Blockchain Tech in Programmatic Advertising

Riley Silbert | August 30, 2018
The Programmatic Ecosystem

What started as a novel solution for websites to sell advertising space during the internet boom of the mid 90’s, programmatic ad buying has become an ecosystem riddled with inconsistencies and deception. Fast forward 20 years and one can see that with DSPs, SSPs, DMPs, and trading desks, the ecosystem has evolved to accommodate the ever-expanding ad market. Since 2015, US programmatic digital display ad spend has increased almost 20% with global programmatic digital display advertising expected to represent 70% of ad sales by 2019.

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Despite the relative success of programmatic, there remain a number of shortcomings that the industry needs to resolve. With the breakneck growth of the internet through the early 2000’s, the necessary components like ad networks also opened the door for middle men to complicate the system and blur the travel of media spend. Combined with the monetization of data for audience targeting, Programmatic has become infiltrated with ad-fraud, lack of transparency, and an absence of user security.

 

Although blockchain application has been accused of being all hype and no substance following the meteoric growth of cryptocurrency like Bitcoin, the reality is showing that even in the current bear market, the true disruptors are rising to the surface.

 

Ad Fraud

Ad fraud sits at the top of the list of concerns that advertisers face with “more than 60% of US ad agency professionals concerned with the quality and transparency of their inventory sources.” In an advertiser’s mind, ad fraud falls into two buckets – viewability of your ad and the legitimacy of the viewer. So when my ‘Riley ad’ loads on a webpage, counting as an impression and charging me a fee, how can I know that it was actually on a section of the page that the user saw and whether or not that user is a bot or a real potential customer? A lot of the time, you can’t. Industry audit reports state that “marketers lost $7.2 billion to digital ad fraud in 2016.” Fortunately, Ken Brook and his team at MetaX are working to solve this issue through The AdChain Registry.

 

This decentralized application (dapp) is a community-curated list of ad-supported websites that provide advertisers with a vetted stamp of approval on domains best suited for serving ads. Though tactics such as ads.txt currently exist to perform a similar vetting function, industry practices for curating registries are “pay-to-play” or arbitrary whitelists used by safety vendors that lack any explicit feedback from the general public about which ad-supported websites are legitimate and why.

 

The AdChain Registry dapp, considered a token-curated registry (TCR), will run using AdToken, a standard ERC-20 utility coin on the Ethereum blockchain. This accomplishes two things. Firstly, the use of AdToken will allow the quality of the registry to be directly tied to the value of the coin. Next, TCRs rely on a native token to grant users curation rights proportional to the number of tokens they hold. This creates a relationship in which the economic incentives of token holders are aligned with the goal of outputting a high-quality inventory list.

 

Transparency

Within the development of programmatic tech created to meet the needs of the digital advertising ecosystem, the industry answered with scale, but not transparency. Today, as data passes from one system to the next, it is siloed in black boxes owned and operated by each centralized party. Advertisers today witness this in reporting discrepancies between a DSP, DMP, and publisher. As a result of the need to align discrepancies across systems before actualizing billing, reconciliation is delayed and cost hundreds of manhours. As Sam Kim with Lucidity put succinctly “the result is a measurement ecosystem that is wholly opaque and inconsistent…The end result? Waste. Wasted money. Wasted time.”

 

Lucidity has the goal of fixing these inconsistencies through implementation of the Lucidity protocol. By tagging a digital asset with Lucidity’s tracking URL, Lucidity will use smart contracts to track, verify, and reach decentralized consensus on ad data for all members of the programmatic supply-chain. This will ultimately provide a unified set of data that’s been verified, that’s secured with cryptography, and that’s free of discrepancies, allowing advertisers to track all of their programmatic costs across exchanges down to the individual publisher.

 

Taking this a step further, Lucidity’s platform will offer a Marketing Analytics Token (MAT) to be used by the ‘Verifiers’ of campaign data to then be rewarded for their accuracy of reporting. This advantage of incentivization further promotes fairness and honestly for all parties.

 

User Data

Perhaps the most overlooked and abused player in the programmatic space is the user. Just look in the past year at Facebook and their use of user data – that’s just the one you know about. Axciom is the largest data brokering firm in the world, recording over $1.1 billion in sales last year, is probably completely unknown to the average user. There is debate on whether the use of blockchain protocols is sufficient to fix what some see as an inherently flawed programmatic system, but in today’s structure data means money.

 

Wibson is a company looking to put that data back into the hands and pockets of the original owner - the consumer. Through a decentralized market place, individuals can transact their data with companies using smart contracts that provides the company with higher quality, curated data, and the consumer with an opportunity for fair monetization.

 

Conclusion

Barry Cupples, CEO of Global Investment for Omnicom Media Group said, “the industry needs change and protocols that support transparency and delivery that we can hold up for scrutiny if needed. Blockchain provides that potential and we are too early to pass any judgement beyond the opportunity we have to seek evidence on the concept.”

New standards bodies like AdLedger will emerge whose members, including MAD, Omnicom, WPP, IBM, IPG, Meredith and Critical Mass, among others, share the need for change.

Blockchain companies that recognize and correct the inherent flaws in the programmatic ad space will continue to rise to the top and succeed in revolutionizing the ecosystem.

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Riley Silbert