Back when this industry was relatively new, marketers used to boast about how digital forms of advertising were far more transparent and traceable (and overall superior) in comparison to traditional ones. At the time, this was probably true, but a lot has changed since then and today online advertising faces numerous challenges of its own, including engagement, targeting, and personalization.
However, the biggest issue here stems from the very thing marketers were once proud —transparency and traceability. Or lack thereof.
Over the past couple of years, digital advertising has been involved in numerous scandals, including privacy breaches, ad frauds, and misleading campaign metrics, which has resulted in consumers becoming more sensitive about their data and advertisers losing $1 for every $3 spent on digital ads due to ad fraud.
According to Statista, the cost of fraud in digital advertising is expected to grow exponentially by 2022 (over 230%), i.e. from $19 billion (2018) to staggering $44 billion, mostly because of the so-called ‘bot traffic’. Combine that with engagement and targeting issues that advertising is dealing with, and you’ve got yourself an industry on the verge of breaking.
There’s more to ad fraud than meets the eye, though. Aside from literally stealing money from advertisers, ad fraud also removes that delicate trust between brands and their consumers. Trust that might have taken years to establish. This, in turn, affects the potential reach and a brand’s overall image, and plays a part in whether or not a company will make it or simply disappear.
And while many are optimistic about the number of ad frauds dropping in the years to come, there are those who have begun searching for alternative solutions.
One of them? Blockchain.
Blockchain as the Ultimate Solution to Ad Fraud (And Then Some)
Trustless, decentralized, and permissionless, blockchain has been around for quite some time now, especially in trading and investing, but to say that these are the only two industries that could benefit from this technology would be an understatement.
From monitoring supply chains and protecting author rights, to food safety and managing IoT networks, blockchain has wormed its way into many spheres of our lives without us even knowing. And why wouldn’t it, after all? Due to its disruptive nature, a lot of tech leaders and experts consider blockchain to be a game changer in the ever-advancing world of technology, and as of recently, advertisers seem to agree with this assessment.
A lot of companies are starting to recognize the potential blockchain holds when it comes to online advertising—last year, Toyota announced a partnership with Lucidity, a blockchain advertising analytics firm, in order to try and eliminate fraud when buying digital ads.
This month, McDonald’s, Virgin Media and Nestlé all signed up for a blockchain pilot led by the Joint Industry Committee for Web Standards (Jicwebs), with the goal of increasing transparency and trust in digital advertising.
So, what exactly are the implications of blockchain becoming the next tech revolution that we need? Could it really help solve the overwhelming problem of ad fraud and make consumers trust ads once more? At the moment, it sure does seem as the solution the online world has been looking for and that could create a healthier ecosystem for advertisers, publishers, and customers.
A Direct Connection Between Advertisers and Consumers
The basic idea behind blockchain is pretty simple: allow people to make transactions through a secure ledger, without middlemen (e.g. banks) getting in the way. By creating such an environment, you create a ‘trustless’ ecosystem where transactions are not only fast, but far cheaper.
Now apply the no-middlemen rule to advertising—what would happen?
Currently, the two biggest middlemen when it comes to digital ads (specifically, display ads) are Google and Facebook, meaning that you have to pay either of them to show your ads to your target audience.
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Now throw blockchain into the mix. It’s safe to say that the media buying process as we know it could easily change.
In theory, blockchain could almost (if not entirely) remove the need for intermediaries, and ensure that the entire system runs only between publishers, advertisers, and end users. Not only would companies pay less for advertising, but advertisers would also have a record of everything that has taken place during the transaction. To put it simply, they would be able to confirm that someone viewed an ad before paying for it.
And even though some would disagree, this more direct connection to consumers wouldn’t even a bad thing for Facebook and Google themselves, since the majority of their revenue actually comes from ads.
As Transparent as It Can Be
However, a better connection to users isn’t the only benefit blockchain would bring to the table. Without intermediaries in the way, advertisers would be able to follow their customers’ journey more closely by obtaining information about campaign performance and metrics such as impressions and clicks. Furthermore, this information could help them avoid spamming people who are not interested in what they’re offering just for the sake of impressions or clicks.
In short, ads would become far less intrusive and far more effective than they used to be, since advertisers would be able to target their audiences better.
A win-win situation for everyone, don’t you think?
Now, picture for a moment being able to verify that every user that visits your site is 100% genuine and imagine being charged only for genuine clicks.
Well, that’s what a blockchain-powered model could mean for advertisers worldwide. No more wasting that $1 out of $3 spent on an ad. Thanks to the tamper-proof blockchain system, ad fraud would take a step back and advertisers would be able to launch campaigns without worrying about being ripped off.
Users, too, wouldn’t need to worry about misleading ads and being a part of a fraud, because thanks to blockchain’s high security and visibility they’d be able to see exactly what they’re buying and who they’re buying products from. In addition to every piece of information about a product being available to them at all times, they’d also be able to decide what they want and don’t want to share with websites they visit, thus protecting their privacy when needed.
Ultimately, Time Will Tell
Is blockchain going to storm the digital advertising industry by night? Will it be a revolution that’s going to turn everything upside-down? Are we finally be able to say goodbye to ad fraud and lack of transparency?
At this point, it’s definitely too early to tell, but it seems like blockchain could definitely be the hero online advertising needs and deserves.
The good news is that many companies have begun to test the blockchain waters—just take a look at Google who announced its own blockchain for cloud and transactional services—but the “bad” news is that it might be a while until we see the results that we truly want.
Still, it’s good to remember that a couple of years back we wouldn’t have even considered blockchain as the ultimate solution to advertising problems, but now? Although we’re in the early stages of this fascinating revolution, companies are already giving it a fighting chance against numerous challenges they’re facing.
And with technology evolving at a pace it currently is, who knows—the marriage of blockchain and digital advertising might happen sooner than we think.