By Miguel Morales
Imagine a world where the challenges of digital advertising operations fade into a chain of collaborative record keeping, and full transparency removes the need for out of band reconciliation. Multiple parties supporting a campaign can all verify that other participating parties are adhering to the same material instructions. Contract details are baked into the flight, nearly eliminating cycles spent pulling and reconciling reporting manually.
Doesn’t that sound nice? Proponents of blockchain solutions in digital advertising claim that blockchain can bring this reality to life. Are they right?
Maybe.
It depends on the specific problems you want to solve. It depends on the needs of the industry as a whole, and it depends on organizations’ willingness to consider and implement blockchain. Without these factors in play, blockchain will continue to linger as a magical solution that exists in theory.
The core feature of blockchain is the collaborative effort used to make it work. It’s this same effort that will drive its adoption and allow the industry to realize all its potential benefits. But do the benefits justify the effort?
Let’s first take a look at the challenges.
Digital advertising is relatively new as an industry. Consider a more long-standing profession such as finance; the longer history has run the course of several life cycles to define rules and practices that result in operations that are more informed and more firmly established.
When compared to operations in more established fields, the process of delivering media still has a few kinks to work out.
Some of the challenges still faced include:
- Standardization of data across disparate systems
- Ease of communication around ad delivery and tracking
- Agreed upon reconciliation protocols
- Measurement and validation of auction mechanics
- End-to-end cryptographic authentication and auditability
- Full transparency and programmatic enforcement
- Reliance on outside (usually tag-based) sources causing different counts for different KPIs, typically a bidder or ad verification vendor
Smart innovators are routinely offering solutions to improve operations, maximize buyers’ investments, and increase the insights gathered along the way. One of the most challenging parts of a media professional’s job is sifting through pitch-ware to find legitimate applications that have real value.
In the case of blockchain, several solutions are labeled “blockchain-based” but on closer inspection may not be what it claims. Blockchain has been positioned as a cure-all solution for digital advertising, but very few use cases in digital media have emerged to make a convincing argument for wider adoption. However, blockchain continues to work its way into digital advertising because some companies have experienced benefits where efficiency and transparency are concerned.
It’s no secret that uncounted waste in the programmatic supply chain is costing advertisers, and a lack of transparency and technologically-enforced rules are partially to blame. Beyond costly fraud, factoring in waste from inefficiencies, bad integrations, and suspect bidding practices, the total amount lost is nothing to sneeze at. With blockchain, we can create an environment where consistent measurement of advertising transactions is enforced, every legitimate player in the ecosystem has a traceable identity, and sources of waste are easily uncovered and eliminated.
It’s not a magic bullet that addresses all the challenges in digital advertising, but blockchains, in all their variations, are very good at a few things, primarily:
- Achieving consensus on all business rules between multiple parties dealing with digital goods
- Providing transparency and therefore collaborative enforcement of those rules
- Transferring value between users, particularly when coupled with a smart contract
The most straightforward application of blockchain technology is in defining rules between multiple parties with full transparency between parties into those rules and how they’re carried out.
Using smart contracts, which are programs that define the business rules before flight, enable a pre-flight consensus on rules that are then codified into the program. Once implemented, these rules cannot be changed without all parties agreeing to any alteration.
This pre-flight consensus is a key feature of blockchain applications. In digital advertising, it has the potential to minimize waste, simplify post-flight reconciliation, enhance programmatic transactions, and enable a more structured approach to reduce fraud and protect user privacy—all benefits that ultimately bring more value to buyers.
Hillary Chapman-Roberts of Global Investment Systems with GroupM comments that “Clients care about transparency, effectiveness, and results. Anything that helps buying teams improve operational efficiency while providing on demand insight into the details of a campaign is of value.”
Specifically, a blockchain-backed shared ledger can:
- Codify auction measurement, validation, and mechanics rules in the form of a smart contract
- Introduce end-to-end cryptographic authentication and validation
- Offer one system for consistent reporting on measurement and validation
- Reduce or eliminate costly mistakes caused by incorrect implementation
- Deliver continuous auditable streams of multi-party metrics to relevant participants
So where do we go from here?
Well, Rome wasn’t built in a day. One thing we need in using blockchains to run our operations more smoothly is a solid foundation. “We are focused on the build-out of a protocol to support varied structures in a way that’s common to all participants,” says Richard Bush, President, NYIAX. “More than just standardization, a protocol is a foundation on which innovation can be built in any fashion by any company.”
But we can’t begin to design the blueprint for a protocol until we know what needs to be supported. And we can’t know what needs to be supported until a critical mass of participants have worked with blockchain to identify what kind of foundation we need.
The first step for bringing the benefits of blockchain into digital advertising is to pique the interest of all parties in the digital advertising ecosystem. Blockchain proponents have been working hard on this step.
The next step is to offer professionals a guide to help them make informed decisions as they venture into the world of blockchain solutions. The IAB and its members have come together to create this for you. Titled Blockchain Application in Ad Tech, this document is a guide to better evaluating blockchain solutions. Download it and use it to help you take an informed approach.
Beyond that, the Blockchain Working Group of the IAB Tech Lab will be contemplating next steps and shepherding the growing application of blockchain solutions to suit the needs of the industry.
To get involved, visit the webpage and reach out to Shailley Singh, shailley@iabtechlab.com.
ABOUT THE AUTHOR
Miguel Morales, Chief Technology Officer & Co-Founder, Lucidity