Enter the Blockchain
Blockchain technology is a digital, immutable and decentralized ledger
of all transactions recorded in almost real time on one network; so, in order
for a new transaction to be added and recorded, consensus of the network
participants is required. Essentially, the blockchain is a spreadsheet maintained
across millions of computers, without central storage or a central authority to
maintain it. Since you cannot change previous blockchain data, there is an
organic mechanism of control: entry errors are impossible, as are manipulating,
altering or destroying data. By solving the problem of double-spending,
security and data tampering when it comes to transactions, blockchain
technology has eliminated the need for third-party oversight.
Considering just how large and complex the advertising landscape
has become, blockchains can provide much-needed solutions, transparency,
accountability and integrity for the entire value chain, from publishing and
aggregation to distribution and consumption.
Blockchain technology ensures spending transparency because both
the buyer and seller see the entire buying and selling process: all hidden
costs are eliminated. With the spread of blockchain technology, advertisers
will witness democratization and liberalization of the market with instant
micro-payments. They will also be able to see how much they are spending and
where their ads are delivered. And publishers will benefit from the elimination
of intermediaries in reaching their target audiences, earning more and ensuring
Consumers can also benefit. The same payment system can offer
consumers tokens or micro-incentives for engaging with ads or completing
activities that add value. With the implementation of smart contracts — such as
those that Ethereum introduced — we could witness a truly transparent
advertising market, with set rules for all market participants securing
accountability. in short, the promise of a decentralized ad ecosystem with
transparent prices and permanent transactions could be realized.
But transaction speed is another story. It is clear that any
industry with a lot of intermediaries, such as advertising, has plenty of
potential for fraudulence and a lack of transparency. The blockchain has the
potential to improve transaction speeds because the technology cuts many of the
unnecessary intermediaries out of the equation. The shorter the supply chain,
the fewer unnecessary transactions there are.
However, with blockchain technology still in its infancy, it cannot
yet offer significant improvements to transaction speeds. Though
transformative, existing blockchains are still relatively slow, with most
taking between seconds and minutes to confirm transactions. The reason for this
relatively slow speed is because in order to write to, verify and encrypt the
growing size of blocks demanded, considerable computing power is required.
Moreover, for blockchains to significantly improve speeds, all players in the
advertising chain and ecosystem would need to adopt the technology. In order to
enable speeds that would be measured in milliseconds, some new, innovative
approach must improve these essential blockchain characteristics.
The obvious solution to this would be faster computing power,
which is inevitable. But to improve speeds, publishers, advertisers and
exchanges would have to improve computer power substantially, which is not
likely to happen overnight. It’s more probable that, in time, we will see new
blockchain projects with higher transaction speeds and larger numbers of
transactions. This depends on the number of companies and startups getting into
the blockchain landscape and developing new solutions. Until that happens, it
is still early to talk about blockchain technology significantly penetrating
the online advertising industry.
Solving all these problems probably won’t happen right away. But
it is clear that blockchain technology is here to stay. It will likely transform
our ways of doing business, the internet and, eventually, all of society. This
means that, aside from solving its essential issues, advertising businesses
will need to accept the blockchain as a new standard — and benefit from
improved reliability and transaction speeds as a result.