Blockchain advertising technology will be the de facto standard for media buying accountability sooner rather than later, if you have faith in the variety of startup companies that intend to revolutionize the industry.

The blockchain has become a catalyst for rapid change in the financial sector, but the implications of distributed ledger technology reach far beyond the monetary applications. The transparent, immutable nature of the blockchain is uniquely suited to disrupting heavily centralized, labyrinthine industries that are prone to interference from middlemen —and is thus the ideal fit for the advertising industry.

Blockchain technology is gathering momentum in the advertising sector, which is currently suffering from a crisis of faith. Centralized advertising oligarchies currently dominate the market, while bot-driven artificial impressions are eroding the value of digital marketing in general.

The potential of blockchain advertising tech has recently captured the attention of the Interactive Advertising Bureau, which recently published a white paper on the influence distributed platforms are already exerting on the industry.

As the largest digital advertising trade association is seriously investigating the destabilizing impact of blockchain advertising technology, agencies and media shops are now beginning to take it very seriously indeed. Traditional engagement techniques such video and TV are delivering diminishing returns in the face of digital marketing — a highly saturated environment that presents increasing demonstrability issues — inspiring advertisers to eyeball distributed ledger solutions as the panacea to their difficulties.

Why is the blockchain so appealing to advertisers, though? Could implementation and widespread adoption of blockchain advertising solutions lead to the elimination of incumbent industry middlemen and topple the monopoly of Google and Facebook? We’ll proceed to explore the most interesting ways in which decentralization is creatively annihilating and reshaping the advertising industry… with renderings of concept Formula One cars that may foretell a future in which blockchains and cryptocurrencies aren’t just enablers, but also major clients.

The Problem With Digital Advertising

The $223 billion global advertising is currently plagued by a number of pressing issues that have advertisers scrambling to devise a solution for. The principal stumbling block facing advertisers today is an emergent property of the shift the industry has undergone from traditional advertising avenues to a digital environment.

Value in the digital marketing industry is placed upon impressions, or the amount of times an ad is served to a consumer. While this concept is sound in theory, exploitative elements within the industry capitalize on artificial impressions created by ad-bot scams and fake traffic generation techniques. A marketer may spend $1 million on video ads in order to reach 500,000 impressions — in reality, however, less than half of these views come from real people.

The financial impact of artificial impressions is significant. Juniper Research, a digital ecosystem market analysis consultancy, recently published a Future Digital Advertising report that identifies more than $51 million dollars of wasted advertising spend on a daily basis due to artificial impressions.

The advertising industry is also rife with intermediaries and middlemen, who take a significant cut from the advertising deployment process and increase overheads. Over time, the industry has become bloated — brands choose to purchase attention instead of creating content good enough to earn it, and thus rely on third parties that are able to obfuscate the processes that occur between those commissioning advertisements and those consuming them.

Blockchain advertising platforms, however, leverage the ability of distributed ledger systems to create an immutable audit trail between a brand and a consumer. This application of blockchain tech has the potential to disrupt the entire industry, as it not only allows brands to gain an insight into the real-world impact of their marketing endeavors, but also obligates agencies to justify their value proposition due to increased scrutiny.

Fraud, Clickbots, and Industry Opacity

There are a number of platforms tackling the issue of fraud and artificial impressions within the advertising industry by leveraging the immutable traceability offered by blockchain networks. MetaX, launched in 2017, uses a bespoke blockchain network called “adChain” to ensure impressions are viewed by human participants.

MetaX’s adChain solution allows buyers to purchase an impression, which is then encoded in a block. This encrypted impression is then shared with all chain participants. When the impression is verified by the publisher it is added to the ledger, thereby creating a comprehensive audit trail that allows buyers to determine how many times it was seen, who saw it, where it ran, and how budget was spent throughout the process.

MetaX’s streamlined approach to demystifying the opaque digital advertising industry allows brands to navigate the complex digital marketing environment and ensure that the impressions they purchase are delivering demonstrable ROI, presenting a high-profile threat to incumbent advertising industry organizations.

Intermediary Elimination

Bringing digital advertising on to the blockchain doesn’t only eliminate fraud, however. AdEx is currently rendering traditional advertising networks redundant by creating a distributed marketplace that allows brands to connect directly with publishers without the need for middlemen.

The AdEx platform is built on the Ethereum blockchain and leverages the immutable nature of smart contracts to create a marketplace in which advertisers are able to bid for specific advertising slots with the specific CPM/CMC they’d like to pay. Publishers are able to select attractive bids, with the entire deployment process managed via smart contract and remitted through a native token.

AdEx has recently launched the AdEx DApp Beta, which presents users with a streamlined, simplified user interface. By creating an ecosystem in which advertisers are able to directly engage publishers, AdEx completely negates the need for traditional advertising networks altogether.

Blockchain Advertising Firms Are Also Targeting Data Privacy

The resource-intensive advertising market has led to extreme specialization in the deployment of advertisements. Brands now leverage the power of big data provided by Google and Facebook to create highly targeted campaigns that isolate and serve ads to a specific or niche demographic.

While targeted advertising is extremely appealing to brands on paper, the reality of targeted ad performance is far from buyer expectations. Nielsen marketing effectiveness director Barney Farmer has attested to the inefficiency of targeted advertisements in an interview with Marketing Week, citing a Nielsen report that stated less than half of all targeted advertisements reach their target audience:

“Digital was made out to be the ultimate targeting system and measuring platform, but it has not lived up to that.”

Consumers are also increasingly aware of the fact that their aggregate data is being sold by the platforms they use for targeted advertising, and are unhappy about it. A Thompson Coburn investigation into consumer attitudes toward relevant online behavior advertising found that the data privacy debate causes negative perception of targeted advertising across all demographics.

Recent debate surrounding the data privacy debate has unearthed moral concerns regarding big data-based behavioral inferencing for advertising purposes. Many consumers believe that targeting decisions are based on discriminatory stereotypes, opening up questions regarding the ethical implications of “cyber phrenology” – using metadata to reach intimate conclusions about someone’s personality and predilections.

Blockchain platform BitClave, however, aims to dramatically enhance targeted advertising efficiency by incentivizing consumer participation. In a unique approach to consumer engagement, BitClave provides consumers with the option to use a decentralized search engine and reveal their browsing habits to businesses, who are then able to serve them targeted ads.

If consumers choose to interact with ads served via the BitClave platform, they are rewarded with a “Consumer Activity Token” which can be traded for other cryptocurrencies or fiat currency. By allowing brands to direct their advertising budget directly toward engaging consumers without the need for a publishing platform, BitClave uses blockchain technology to eliminate middlemen in the truest sense.

Any blockchain advertising solution that attempts to redress issues present in the incumbent system is inhibited by slow adoption rates and the need to present a value proposition and use case justification. The deployment of distributed ledger tech in the advertising industry, however, is occurring rapidly due to the reduction in overheads and dramatically improved transparency it offers.

Ultimately, blockchain innovation in the advertising sector should directly benefit consumers as well as brands and advertisers. Marketing isn’t going away, but the ‘mindshare’ so beloved of marketers might finally be on the horizon – and a future in which you will be paid in fungible cryptocurrency for watching Super Bowl halftime ads may be around the corner.

We would particularly like to thank Adam Grist and the blockchain marketing team at Searched.io, together with their sponsors at Coinlauncher.io for allowing us to use these stunning images in this article.

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