Can Blockchain be the solution to the transparency Issues in digital advertising?

Can Blockchain be the solution to the transparency Issues in digital advertising?

A recent study published by ISBA on Programmatic Supply Chain Transparency in association with the Association of Online Publishers (AOP), carried out by PwC, highlighted the transparency issues in programmatic advertising. With only 51% of advertiser spend reaching the publishers, around 15% of the advertiser spend remains unattributed. The report also called for standardization in the definition of transparency across programmatic supply chain participants, which includes advertisers, publishers, agencies and ad tech platforms.

Unilever, too, had raised concerns on transparency in digital marketing in the recent past. It announced the creation of Unilever Trusted Publishers, to address the issues around ad frauds, brand safety and quality of ad traffic. More interestingly, Unilever forayed into blockchain-based digital ad-buying. It claims to have found great success with Blockchain, resulting in “zero-leakage” in its media investment. This points at some exciting possibilities in this space.

Blockchain technology is popularly associated with Bitcoin that started the age of cryptocurrency. Fewer people are familiar with its other applications or other blockchain platforms. Ethereum, with its native currency Ether, is the second-largest cryptocurrency platform after Bitcoin. It has a wide range of applications beyond cryptocurrency. Its smart contract functionality promises nothing less than a revolution in the way we conduct digital transactions.

Smart contract, with its array of applications, presents exciting possibilities for digital advertising as we know today. However, most marketers are not fully aware of the scope of blockchain technology or smart contracts in digital marketing. It can bring in the much-needed transparency to the marketing dollar spent on digital media dominated by the walled gardens of big ad platforms.

Today Facebook and Google are grading their own homework, providing little transparency into what happens to the advertiser's spend – how much of it is spent on reaching the target consumer specified by the advertiser? This lack of transparency benefits neither the advertiser nor the publishers.

The advertiser might be paying more than what is required, while the publisher could be receiving less than what she deserves. Understandably, given the in-built inefficiencies, the ad networks are making a killing in this billion-dollar industry. This article aims to give the advertisers a preliminary understanding of Smart Contracts to help increase the efficiency of their marketing spend.

From an advertiser's perspective, there are three areas with a high level of opacity in digital marketing, where smart contracts can help:

  1. Target Audience - The ad platforms let the advertiser define the target audience, but provide little post-flight data regarding targeting in ad delivery. The ad platforms share data points like the number of impressions/views, clicks, CTR, engagement rate, etc. These serve as a gauge for the quality of communication (or the value proposition) and relevance to the audience. However, the advertiser is not told who all the ad was served to, which can give context to the data points shared. The percentage of the impressions, engagement, CTR, etc., from the relevant target audience, is a big unknown.
  2. Brand Safety - Advertisers are concerned about the placements of their ads. Even when the ad placement and exclusion list is defined, there is never a 100% assurance of ads not showing in a place that will negatively impact the brand reputation. Sure, one may bid right and land the targeted publishers, but there will, inevitably, be a long-tail of below-average publishers, who help mop-up the results the advertiser is looking for.
  3. Measurement and Payment - Both in-flight and post-flight audits fail to measure a campaign in its entirety. Although ad platforms offer granular data on delivery, there is no way to audit the unfavourable parts of the results - like low-quality ad inventory, ad frauds and wrong placements. One may argue that there are enough and more tools to audit performance, but the existence of a high degree of opacity cannot be refuted. Even as the ad gets ‘n’ number of impressions or clicks or views, the advertiser wouldn’t know the efficiency or effectiveness of the ad spend.

How Blockchain can help

For understanding the usefulness of blockchain in digital advertising, a basic knowledge of blockchain and smart contracts is needed.

What is a blockchain?

Blockchain, simply put, is a distributed database, where data is stored in blocks of information across a network of systems. Any transaction needs to be confirmed by the participating systems. Once the transaction is approved, the same is added as an additional block on top of the previous one and shared with the network. The previous block is retained, not deleted. 

For now, the following features of blockchain are relevant to this discussion

  1. There is no central authority or approver (except for permissioned blockchains)
  2. The changes are visible to the entire network. Changes are possible only with consensus. Hence, manipulating data is impossible
  3. The data is immutable, which means once the block is published it stays there forever. Other changes are published on top of it, as a new block.

What is a smart contract?

A smart contract is a computer program or a transaction protocol which automatically controls, executes and documents events and actions according to terms of a contract or an agreement. Essentially, it’s a contract pre-baked into a computer program. Suppose, an agreement mandates a party to the contract, to deliver certain quantity and quality of products at a certain time and place, the payment gets processed as soon as the four conditions – quantity, quality, time and place – are met (assuming these are only four conditions mentioned in the given agreement, although there could be more). It’s a trustless contract as there is no mediator, or notary stamping the contract, in whose authority the parties place their trust.

How Smart Contracts work in digital advertising

The buyer creates a digital insertion order (IO) clearly defining the performance criteria. 

Based on the IO, targeting, placement, and other performance metrics are built into the smart contract to be used on an order reconciliation platform, which verifies details on a blockchain.

A third party measures the performance of the campaign and shares this data with the order reconciliation platform. The order reconciliation platform hashes this on a blockchain, calculates the billable metrics as per the smart contract. Both the buyer and seller of the ads have access to the measurement data and billing reconciliation data.

The beauty of the blockchain lies in its transparency. The way programmatic advertising works today, it creates an opaque wall between the demand-side and the supply side. A part of the ad inventory may meet the expected quality (the screenshots of which are shared), but most of it could be getting wasted on irrelevant, low-quality or cheaper publishers. 

Programmatic advertising is riddled with such inefficiencies, affecting advertisers and publishers alike. In its bid to clean up the digital ecosystem of these inefficiencies, Unilever launched Unilever Trusted Publishers addressing the 3Vs – viewability, verification and value standards. Although it created enough noise highlighting the need for greater transparency in digital advertising, little has changed so far. Not all advertisers have the same prowess as one of the world’s largest FMCG companies. Advertisers and publishers need to collectively push for a more credible and transparent alternative, which the blockchain technology currently offers.


Author Bio

With an MBA in Strategic Communications from MICA, a premier Business School in India, Mithun has spent 8 years building global brands. His tryst with Blockchain began 4 years ago, while exploring solutions to drive greater efficiency in business & marketing processes. He strongly believes that Blockchain has the potential to revolutionize and disrupt the current socio-economic structure, for good.

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Publication date: 
06/04/2020 - 16:45

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