How The Blockchain Can Bring Trust And Transparency To The Advertising Industry

Concerns over a lack of transparency in spend have long plagued the global digital advertising industry. For the advertising industry, this is where blockchain technology can really help to secure exchange of digital assets to solve these very issues: lack of transparency and murky reconciliation. In a blockchain, once a transaction is validated through a consensus process, it is instantly committed to all ledgers in the network. These ledgers are distributed databases that store the information recorded from a transaction. When it comes to transformation, blockchain technology can have such an effect on the advertising industry.

Blockchain for advertising at the IBM booth at the 2018 NABShow. (Las Vegas, NV)

The Interactive Advertising Bureau (IAB) empowers the media and marketing industries to thrive in the digital economy. One thing the organization has looked into are the benefits of the blockchain outside of cryptocurrency. It has the potential to deliver greater efficiency, reliability and high-quality data to an important component of the business process which is the supply chain. The network can greatly lower the costs of transactions due to its decentralized nature where there is no middleman or third party that arbitrates or gets a cut of a large business deal. Safety and security for data is also provided by cryptographic techniques that keep it tamper proof and uncensored. The most important features are the ability to keep a fully verifiable and immutable ledger or database layer of trust and transparency that isn’t always available within media and advertising processes.

One of the ways a blockchain can improve is the interaction of advertisers with the supply chain. In this case you have a publisher and advertiser who need to transact without a third party involved or if there is a third party they must not be able to manipulate any step in the process. Instead they will use the blockchain like their platform in a “permissionless and trustless” environment. A consensus mechanism can provide the trust in a non-biased manner in a public blockchain. However, they can also use a private and more enterprise suitable blockchain that is “centralized and permissioned” but will still provide the trust and transparency that is needed.

A smart contract can implement more trust and transparency between the publisher and advertiser. Using the Ethereum network, a smart contract is implemented by locking ETH into a digitally signed transaction that is put on the blockchain. It contains conditions that will execute upon fulfillment. In this case the publisher gets paid once they fulfill the conditions in the smart contract set forth by the advertiser. All transactions are immutable as well, so this is to prevent malicious actions on anyones part.

The procurement of media or “media buy” is in need of an update. Due to digital transformation the ecosystem in advertising has changed. Lack of quality control, security and financial transparency between the many parties involved can become a problem. What blockchain can provide is a solution built on trust that addresses the problems fraud can bring to this ecosystem. By design, a blockchain solution prevents data from being altered retroactively, ensuring the verifiability and integrity of transactions. This can also guarantee accuracy and prevention of any sort of data manipulation.

According to IBM:

“Blockchain will not only ensure trust and transparency, it can help advertisers of all sizes reduce transaction costs, increase efficiency, simplify contracts and improve invoice processing.”

One of the world’s largest consumer goods advertiser, Unilever, is teaming up with IBM on a blockchain project for the ad industry. One of their aims is to provide transparency for advertisers. This means that companies can disclose reliable information about their business footprint. This can also prevent any fraudulent practices since the transactions are recorded publicly and can be disclosed to ensure that ads were properly sourced. Since advertising has become digital and highly automated, it has become easier to post ads by just about anyone without any requirement for trust.

IBM, a tech giant is offering its services to developing blockchain solutions (Source IBM)

It is the lack of visibility on third parties that is an industry concern. It is due to these problems that ad agencies want a solution that works to address global ad fraud, gives companies full control over their ad spend, and police programmatic algorithms to ensure that budget isn’t wasted and ads are being seen by the right people. In the first phase of the program, the main goal is to identify and correct issues of reconciliation by providing a unified view of audience delivery. By using smart contracts that validate the agreed figures, discrepancies are cleared right away versus trying to clear weeks or months after as is the case for many media buys.

A huge problem in the ad industry is the amount of losses each year. As a result of unauthorized reselling of inventory, advertisers and publishers are losing billions of dollars. This is where projects like Ads.txt come in to the picture. Ads.txt stands for Authorized Digital Sellers, and it provides a script for ad publishers to openly declare who are the authorized sellers of their inventory. This makes use of the adChain protocol which is a registry of reputable publisher domains that is stored in a smart contract on the Ethereum blockchain.

An example of an ads.txt file from the IAB Tech Lab.

The following are just some use cases that are emerging for the use of blockchain in the ad industry:

Selling of TV ad inventory

-Fraud prevention in ad spends

-White listing authorized sellers of inventory

-Campaign reconciliation

-Smart contracts to simplify release of funds

-Validation of advertising assets

It becomes clear that with tighter competition and shrinking budgets, getting the most out of budget for quality and validity in advertising becomes important. Avoiding fiascos like what happened with Facebook advertisers, who manipulated the network behind a facade of what appeared to be legitimate operations is something that the advertising agency can address with more trust and transparency using blockchains. It allows both buyers and sellers to know who exactly it is they are doing business with. That can reduce fraud, which is the layer of spend transparency needed by the advertising industry.

The challenges ahead are quite steep though and there is no standard implementation for current blockchain systems other than for cryptocurrency (as of this writing). It even seems like a “hype train” because the word blockchain now seems to add value to any project, even though there might not be a full understanding of what it is and how it works. New projects are sprouting up around the world, but the blockchain is not perfect. Despite its uses there are still things that require improvement and one of them is speed. Compared to established institutions like Visa, the rate of transaction velocity using a blockchain still falls behind when comparing. It is these problems with scaling that developers are hard working on. Despite these obstacles, the potential of what it can address is apparent to the ad industry. In the end it can lead to more peace of mind with a system that makes it possible to audit every step in a transaction.


For a more detailed explanation of a blockchain, you can read a previous article I wrote on the topic.

“Blockchain Goes Beyond Bitcoin, It Is How You Share Information”

Originally Published:

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