Can blockchain rescue digital advertising?

Fri, 15/09/2017 - 07:57

Disconcerting for the advertising industry, these were areas where P&G believed its ads were served to bots instead of humans, and at places where the brand’s values were not reflected. While the latter might be a jibe at YouTube, where advertising was found to be served on content of a dubious nature, the problem with bots should have everyone concerned.

Digital ad fraud is a major dilemma, with the world’s largest advertising agency, WPP, stating it could account for as much as US$16.4bn in 2017. Deceptive advertising networks form a big part of this, selling ad space on fake sites with click bots driving traffic. Advertising agencies and clients get caught up in this maelstrom through programmatic buying, and since very few human checks take place, these networks are very seldom flushed out beforehand.

The solution to the problem might just be found in the rise of another digital platform: blockchain. Primarily associated with the cryptocurrency bitcoin, blockchain technology takes care of the trust problem by producing an immutable and open digital ledger. Start-ups, such as the New York Interactive Advertising Exchange (Nyiax), are using blockchain to address the current digital advertising trust problem.

Developed in partnership with Nasdaq and running on blockchain technology, Nyiax looks set to strengthen direct trade between publishers and advertisers, cutting out third-party chisellers responsible for fraudulent deliveries. Nyiax promises publishers increased revenue, as they can sell inventory directly. Advertisers, meanwhile, are not only set to cut out fraudulent impressions but can also purchase premium inventory ahead of time.

Blockchain has the potential to bring an end to “spoofing” – when fraudulent companies claim they have the right to resell advertising on certain premium sites when they don’t. The Interactive Advertising Bureau (IAB) has been trying to address spoofing through its Ads.txt initiative, but has also formed a working group to look into the benefits of blockchain to clear up the murky waters of programmatic buying. Since parties can be identified using inimitable blockchain keys, any advertising sold can be traced back to its source.

With Nyiax going live towards the end of the year, a slow pick-up should be expected. For one, blockchain isn’t exactly a household word in the advertising industry yet, while transactions using blockchain are not as immediate as those done through programmatic buying.

While blockchain could be the potential white knight for the ad industry, the benefits of cryptocurrency might just do the same for publishers. Getting people to pay for content is the Holy Grail when it comes to online publishing. But, with the exception of a minority of publishers, paywall implementation has proved problematic. The monthly rate is in many cases considered too much by casual readers, while charging less through a credit card on a per-read basis is also not viable, due to the cost of transactions.

As there are no intermediaries using bitcoin, publishers could implement payment structures where minute amounts are subtracted from the bitcoin accounts of signed-on users.  If you don’t want to sign up but are willing to make a donation after reading a particularly interesting article, just click on the bitcoin donate button. Sure, the amounts might not be much, but added together they could certainly help publishers pay a few bills.

The big take-out: While both bitcoin and blockchain still have some way to go before reaching the consumer tipping point, all signs are there that both have the potential to improve the publishing and advertising space (among many other industries) significantly. Becoming familiar with this technology will stand you in good stead for the future. 

*This article originally appeared in the Financial Mail.

Need Assistance with Digital Strategy?

Rogerwilco’s team of strategists, business analysts and data scientists is here to help.