Mobile advertisers have been hearing a lot of hyped blockchain claims over the past few years: the main claim being that this technology will solve issues at the core of mobile advertising, namely transparency and fighting fraud. And yet, there has been little evidence of blockchain’s promised, earth-shattering impact on the industry so far. Is this finally set to change? 

According to the CMO Survey, only 8% of firms rate the use of blockchain in marketing as moderately or very important. However, we are making progress. Solutions are emerging now the question is, will brands push networks and third-party ad tech partners to adopt such blockchain-based solutions in the near future? While there are a number of blockchain-ready companies, there is still work to be done before marketers or publishers can start buying and selling media using blockchain platforms. The first step for players in the ecosystem would be to understand where its real value lies when it comes to bringing transparency and fighting fraud.

What is blockchain?

In simple terms, blockchains are decentralized peer-to-peer databases without any single point of failure. Being based on strong cryptography, they provide extreme safety and security. The main benefit is that all users together agree on a history, that once agreed upon becomes immutable. Companies around the world are already leveraging the benefits that the technology provides to solve inefficiencies of the market. Forbes predicts that the global blockchain market will be worth over $60 billion by 2024 as more companies adopt distributed ledger technology. 

What good is blockchain for advertisers?

How does blockchain-technology benefit advertisers? Blockchain technology can provide immutable records for both suppliers and customers of who delivered which advertisement at what time. This is a solid basis to reconcile campaign results or facilitate supply chain payments. Also in the face of data protection, blockchain can provide the means to manage user consent, by providing a distributed database of who gave consent to what which can not be tampered. A success story comes from blockchain ad start-up Lucidity, who has just announced its partnership with Toyota and agency Saatchi & Saatchi for future Toyota ad campaigns, after the brand saw a 21% uplift in ad performance during the test phase.

How can blockchain address transparency and fight fraud?

For one, blockchain can help clear the issue of data quality transparency. As data attribution is a major pain point, solutions to facilitate reconciliation (instances where marketers dispute results) are increasing. One such organization is MadHive – a data management tool powered by blockchain: at DMEXCO, they presented a campaign that uses a cryptography-encrypted pipeline to authenticate data sets, thus ensuring that the target audience paid for by the advertiser is identical to the one getting delivered. The model creates direct communication between publishers and advertisers. The tracing of data was compared to “putting an authentication breadcrumb trail.” MadHive was using a private Blockchain for this proof of concept.

At the moment, blockchain-based solutions will emerge in parallel to the existing supply chain and offer a more efficient and reliable alternative to current data-targeting, ad delivery and attribution solutions, but if adtech players come together to establish standard blockchain solutions, they could disrupt the status quo entirely. Using a public blockchain would allow mobile advertisers and agencies to have access to the same data sets and trace back the number of impressions delivered in a campaign, who they were delivered to, and where. 

What is cryptography’s role in the blockchain?

Since early ages mathematical methods called cryptography have been used to encode messages, so that only a dedicated person or group of people could decode such messages. This has been used extensively to send important messages between governments or to facilitate communication between troops during war, where messages could be intercepted by the enemy. Also, cryptography is able to create a signature of messages that verifies the creator of a message. This is powerful, as it prohibits enemies from creating fake messages or orders. 

Blockchain relies heavily on cryptography and ensures that actors and arbitrary entities can be identified. A certain media-player with audited source code would be such an entity, which could be identified and that could create messages and sign them. A signed message from a media player like “I showed this video to user X” is what advertisers currently wish for: to have prove that an action they expected to happen actually happened properly. Blockchain can provide this en masse for the whole ecosystem and it is a matter of time since the industry adopts it.

Early adopters in the ad tech field include the blockchain advertising platform MetaX, which provides a community-curated list of ad-supported websites. Also cryptocurrencies like the basic attention token and others are emerging to set the field for an advertising ecosystem, where also the consumer is identifiable and can earn coins for watching or interacting with ads.  

The next challenge

Fraudulent traffic is costing digital advertisers more than $16 billion in 2017 (WPP) globally. While blockchain technology will not be able to solve such a mammoth issue immediately, it will be a matter of time if many more players get on board. Blockchain technology can start restoring dollars spent on fraud back to the advertisers’ side and yielding revenue maximization by ensuring payment for publishers.

However, it’s not all black and white. While the modus operandi of fighting fraud may change, the trust issue isn’t altogether addressed. Ownership of data on a decentralized system will rightfully raise questions about gatekeeping of this data in the blockchain, such as: where does the ecosystem end and where does it begin? If an open RTB system doesn’t have a residing “authority”, can we trust the same ad tech players within blockchain to play fair? Who verifies what goes into the blockchain?

The answer lies, as always, not in the hands of tech, but in humans who use this technology. The ideal step to ensure a transparent ecosystem would be for a significant number of adtech players and advertisers to join forces and agree on setting the standards regarding the governance of public and private blockchains. The risk with a decentralized system is that the bigger players who are already using blockchain, will set the blockchain standards in their own favor. Leaving blockchain’s growth aside, urging advertisers to comply to the same standards may remain the biggest challenge.