High Fees and Hidden Fees in Ad Tech: The Guardian’s Experience
This is a
lesson learned with difficulty by The
Guardian, the British newspaper and digital
publisher. The Guardian is suing the Rubicon Project over disputes related to ad
tech, claiming that it missed out on substantial revenue from advertisers
because of the way the Rubicon Project’s ad tech platform operates.
Rubicon Project is a company that specializes in ad tech and promises to use
digital tools “to automate buying and selling for the global online advertising
industry.” The Guardian contracted
with the Rubicon Project to connect advertisers looking for ad space to The Guardian’s digital assets where
advertisers could run their ads.
The Guardian’s suit alleges that the Rubicon
Project’s automated advertising platform imposed “secret commissions” on the
publisher, on top of the fixed fees that the company expected to pay in exchange
for directing advertisers to The Guardian’s
ad space. More generally, The Guardian
claims that the Rubicon Project inflated its profits by failing to provide
visibility into the amount that advertisers were willing to pay for ad space.
Because the publisher had no means of knowing what advertisers would spend for
the ad space it wanted to sell, its profits suffered, according to the lawsuit.
The Siloed Ad Tech Supply Chain
advertising companies like the Rubicon Project are only some of the numerous
intermediaries that introduce cost inefficiency to the ad tech supply chain.
diagram from App Nexus illustrates, vendors — who run ad servers, verify ads,
provide ad exchange management services, manage ad data and more — all impose
fees that incrementally eat away at the sums spent by advertisers as they
travel down the supply chain.
result is that, for every dollar spent by advertisers, only about 40 cents end
up in the pockets of publishers who provide ad space.
The Blockchain Solution to Ad Tech’s
blockchain technology, a better ad tech world is becoming possible.
blockchain is a special type of database in which data is stored and managed in
a decentralized fashion. As a result, no centralized party has control over the
data and, because transactions are visible to all nodes on the blockchain,
attempts to cheat or hide data are easy to detect and prevent.
tech, blockchain’s most significant feature is its ability to ensure trust
between advertisers and publishers without requiring the assistance of third
parties. Traditionally, ad companies like the Rubicon Project have served to
ensure that contracts between advertisers and publishers are enforced. This was
important because conventional technology offered no good way to enforce
contractual agreements automatically.
“smart” contracts that are executed on the blockchain, however, ad agreements
can be automatically enforced without third-party intervention. In a smart
contract, the terms that buyers and sellers negotiate are enforced by software.
If either party fails to fulfill its commitment, the contract is automatically
canceled. In addition, because the contract terms are recorded on the
blockchain, which is publicly visible, it is impossible for one party to hide
or misrepresent data related to the transaction.
The MAD Network’s Approach to Ad Tech
Network is one
example of a blockchain-based solution to ad tech’s intermediary problem.
by MadHive, MAD Network provides a decentralized ad server that
advertisers and publishers can use to buy and sell ad space directly from each
other, with transactions recorded on the blockchain. The MAD Network cuts out
all of the intermediaries who introduce fees and delays to the ad tech supply
addition, the MAD Network allows publishers to sell anonymized data about user
behavior on their platforms. Advertisers can purchase this data and use it to better
understand the groups they want to advertise to. This feature adds visibility
to the ad buying process and provides a better way for advertisers to predict
and measure ad performance. It helps to make ad tech less secretive and more
transparent, while also offering an additional revenue opportunity for
Network will be powered by MAD Tokens, a cryptocurrency that advertisers and
publishers will use to buy and sell ad space. MAD Tokens are set to become
available for purchase through a token sale in the final quarter of 2017.
MAD Network, the ad tech dollars will no longer disappear. The amount that
advertisers spend to place an ad will be virtually the same as the sum that
publishers receive to publish an ad. In addition, contracts will be enforced
automatically, eliminating concerns about trust.