Blockchain technology. It is fast becoming a major disrupter in any number of industries – financial services, healthcare, insurance, logistics, investing, travel, education – and even government environments.
Here is a transparent, immutable method of recording and storing everything from contracts to transactions, to identity documents, and more.
It is only natural that, as this technology becomes more widespread and valued, it will “hit” other industries as well. One of those is the marketing and advertisement niche.
The Current State of Advertising
Fraud. Lack of transparency. These are the issues that plague online advertisers as they dole out money for advertising.
More and more businesses are beginning to shy away from purchasing online advertising, unless they can purchase it directly through Google, Yahoo, Facebook, etc. and actually see those ads. They then have to create their own ads for publication and hope that they reach their target audiences.
It’s inefficient, and, if they don’t have the creatives on board or know exactly where and when to post ads, they are they are simply throwing those ads at a wall and hoping some stick.
In the traditional advertising world, businesses have contracted with ad agencies to do the work for them. In the online advertising world, such agencies also exist. Unfortunately, tracking their activity and ensuring that businesses get what they pay for is just not transparent.
How businesses Buy Online Advertising
There are three ways in which online advertising can be purchased
- Businesses buy directly from a publisher, like Facebook or Google, as mentioned above.
- They can buy ad inventory via an ad network
- They can buy via ad exchanges, bidding for inventory, in competition with other businesses.
It is in the ad exchange option that there is the biggest potential for fraud and lack of transparency. Publishers who place their inventories up for bids and give details of the audiences they can reach. Businesses then bid for those spaces, and the highest bidder wins – just like an auction.
Unfortunately, unscrupulous fraudsters get into these exchanges and boast that they represent publishers. They sell low quality or non-existent inventory, and the business is left wondering if their ads are reaching the right targets or even being published at all. And their ad dollars have already been spent up front.
Because of these issues, the online advertising marketplace has developed a reputation for being quite risky and probably not worth it.
What Blockchain Can Do
Blockchain provides an immutable electronic ledger where transactions between parties are documented and stored. The transparency comes from those transactions being open to all with access permission, but they cannot be altered without the consent of all parties to the transaction. And any alterations are also time and ate stamped and recorded/stored.
A business that contracts for advertising and uses blockchain for those transactions can verify the identity of the sellers, because they have their documentation and identifications documented and stored; all transactions are verified and are related to previous transactions of the same sellers; and the transactions, once made and recorded, cannot be altered. Further, the fact that these contracts/agreements are recorded, they are stored in separate distributed databases, and dangers of hacking are at an absolute minimum.
The other great thing? Advertisers are able to see how each of their dollars is spent, who is making a commission, and exactly where and when those ads were published.
There are Still Challenges
Especially with ad exchanges, where bidding usually occurs in real-time, and bids are awarded within a second or less, blockchain is not yet usable. Chaining and required verification take quite a bit longer. And so, the technology will need to improve for speed.
The other issue is that the use of blockchain cuts out intermediaries (the middlemen), and so there is a sub-culture within the advertising industry that is obviously balking at the use of this new technology.
Fortunately, ad buyers see the value of blockchain, and that need will spur many to get to work on the issue of speed. The technology will improve and, as it does, more and more businesses will demand it as they fork out their advertising dollars.
What About the Consumer?
Here’s where things really get interesting.
Any consumer who has accessed a site because of interest in a product or service; any consumer who has made a purchase of a product or service is now on a “list.” He is now the subject of continued promotional advertising from the companies he has explored or purchased from. Further, his information is almost always likely to be “sold” to other companies who will then begin to target him with their advertising. It shows up on their opening browser pages; it shows up on the social media newsfeeds; and it even shows up in his emails. It’s easy for consumers to feel that they are no longer in control of who has access to them.
They want to regain control over who and what “invades” their internet space.
And consumers often find this irritating. If I buy a pair of shoes online, providing my personal information to do so, I am immediately the target of related niches that also want to sell me stuff. Now I have businesses that sell all sorts of personal clothing items barking at my internet door.
What if consumers, through the use of blockchain technology, could bar their information from being distributed in any way to another company, based on interest or purchases made? And suppose, when they make a purchase, they can block that company from accessing their personal information again, unless and until they decide to make another purchase?
These are the things that consumers are beginning to demand and that blockchain technology can deliver.
Wrapping It Up
Blockchain technology is still in its infancy. The average person, and even many businesses, are just not aware of its potential for them.
But this is changing, albeit gradually.
It is already transforming the way in which a number of industries operate, and the advertising industry is no exception.
Expect blockchain to provide the transparency that ad buyers want and the controls that consumers of that advertising demand.
