Last decade made a pretty bold promise to digital advertising, which more than other industries suffers from insufficient transparency and a fraudulent environment.
The IAB Tech Lab conferences, in particular, frequently gathered blockchain evangelists and ad tech experts who discussed how this technology would finally drive authentication to programmatic chains. Reduced budget waste, elimination of intermediaries and fraudulent traffic are the core challenges of ad tech that decentralized ledger promised to resolve.
As soon as the IAB Tech Lab blockchain working group started developing principles of decentralized networks, the advertising industry was believed to be standing on the threshold of massive technology introduction into a real business. Now that we’ve marched into 2022 it’s time to recollect those talks, inspect the current market and finally understand if blockchain really brings some changes into ad tech and martech scene.
The landscape of blockchain-driven solutions: from 2018 to 2022
Currently, buy-side is most enthusiastic about blockchain implementation in ad tech, because advertisers and media buyers need good quality traffic. Globally, ad fraud will most certainly cost advertisers $81 billion in 2022. Roughly speaking, ad fraud takes $1 from $5 invested in digital ads.
In 2018-2019, budding blockchain-based advertising projects provided the first opportunity to buy clean and secure traffic, enriched with genuine data about ad campaign performance. In 2019, this environment evolved, multiplying the number of blockchain marketing startups from 22 (2017) to 290 (2019), which is more than 13 times in a year. These commercial and non-commercial projects mainly function in the area of social marketing, data, commerce, content marketing, and digital advertising, where the number grew from 10 to 105.
Starting from 2019 society has shifted its attention toward NFT technology (which also uses a blockchain ledger for protecting the ownership of digital assets). With this, blockchain is featured among the top martech trends in 2022. Over 31% of industry experts think that VR/AR, Metaverse, NFT, and Blockchain technology will define the trajectory of martech and ad tech development.
Sure, right now crypto markets are not being in the best of times – the growing cryptotrading markets recently crippled in China. In January 2022, Spain and the UK also introduced new stifling regulations to eliminate crypto advertisements. However, the growth in the number of successful blockchain advertising startups signals that companies have finally started to understand the true value of technology without associating it with the token economy.
What blockchain solutions are here and how do they reshape advertising?
Let’s recall why the industry clung to blockchain technology in the first place – because it created a distributed database that could be trusted by demand and supply partners alike. When companies add a blockchain to digital advertising, they reach the next level of clarity and accountability.
Every action or impression is recorded on a distributed ledger: which user watched the ad, which advertiser bought the impression, what was the cost and the components (commissions, actual bid), and so on. This way, all data becomes auditable to every chain participant on an event-level basis. The parties themselves can detect fraud and initiate automation removal of a suspicious component from the chain.
The majority of martech-powered solutions are currently focusing on improving transparency and mitigating advertising fraud, for example:
- AdEx – the platform that connects publishers and advertisers directly, reducing the middlemen and thus hidden commissions;
- Rebel AI – focuses on identity to eliminate the problem of domain spoofing;
- XCHNG – Fights with ad fraud thanks to the application of smart contracts;
- AdBank – secures transactions between advertisers and publishers while also delivering transparency over payments;
- Papyrus – ensures fairness and efficiency of media supply chains with the blockchain network.
Apart from fraud protection, blockchain solves many problems in different areas of advertising. Based on the events recorded on the ledger, document flow, and paper bookkeeping become a matter of one click automated by smart contracts.
Additionally, blockchain in martech helps to protect the interests of users, e.g. Brave browser users, actually earn revenues in the form of BAT (Basic Attention Token) in exchange for ad watching. Since global attention is also focused on privacy protection and digital ownership, most likely the next generation of blockchain startups in marketing will be developed exactly in these niches.
What about challenges?
In the absence of regulation, many blockchain pilot projects were at risk of ending up absolutely impractical. Nevertheless, the world is adapting to blockchain anyways. Luckily, market participants joined forces that contributed to faster technology adoption and regulation development. IAB Tech Lab’s initiatives support businesses in their desire to stay aware of the best practices of blockchain integration into ad stacks. A set of specific programs are constantly being developed in order to facilitate education, raise awareness and deliver a legal framework for such platform functioning.
To better understand market readiness and realize how blockchain works in the real world, the IAB Tech Lab started a blockchain pilot program that will deliver real-world algorithm for testing blockchain-based services and products.
The members that develop blockchain solutions are invited to showcase how their blockchain-based projects can work. Their advertising blockchain initiatives have deployed working mechanisms for addressing ad fraud, transparency, and efficiencies in the reconciliation of campaign data in their own way. Some have developed 2-layer protocols to accelerate transaction speed; some have automated purchases by smart contracts and others have combined IAB Tech Lab’s ads.txt, (registry of authorized sellers) with Ethereum to achieve increased inventory purchasing transparency.
The other obstacle of the past was speed. Now, blockchain transactions occur in minutes, while processes in digital marketing occur in milliseconds. This problem apparently found a partial resolution in 2019, when blockchain startups figured out how to cover the problem with multilayered protocols architecture that execute transactions outside of the main blockchain.
Finally, the third and probably the most important problem of blockchain in ad tech is a lack of education and the shortage of professionals well-versed in blockchain implementation in advertising. Despite obviously growing curiosity and awareness, actual comprehension of blockchain, NFT, and related technologies among mass audiences is very low – even in 2022 96% of Americans fail the common quizzes that include basic crypto concepts.
However, in order to improve the state of things in this department, we need to have more educational initiatives like those presented by IAB. We also need support and educational initiatives on the local and regional levels that would raise awareness of blockchain implementation in ad tech. This awareness could encourage broader blockchain solutions implementation and would persuade companies to invest resources in employees training and education.
Early experiments with blockchain in advertising were quite successful, which raised the bar for subsequent projects. Marketing and advertising tech built on blockchain, NFT, and similar technologies can become the new normal, although even in 2022 it is still rather a prerogative of niche enthusiasts and small startups. Regulatory uncertainty, poor awareness, and lack of professionals are still challenges that stand in the way of the mass deployment of such solutions. However, once these obstacles are passed marketing and advertising landscape will be redefined.
It will be possible to see how much money from advertisers’ budgets reach the publisher after passing the pipeline. In turn, impressions served by websites will be easily signed and tracked. Finally, the users will be able to receive rewards for their attention and protect their digital assets.
So, obviously, blockchain in advertising doesn’t have to be overhyped, nor does it have to be underestimated. For this, we shouldn’t take it as a universal hammer able to fix every problem, but rather see it as a tool of great capacity if the problem it needs to solve is right.