You’ve heard it before – the sales pitch that goes something like this: “Blockchain is the answer to marketer’s nightmares of ad fraud, transparency, and discrepancy. This singular technology will fix all ad tech problems – a promise of delivering one solution to solve for brands, agencies, publishers, and platform troubles.”

If you think these claims sound too good to be true, it is because they are – at this point in time. In the near future, the technology has encouraging potential for specific advertising use cases. Before we’re able to apply blockchain thoughtfully and effectively to advertising, the industry needs to undergo a crawl-walk-run education around its key components, what it truly enables, and how it should realistically be used today.

Similar to when AR/VR became available in 2014, the industry is facing shiny object syndrome where we’re enamored with the potential of blockchain for advertising. However, marketers are still not quite sure how to apply the technology to reap its full benefit. Candidly, a decentralized ledger, or blockchain solution, is not always the most efficient or best way to achieve marketers’ goals; it may just replicate other solutions in-market, with little to no incremental value to the advertisers but additional technical costs and complexity. Additionally, most companies are still in alpha or early beta stages with no global offerings live.

What blockchain can help achieve today and in the near future are two distinct massive enterprise issues that all advertisers face: ad fraud and supply chain transparency. If we can re-focus interest and efforts around these two lanes specifically, we can begin to solve issues that marketers handle on a daily basis, and provide a proof of concept for blockchain in advertising.

Tackling Ad Fraud

Ad Fraud is a major issue for advertisers and represents over $7 Billion lost dollars, according to The Trustworthy Accountability Group (TAG), an advertising industry initiative fighting fraudulent activity and increasing trust in the digital advertising industry. Blockchain can help tackle ad fraud by leveraging encryption technology to make it nearly impossible for fraudsters to spoof domains. By locking a bid request and requiring an encryption key from the legitimate publisher to unlock and serve an ad.

In this example, only the publisher and the advertiser have the key and the ad will only serve when they match. This approach to leverage blockchain to tackle ad fraud will help advertisers prove if we can more effectively, through a decentralized immutable ledger, identify non-human traffic. Blockchain proof of concept experiments can help increase transparency and advertisers’ paid digital media quality. If blockchain can eradicate the unsolved domain-spoofing and other forms of ad fraud, the technology can immediately add value to the supply chain.

While supply chain transparency may be a longer timeline to tackle than an ad fraud solve, it is still within reach. In the realm of supply chain, buyers and sellers are in discussion around using blockchain to address billing and reconciliation workflows. However, we see a huge opportunity for blockchain to use algorithmic consensus of all sellers and buyers to create a new standard for supply path transparency. If every member of a supply chain authenticates each step in programmatic buying process, the opportunity to transfer hidden fees can be eliminated.

Following programmatic bids along each step within DSPs, SSPs, ad servers, and publishers, there are opportunities to understand where incremental charges are unnecessarily inserted into the workflow. The push to use blockchain technology to identify supply path inefficiencies and subsequent unfavorable ad experiences for consumers delivers immediate value back to marketers. In addition, this information from supply chain transparency extends beyond campaign performance and can be used to identify valuable partnerships, subsequently exposing the good and bad players in the marketplace to create true supply chain transparency from consensus.

Now What?

Beyond ad fraud and supply chain transparency, we anticipate some applications for blockchain may become viable for our industry much more quickly than others.  While tackling ad fraud and creating supply chain transparency are viable solutions for the near future, transaction settlement, for instance, is unlikely to move quickly.  Because of the scale and complexity of the media business and the amount of parties involved in the various facets of it, significant alignment between players will need to occur –  which may require years.

At this time, most of the buzz around blockchain in advertising will actually further complicate the ad tech landscape by adding new technology to solve for gaps in existing tech. The industry needs to focus on the problems we can solve today with blockchain, to provide a proof of concept for its effectiveness in tackling the industry issues of tomorrow.

For this to be a reality at scale, the marketplace needs an end-to-end test of the blockchain solutions that solve for ad fraud and supply chain transparency, which would require participation of independent SSPs, DSPs, and marketers that are open to sharing proof of concept learnings to better the entire advertising ecosystem. It is only through industry collaboration that blockchain innovation can have the opportunity to fix marketers’ unsolved pain points.

Below is a list of blockchain terms you need to know:

Blocks: packages of data that carry permanently recorded data on the blockchain network

Consensus: achieved when all participants of the network agree on the validity of the transactions, ensuring that the ledgers are exact copies of each other

Central Ledger: a digital register that is used to record and is maintained by a central agency

Cryptocurrency: also called tokens, cryptocurrencies are representations of digital assets

Digital Signature: a digital code generated by public key encryption attached to an electronically transmitted document to verify its contents + the sender’s identity

Distributed or Decentralized Ledger: ledgers in which data is stored across a network of decentralized nodes; does not have to have its own currency and may be permissioned and private

Distributed Network: a type of network where processing power and data are spread over the nodes rather than having a centralized data center

Encryption Key: a random string of bits generated specifically to scramble and unscramble data created with a unique code that makes it harder to break.

Mining: the act of validating blockchain transactions

Node: a copy of the ledger operated by a participant of the blockchain network

Private Key: a string of data that allows you to access the tokens in a specific wallet that act as passwords and are kept hidden from anyone but the owner of the address.

Public Address: the cryptographic hash of a public key that act as email addresses which can be published anywhere (unlike private keys).

Smart Contracts: encoded business rules in a programmable language onto the blockchain that are enforced by the participants of the network.

Transaction Settlement: the process where each member of the supply chain receives funds for a transaction

Wallet: a file that houses private keys

Author: Violeta Todorova, Manager of Growth & Strategy, Publicis Media