Blockchain is changing the way the world performs commerce by allowing for cryptocurrency transactions and other types of data transfers without the use of a centralized authority.
Since digital advertising is integral to how commerce works on the internet in the present day, it makes sense to examine how blockchain can affect it. That’s why in this article, we’re exploring how blockchain and digital advertising open up opportunities for transparency and trust — not just for advertisers, but for users, as well.
What is Blockchain?
Blockchain is a decentralized digital ledger made up of “chains” of “blocks,” which are storage houses for various types of data. This data typically consists of information about transactions like crypto and digital assets such as non-fungible tokens (NFTs).
How blockchain technology works
The way that blockchain technology works is actually quite simple.
The first piece of information to know is that identical copies of the digital ledger are spread among multiple computers called nodes. The second piece is that nodes must verify all new incoming data before a new block can be added to the chain and all the ledgers be updated.
Both pieces are important for establishing the two qualities that are integral to the blockchain ethos.
Principles of transparency and trust in blockchain
Blockchain is rooted in transparency and trust. This is evident in the fact that most blockchains are decentralized and open for all to see, meaning anyone can go onto one and access the information stored there. It’s a way to hold organizations and businesses accountable for transactions, but also contracts, supply chains, and even voting.
Blockchain in digital advertising
Blockchain also has the potential to transform digital marketing by increasing transparency and trust between advertisers, publishers, and consumers.
Key Features of Blockchain
These are 3 key features of blockchain.
Decentralization
Decentralization refers to the fact that the blockchain can be monitored and have data added to it by anyone rather than by a single authority or organization only.
Transparency
Blockchains are public, meaning that any information recorded there is also available for everyone in the world to see. This system facilitates transparency from the people or organizations that are adding data to the ledger.
Immutability
Once the nodes in a blockchain have determined that the data is legitimate and records it in a new block, the block is irrevocably added to the chain. From then on, it becomes immutable, meaning it can’t be changed or modified by outside forces.
Digital Advertising and Programmatic Buying
As blockchain has been evolving, so has digital advertising. Let’s explore what that looks like.
The evolution of digital advertising
Almost since the beginning of the internet, marketers have been utilizing digital advertising. Today, ads are a seemingly inextricable part of the online experience. But they have evolved beyond simple ads to something far more sophisticated (and invasive): programmatic advertising
Introduction to programmatic advertising
Programmatic advertising targets individual users with ads that match criteria like their shopping behaviors, search and purchase histories, and content preferences.
To obtain spaces on websites for these types of ads, advertisers go onto demand-side platforms (DSPs) and bid how much they’re willing to pay for it, usually per 1000 impressions of their ad. Typically, the highest bidding advertiser wins the space, and the website publisher gets a share of the money. Some of that money also goes to the DSP, which acts like a middleman in this scenario, to cover fees.
The intersection of blockchain and digital advertising
With an understanding of the latest evolution of digital advertising, let’s look at how it intersects with blockchain.
Enhancing transparency to digital advertising
Blockchain can enhance digital advertising transparency in a multitude of ways. It can:
- Show consumers that the products or goods being sold are real, legitimate, and live up to the advertisers’ claims.
- Show consumers where goods are coming from.
- Record transactions forever.
The role of blockchain in combating ad fraud
Ad fraud is a cybercrime in which fraudulent publishers present false, inflated numbers of ad clicks and impressions. They do this to increase the money they make at the advertiser’s expense. Since blockchains verify data before posting it, they make expert ad fraud combatants.
Improving data security and privacy for users and advertisers
Being made up of many nodes and ledger copies, a blockchain is nearly impossible to hack. This translates to greater data security and privacy for both users and advertisers.
Building trust between parties in the ad ecosystem
Doing business on a blockchain builds trust between the parties in the ad ecosystem: the advertisers, the publishers, and the consumers. It protects everyone’s data, ensures transparency, and even tracks the fulfillment of so-called “smart” contracts, which fulfill themselves once the parameters for the contracts are met.
Impact of blockchain on consumer confidence
Finally, blockchain leverages all the above intersections with digital advertising to build transparency and trust, which are the bedrocks of consumer confidence in brands.
The opportunities of blockchain in digital advertising
Take a look at the opportunities that blockchain can provide for all three major digital advertising players.
For advertisers
Streamlining the ad buying process
Blockchain streamlines the ad buying process by verifying that a publisher has ad inventory to sell, so that an advertiser can purchase it without a middleman.
Acquiring better insights
The information stored about a publisher and its ad space in a blockchain can immediately provide advertisers with valuable insights about whether they should buy it or not.
For publishers
Fair compensation
Without a middleman between them and advertisers, publishers can ensure they receive fair compensation for ad space and don’t have to go with the prices set by the middleman.
Enhancing audience data management and monetization
Publishers can manage data about their audience more efficiently with blockchain and thereby enhance their monetization strategies.
For consumers
Better data control and more privacy
Consumers can have better control over their data and more privacy by conducting anonymous blockchain transactions and/or using private blockchains that are centralized.
Blockchain challenges and adoption in digital advertising
As with every innovative technology, there are challenges and barriers to adopting blockchain in digital advertising.
Overcoming technical barriers
Blockchain is technically complicated and has a significant learning curve. These are barriers which can make it difficult to scale and integrate blockchain in existing organizations or companies.
Current state of blockchain in digital advertising
Blockchain is not currently in widespread use in the digital advertising world. However, it has seen limited use by major tech companies like IBM for supply chain tracking. Some companies, like the ad blocking web browser Brave, have based their entire business model on it.
How to improve industry-wide adoption and collaboration
The biggest barrier to blockchain’s adoption on an industry-wide scale is lack of knowledge. Educating advertisers on the benefits of blockchains, how they work, and how to integrate them into their current system is key to increasing adoption rates and collaboration.
Conclusion
Blockchain and digital advertising can vastly improve the digital advertising experience for advertisers, publishers, and consumers by increasing transparency and trust. The decentralization, transparency, and immutability of blockchains are the answers that the industry is looking for to facilitate fair publisher compensation, hold companies accountable for their supply chains, combat ad fraud, improve customer confidence, and more.
Article Contributed by Alise Zaiceva is a content marketing manager at Setupad. Having worked in the adtech industry for more than three years, Alise has developed a strong attention to detail and research, as well as a passion for technology. Her work with content is aimed at helping publishers scale their businesses through powerful digital marketing strategies. Alise believes in the supremacy of holistic website optimization for incremental revenue gains.