The Association of National Advertisers has slammed Facebook for having “not yet achieved the level of measurement transparency that marketers need and require,” and pointed out that it expected better of a site that handles more than $6 billion in advertising a year.
The Cost of Distrust
Despite the industry’s continued growth, digital advertising lacks many of the core building blocks that make an ecosystem secure, costing the industry billions of dollars a year.
IAB released a study with substantial financial implications on fraud in the industry and produced dramatic results. The total cost to the digital advertising ecosystem from fraud and other supply chain flaws, specifically malware-related and infringed content, is $8.2 billion per year; 59 percent is incurred costs and 41 percent is lost revenue opportunity cost. An estimated $4.5 billion alone is the cost when invalid traffic is served advertisements. The current cost to fight supply chain flaws is $219 million, a significant portion of which is spent on ad tech intermediaries to escalate issues of viewability and fraud.
Trust Debates and Opportunities
In a recent e-marketer study, 70 percent of marketers admitted that they will spend even more on marketing technology in 2017. Why the increasing spend on marketing technology?
Some of the allocated funds will no doubt be spent to prevent and track fraud, but 74 percent say their main digital priority is to match customers across multiple devices. Only 14 percent surveyed say they actually have the technical capability to do so. This means that even more intermediaries will be placed between the content creators, their audience and the advertiser. And, at what cost to the consumer who is desperate to protect their data from misuse?
Infusing trust in the media and ad tech supply chain will require a new form of data security to protect anonymity in a world of hyper personalization. Creating more efficiency and data integrity requires disintermediation, connecting consumers directly with well-suited brands and media. This is where the real potential and the opportunity lies. This is how blockchain technology will rise to the challenge with a set of features that can transform the media and digital advertising industries not closely associated with trust.
Blockchain Applications: Managing Consumer Relationships
Naturally, the level of identity matching and data portability marketers need requires major security measures to protect from data leakage. The only way to maintain and verify trillions of transactions and events with billions of people and hundreds of thousands of brands will be with a highly decentralized technology that no one entity can control, like blockchains. Using blockchain tools such as smart contracts and multi-signature cryptographic keys, data sets used to target ads can safely move about the ecosystem, even among parties where there are high levels of distrust.
Ad Delivery Verification
Blockchains have the capability to transform digital advertising. For example, the technology can provide transparency into the supply chain using a shared ledger which also provides an audit trail. Beyond ad delivery verification, blockchain is the only solution to provide a universal data set everyone understands and trusts, becoming the single source of veracity that all participants can access together to begin to eliminate fraud.
Digital Rights Management
New styles of content are going to be the driver in capturing ad dollars and if content remains the proverbial hero in the story, then there are many areas where blockchain technology can be vital.
Essentially, blockchain technology can improve the atmosphere for content creators through rights management. This has direct applications to content, which can be time-stamped and stored with a unique identification. Once this information is saved, it is immutable. The rights to a particular piece of content can be seen by everyone participating on the blockchain network, rather than stored on a stand-alone server owned by one intermediary. It would also create a direct consumer-to-creator network where consumers interact directly with creators and have direct access to their content. This will transform players like Netflix and YouTube as well as the current distribution process, shifting more of the financial upside to creators who can essentially license their IP directly.
The U.S. Department of Defense has funded several startups and endeavors dedicated to building blockchain solutions to identify and deter cyberattacks. The technology can secure an organization’s network by placing the identities of all authorized users in the blockchain ledger, which continuously verifies them. A blockchain can also continuously ensure that all the bits of code used to run a network are authorized and genuine and that files haven’t been modified.
With growth numbers for advertisers and incumbents increasing substantially, the industry lacks many of the building blocks to capture missed opportunities in a heavily fractured and siloed industry. This is truly a relevant and exciting moment for Distributed to launch the Media and Advertising vertical to explore the use of blockchain technology and how it may address and solve some of these large issues. There are newfound opportunities in the media and ad tech landscape with enormous financial upside for all parties at the table.
This article originally appeared in Issue 01 of Distributed.