What is the next big innovation in advertising technology?

It could be blockchain. Why? I'll post some excerpts from the article but in order to understand the value of blockchain in business and marketing, you should understand how this technology works. Therefore, please read my step-by-step explanation of how blockchain works first.

Challenges that await digital marketing and advertisement

Technological development greatly influences marketing. From strategy planning, through execution, to analysis. Marketers can access countless data coming from distribution channels and tools they use to manage the whole process. Despite that, we are facing unprecedented distrust towards brands (which is caused mainly by fear of personal data leakage) or product authenticity concerns. Fake news, mass personal data leakage (or making it available to third parties) and other similar phenomena further increase distrust. According to a survey conducted by CB Insights its respondents believe that among the biggest technological companies Facebook will have the biggest negative influence on society in the next 10 years.

From the business operation perspective we are challenged by ineffective ad cost analysis, caused by bot traffic and many middlemen in the ad supply chain. According to Forrester agency study, advertisers lost 7,4 billion dollars in 2016 due to ad fraud. What's more, Forrester predicts that losses may reach 10,9 billion dollars in 2021. Video and programmatic ads are the ones most threatened by fraud. Due to a large scale of abuse, the problem seems to grow beyond marketing departments. According to CMO Council report 72% CMOs are under pressure by their CEOs to solve problems concerning trust between brands, agencies, publishers and clients.

How can blockchain solve this problem?

Thanks to its features - transparency, irreversibility and immutability - blockchain works like a trust machine, and that is why it can be applied whenever two parties exchange something and want a good method to do it while establishing trust and transparency. Let's take a look then, on how to make use of blockchain qualities to solve above problems. I'll present blockchain application examples coming from Walmart, AXA and similar companies, as well as ideas that may help you take advantage of this technology.

1. Increase trust towards a brand - thanks to previously mentioned smart contract features (irreversibility and immutability) you can use it to prove product quality and guarantee pledge fulfilment.

Supply chain control is a flagship example. Blockchain enables safer and faster cooperation between all chain users: from suppliers, through shippers, producers and retailers.

Let's say that you want to guarantee quality and safety when it comes to vegetables sold by your chain store. To find out if the producer cultivates them accordingly, you consult a certain quality assurance institution (a kind of a middleman) that has to be paid. You also have to trust the carrier to transport your goods in the right conditions e.g. in the right temperature.

How can you change all that? You create a smart contract with your producer. You write down conditions that you require the vegetables to be cultivated in and what data source you'll use to confirm that e.g. IoT hydration sensor on the plantation. If a batch is hydrated according to contract, auto-payment is activated in set time period. This process makes you free of an outside institution, otherwise needed to ensure quality. The same goes for transport. You agree on e.g. transport temperature in your contract (IoT thermometer provides necessary data). If the temperature does not exceed agreed value, auto-payment is activated. Final customer can access smart contract and check if the product they buy is up to standards. Read more on how Walmart and Maersk use blockchain to increase safety and reduce transport costs.

What about the case when your product is damaged or the service is not provided according to the agreement? I imagine an intelligent contract warranty. Service will be provided based on trusted data sources - database, API, IoT sensors or authorised service. This warranty (or insurance) cannot be breached, there is no escape from fulfilling your obligations.

It's still too soon to introduce such solution on a mass scale but a pilot programme can bring you valuable data and benefit your PR. Read about AXA's smart contract tests.

2. Preventing fraud in online advertising. Marketing industry faces distrust and too-many-middlemen problems. You should know by now that blockchain can help with those issues. Software developers working on decentralised apps know that as well, which is why more and more projects are made. Take a look at two examples:

  • AdChain - is a publisher registry that contains websites offering advertising space. Token owners decide if a web is trustworthy by voting. Incentive system makes voting for dishonest publishers pointless, because when the register looses quality, advertises will decrease their activity as well, which will result in the app's (of which token owners are shareholders) failure.
  • AdShares - is an open programmatic ad trading ecosystem. It will allow direct contact between publishers and advertisers, enabling them to set their mutual preferences regarding ads and their price. Publishers and advertisers will be able to rate content quality and campaign results. User-accessible registry along with intelligent contracts will protect participants from fraud by monitoring ad views. Thanks to that bot-generated views will be easy to identify and advertisers won't have to pay for them. Apart from cryptography AdShares utilises "display first, collect payment later" payment system, which enables paying for ads after they were verified and also allows to use revenue sharing model.

You're thinking "Ok, they want to remove middlemen but they are middleman themselves, how do they want to profit from that?" I've been wondering about that too. It's all true, but they offer much lower rates in a form of tokens worth 1% of the ad price compared to 30-50% in case of centralised middlemen.

3. Managing personal data - blockchain can change the way how we manage our online data. Specific websites and apps currently collect data about our activity and use it for ad-related purposes. The result is that users do not own their data. Developers want to change that by creating decentralised apps that will work like a cartographically locked wallet, allowing its owners to decide with whom and for what purpose they share all collected info. The wallet will contain personal data as well as data collected while users are using social media. Therefore, data that can be downloaded from your Google, Apple or Facebook accounts can be collected in an anonymous form in one wallet and you can decide who has access to it. Civic is a good example of utilising blockchain to that purpose.

There is an equally interesting app, built by Mozilla's co-founder, Brave browser. It allows users to block all ads and cookies, and enables them to support their favourite websites or content creators with micropayments in cryptocurrencies, instead of watching ads. The next step is getting paid for watching an ad - users will be rewarded for interacting with specific ads. This functionality is developed by Brave creators. Thanks to apps like this creators and publishers will be forced to improve their content quality to convince users to give access to their data.

4. Social media. Solutions mentioned above will also influence social media. This is the part where I answer the question from the introduction - how can Facebook utilise blockchain. My answer is: It can employ this technology for its daily operations as well as for improving value for its users. Here is what they can do:

  • Facebook employs over 1000 counter-fraud specialists, that watch over the network of over 6 million advertisers it serves. To minimise costs it could create a private blockchain, a network that could be available only to chosen individuals. This network could take a form of private AdShares. It would allow Facebook ad-network members as well as advertisers to gain better insight into their cooperation. It would also result in dishonest party elimination.
  • How can Facebook boost and improve their impact on society? For example, by rewarding authors for publishing valuable content and users for discovering it. Decentralised version of reddit, steemit platform, is a good example of such actions. High-rated content creators are rewarded with tokens, while users can receive tokens for early discovery of such valuable content. This business model is more fair to the online community than the one where the service administrator is the sole beneficiary of network effect generated by that community.

If you want to know what actions you should take on, read summary of - What is blockchain and how can it change marketing? • Future Mind


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