A Brief History of Ad Buying
Before the digital revolution and the advent of the internet,
the only way for advertisers to purchase ad space from publishers was for
humans to negotiate contracts manually. This approach was inefficient and difficult
to scale. An advertiser or publisher can only negotiate so many contracts in a
day, and the time required to discuss, sign and implement a contract manually
is not insignificant.
In more recent years, computers have made it possible to
automate ad buying by having software do much of the work. Humans still have to
plan ad campaigns, of course, and design the actual advertisements. But
programmatic advertising removes the tedium of having to purchase ad space
In a broad sense, programmatic advertising has been around
for years through platforms like AdWords, which connects advertisers to content publishers
automatically. However, AdWords still requires advertisers to sign up manually,
so the ad buying process is not completely automatic. If you adopt a narrower
definition of programmatic advertising, the term applies only to situations
where the ad buying process is fully automated. Google (among other companies) offers that as well, as a newer type of
The Challenges of Programmatic Advertising
Whether you use a solution like AdWords or more advanced
programmatic advertising platforms, the process is prone to certain challenges.
The greatest is that, although programmatic advertising is
much more efficient than manual ad buying, the process usually requires the
services of a middleman. In the case of AdWords, for example, people who want
to run ads don’t buy directly from the website owners on which the ads will
appear. Instead, advertisers pay Google, which in turn places ads for them. The
requirement of a middleman is inefficient from a cost standpoint for both
advertisers and the content publishers whose sites host ads.
In addition, programmatic advertising is sometimes subject
to fraud. The Interactive Advertising Bureau found that as much as $8.2 billion
is wasted on fraud and other flaws in conventional digital advertising
Finally, programmatic advertising as most organizations use
it today makes it difficult to measure campaign effectiveness. The main metrics
available for tracking ad performance on a website are clicks and page views.
Correlating these metrics closely with performance is challenging at best.
A Blockchain-Based Approach to Ad
Management: The MAD Example
Blockchain technology can resolve many of these challenges.
To illustrate how blockchain is being put to use in this space, consider the example
of the MAD Network, which is building a blockchain-based ad management
solution that is designed to benefit advertisers and content publishers alike.
One key innovation of the MAD Network is the creation of an
ad server that uses smart contracts to allow advertisers and publishers to
negotiate ad buying. Because the smart contracts are run on the blockchain,
they can be enforced automatically.
The blockchain also eliminates the need for a centralized
party to oversee ad buying. The MAD Network is building the ad server platform,
but that is all; it is not a middleman in the ad management process.
Advertisers and publishers are instead able to interact directly and
automatically with agreements enforced through the blockchain.
The MAD Network also seeks to introduce innovation to the
process of tracking ad effectiveness. The network will allow content publishers
to sell anonymized data about user behavior on their sites and will allow advertisers
to buy it. This feature provides an additional revenue opportunity for
publishers, while enabling advertisers to gain more specific information about
user behavior and impressions than they could by counting clicks and pageviews
Because the ad buying processes on the MAD Network are all
handled by software, not humans, it is easy to build decentralized applications
or other tools that interact with the network for programmatic advertising.
In short, solutions like the MAD network are enabling a new
generation of programmatic advertising opportunities, using the blockchain as
their backbone. Advertisers and publishers alike will enjoy faster, more
cost-efficient processes for buying and selling ad space.