No one trusts online ads anymore. Will blockchain change all that?
As the digital advertising landscape grows increasingly complex and fragmented, publishers are facing rising economic pressures. Meanwhile, users are concerned about privacy, security and the overall online experience. They lack control over the tracking and collection of their data, and often find their online experience degraded. The problem is simple: consumers have grown weary of an ad environment that has gone too far, while publishers fight to remain economically viable.
At the heart of all these problems, the lack of trust is poisoning the entire advertising ecosystem. Every time there’s a misguiding click, a mis-selling offer, an intrusive pop-up or ‘sponsored articles’ that aren’t really articles… trust goes further south. Click by click, day by day. In addition, when taking into account advertiser problems such as fake ad impressions or fake social interactions, we’ve landed in a toxic environment. The tools to manage how advertising is display and measured have become complex and polluted.
In a nutshell, trust and hope are eroding fast and damaging marketers to manage and control their digital ad spend.
What is Blockchain and why does it matter?
Blockchain is a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. Bitcoin was created in 2008 as a decentralized currency which is meant to be useful as a quicker, cheaper, and more reliable form of currency.
While the bitcoin payment system is pioneering and exciting, it is the mechanics of how it works what makes it revolutionary. The technology with a decentralized network which isn’t owned or managed by a single entity or organization can be instrumental in the future of many industries, including advertising.
As Sally Davies, the FT Tech Reporter puts it: “Blockchain is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.” It is no coincidence that the interest for blockchain technologies has skyrocketed over the past few months.
Above, the graph showcases the increasing interest in blockchain as a search term.
The ability to manage digital transactions without the need for an intermediary could take transparency and accountability in online advertising to a new level. When considering each ad impression served as a digital entity or transaction, blockchain might be what the digital advertising landscape desperately needs to be cured of mistrust, dishonesty, and deceit.
The opportunities to leverage blockchain technology by which every click is accountable, safe and with the potential to be influenced by pre-set criterias or ‘contracts’ could change online advertising as we know it today.
Who is currently using blockchain?
A report by McKinsey points out that banks, payment-service providers, and insurance companies have shown the highest level of interest and investment in blockchain. But it suggests that other organizations including government agencies have just as much to gain from experimenting with this technology and deploying it strategically.
While these industries are at the forefront, virtually every sector could be disrupted with blockchain technology - from real estate to retail. What if this new level of accountability could put an end to rental scams? What if blockchain was used to tackle food poisoning by tracking packaged products at the time of an outbreak?
The use cases are virtually endless.
How can marketers leverage blockchain technologies?
The ways in which people can use blockchain are as varied as the ways in which the internet can be used. However, as it happened with the birth of the internet, it will be up for early adopters, creative thinkers and pioneers to discover, explore, and define the most effective ways to improve the marketing world.
And without a crystal ball, if we take into account key attributes of the blockchain such as accountability, security, and attribution - there are some marketing areas in which this technology feels like a natural fit:
1. Ad delivery verification: combating fraud
Blockchain could be used to detect whether ads are being delivered and if they’re going to the right place. Auditing ad deliveries can be extremely costly, time consuming, and most companies don’t have the budgets or patience to do so.
Decentralized auditing could be a cheaper alternative for brands that want to ensure that ad networks or agencies aren’t inflating numbers or in the worst case, being defrauded. A brand could take ad deliveries from an ad server, then release them to the mining machines in the blockchain, which would then be able to analyze them, and scrub them for fraud. So simple “footprints,” like a non-live browser supposedly seeing an ad, can help a brand figure out if the ad delivery happened. The more interesting use is if those frauds can be identified and blacklisted in real time.
2. Security: data management and user privacy
Blockchain contains what everyone in data management wants: information that comes with complete provenance. Data showing who did what, when and with full history from day one. Verified by all parties participating in the network, transparent, with complete reconciliation, and secured by the latest in cryptography.
In an era of privacy concerns, the blockchain gives marketers a nice way to anonymize large amounts of data (so you’d see it on a network level but not attribute it to individuals) and still use it for brand-building. Many brands are now seeking direct connections to customers and are intent on removing the middlemen when it comes to data. The blockchain would be a way to maintain transaction data in a highly decentralized way so it’s both secure and massive.
3. Loyalty Programs: CRM and Real-Time Rewards
Blockchain can go beyond recording and managing transactions - companies will be able act upon them. By using this information in real-time, bends will be able to create much more sophisticated CRM systems and loyalty schemes.
Jeremy Epstein gives a great example using the travel industry, known for it’s loyalty schemes. What if a buyer could port his entire travel history, average purchase price, favorite routes from the United app to the Delta app and then brands could immediately assess the potential customer value and enroll him at the same (or better) level within their program?
What if that flight buyer could do that with every airline at the same time? The entire concept of loyalty could change. So, my loyalty to an airline becomes a function of best price, best convenience, best experience, best rewards for that immediate next flight.
What can I expect in the near future?
By enabling the digitization of assets, blockchain is driving a fundamental shift from the Internet of information, where we can instantly view, exchange and communicate information to the Internet of value, where we can instantly exchange assets. A new global economy of immediate value transfer is on its way, where big intermediaries no longer play a major role. An economy where trust is established not by central intermediaries but through consensus and complex computer code.
The possibilities are endless, yet as a nascent technology, there’s an understandable level of skepticism and cynicism around the idea of putting blockchain at the heart of every digital transaction or contract. It will take time an effort to educate customers and clients about how blockchain can help bringing transparency and added value to the marketing mix by bringing accountability, transparency and trust to the table.
It took me a moment to get my head around the concept of blockchain technology and its scope. It’s easy to get overwhelmed and confused by the techie headlines or the prophetic visions. Just remember that in essence, all a blockchain does is assign any piece of information a unique signature and a timestamp. The main innovation of the blockchain is that it allows what is technically called a “decentralized timestamp server” - which might turn out to be a pretty big deal.