Blockchain is a truly transformative technology in terms of ensuring transparency in nearly every sector of the economy. As the records of DLT (distributed ledger technology) transactions are kept on a public register, hiding or altering any of them unilaterally is next to impossible. This technology thus has the potential to prevent any abuse of power by intermediaries or other third parties.

The Old Way of Doing Things

The Digital Marketing and Advertising industry is one of the early blockchain adopters, and it is no wonder: this sector has always been plagued by transparency breaches.

Average annual losses from fraudulent ads account for an astonishing $6.5 billion. Much of the money wasted comes from “showing” promotional materials to bots rather than potential customers.

Another big problem is trust. Feeling unsure whether to pay new publishers directly, advertisers tend to opt for verified middlemen, who may sometimes provide fake statistics or manipulate budget spending. Then, there is the high commission fee, of which little goes to the actual media owner.

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Last but not least, consumers are getting more and more concerned about the relevance of displayed ads and how their private data is used for targeted promotions. Seeking to protect themselves from annoying, irrelevant or repetitive ads, people are tending to block pop-ups, or simply skip ads more and more.

Below you will find some interesting cases proving the potential of blockchain to address the aforementioned challenges, ensuring that advertisers, publishers, and ad consumers establish mutually beneficial and trustworthy relations.

No more unscrupulous intermediaries!

Blockchain for Transparent Advertising: Direct Media Buying

The issue of trust, along with the desire to remove the middleman, can be resolved via a simple blockchain formula: media marketplace + tokens + smart contracts.

The use of utility tokens ensures the speed and accountability of all transactions, while the application of smart contracts solves the problem of trust — once the condition is fulfilled (e.g. the ad is placed), the guaranteed payment occurs automatically.

Thanks to this simple combination, advertisers can reach their target audience directly, minimizing the number of invalid clicks and making sure their budget is used economically. It is equally beneficial for publishers as well, since they can connect with trusted advertisers without intermediaries and get the most from their traffic.

A great example of this model in action is seen with AdEx, a commission-free ad network built using Ethereum smart contracts, with its own AdeX (ADX) tokens used for staking. Other similar projects include AdBit Media, a media marketplace built on smart contracts and ADBT ERC20 tokens, and XCHNG, which is establishing itself as an open crypto-based ledger framework for digital advertising, with its own smart contracts and tokens.

Blockchain for Transparent Advertising: Accountable Ad Delivery

Another benefit of blockchain in the advertising industry comes from the fact that it is distributed, which helps register and validate any actions that occur.

Applying DLT technology can thus help track the whole supply chain in digital advertising, from payment and placement to actual display, clicks, and the calculation of expenses.

The benefits of DLT in advertising are made extremely clear with a new platform called Amino, which generates an unmodifiable digital ledger for each media buying transaction, tracks an ad each time it runs, calculates how much money each of the parties is making along the way, and prepares respective financial records for automated payments.

Another example is SaTT (Smart Advertising Transaction Token), which deploys smart contracts that provide statistics to third-party APIs, thus validating and quantifying transactions. Furthermore, advertisers can add a trusted third party (“oracle”) that will analyze campaign performance and decide the amount to be invoiced (e.g. Google Analytics or Instagram Analytics).

A great way of ensuring the accountability of online advertising was developed by SocialMedia.Market, a blockchain marketplace for connecting brands and influencers, which has its own… Decentralized Dispute Resolution system! Arbiters are selected on a decentralized basis, taking into consideration a number of objective criteria, and their job is rewarded in tokens.

Blockchain for Transparent Advertising: Ad Consumption Rewards

The application of blockchain in advertising can become a real breakthrough, because for the first time in history ad consumers will actually be able to earn money for their mental efforts. This will not only revive their enthusiasm after years of feeling tracked, used and overwhelmed with unneeded information, but also motivate them to be more focused and engaged.

Some early adopters attempting to challenge the current “world order”:

BAT (Basic Attention Token), an Ethereum-based token, where utility is based on user attention. In simple terms, when a person is viewing ads in the BAT browser, his/her user data is being collected and rewarded with tokens.

Momentum, a smart contract platform for tokenizing loyalty programs and providing exchangeable rewards based on brand engagement.

Sweet, a digital reward platform, where artists and brands can request actions from fans and reward their efforts with Sugar ERC20 tokens, which can be spent within the Sweet ecosystem.

Coupit, a decentralized incentive platform, where user reviews are rewarded with Coupit tokens.

Orioncoin, a token that operates similar to a loyalty points system, and can be spent in the ecosystem for acquiring tangible goods or services (e.g. a free stay in a 5-star hotel).

In short, consumers can finally have something in return for the tremendous amount of data they share, often without their consent.

Ring-Fenced Accountability

With very few exceptions, the aforementioned solutions are typically built upon Ethereum smart contracts and use their own ERC20 tokens. This means that even if the platforms set certain standards of transparency and fraud prevention, there is always an option to double-check where each transaction ended up with external blockchain analytics tools.

For instance, by using the Graph, Balance and Statement widgets found within the ORS CrytoHound tool, one can not only see their own earnings and expenses from advertising activities on different blockchain marketplaces, but also investigate the transaction history of any other address — be it a suspicious ad publisher or someone writing fake reviews to earn incentive tokens.

Closing Thoughts

We are only just starting to discover the power of blockchain services in the advertising arena. However, from what has been achieved so far, DLT technology appears to have the potential to intelligently resolve some of the major transparency issues that advertising parties are currently encountering.

Thanks to blockchain:

Publishers can maximize their revenue via direct cooperation and guaranteed automated payments.

Advertisers can save money on ad fraud and intermediary fees while enhancing the quality of their reach.

Ad consumers can be rewarded for their interaction with digital ads for the very first time!

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