both small and large companies. Ari is a graduate from the University of Miami School of Business Administration, and his key skills include digital marketing strategies, web development management, and business consulting.

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