A good number of firms are already turning to blockchain-based ad solutions because of their benefits and the fact that they help companies tame ad fraud. A lot of these benefits come by because blockchain helps improve transparency in media buying. For instance, parties to ad contracts can know exactly how much is expended on what.
Further, companies that have done tests with these solutions report massive reduction in impression discrepancies and ad costs. Some are also preferring blockchain-based ad solutions as they help them avoid disputes and disagreements related to advertising.
Nevertheless, blockchain is also attracting attention in the media buying, selling and placement markets due to its ability to reduce reconciliation and to settle transactions instantly especially when cryptocurrencies and tokens are used inside such ad platforms.
Improving transparency, ad accuracy and trust as well as removing inefficiencies
Warc, a marketing intelligence firm, said that out of every dollar spent world-wide last year on programmatic ads, just 40 cents on average made it to the publisher selling the ad space. And while marketers can actually manually review and audit their campaigns, blockchain provides a faster and smoother solution to review spending and to highlight discrepancies. Besides that, blockchain facilitates near-instant transactions, is more secure and can be used to process millions of transactions per second.
In programmatic advertising, transparency is a problem because of the foggy supply chain where the marketer will pay agencies up front, then the agencies use the money to pay media buyers, exchanges, and other ad tech providers. There is no item for record itemizing on details about where the money goes or for brands to know exactly how much of the budget is exactly used to pay for the ads, to fees and to intermediaries or what services the fees are paying for.
Moving forward, IBM is working on a blockchain process that will help end digital spending waste and address transparency and trust among advertising partners, brands and publishers as well as ad accuracy. The digital media supply chain is based on Hyperledger, IBM's open-source permissioned blockchain, and the environment will be built on MediaOcean’s campaign management platform.
IBM is already using its Artificial Intelligence (AI) system Watson to target consumers in programmatic ad buys and thus reduce costs in the process. Programmatic ad buying is the algorithmic purchase and sale of advertising space in real time. Software is used to automate buying, placement and optimization in media inventory via a bidding system.
The system being developed by IBM and partners will make it possible for parties to check every step of an ad campaign, right from purchase to execution on media (publishers platforms) and all this will be recorded on the blockchain hence solving a variety of challenges related to transparency. It will remove business friction in advertising.
And there has been disputes related to lack of clarity about where exactly the money used to buy ads goes to. The system will provide a comprehensive view of the supply chain and tackle opacity from rapid proliferation of intermediaries, which makes it hard for both advertisers and agencies to identify exactly how much goes towards 'working media.' And records being immutable, there is less chance for alterations and data integrity is ensured. Again, blockchain makes it much easier and faster to track transactions from a single platform.
IBM iX and advertising software provider MediaOcean also announced a new ad-focused blockchain consortium at the recent Cannes Lions Festival of Creativity.
The solution developed by IBM iX was launched by IBM in partnership with Unilever. The first phase is providing a unified view of audience delivery in order to identify and correct issues of reconciliation. Parties will be able to use smart contracts that can validate agreed figures, which makes it possible to easily identify discrepancies and clear them instead of taking weeks or months to clear the discrepancies as happens with many media buys.
At the same time, it will be possible to use the blockchain record impression data and determine exactly how much media companies or publishers should be paid.
One publisher working with IBM and AdLedger on the same is Salon Media Group, which said that the system would, not only help publishers regain more control over their inventory but also illuminate where inefficiencies exist within the long and complex supply chain. The company said the greater ad placement accuracy would make advertiser spend much more efficient.
Anheuser-Busch InBev, ATT Inc., Kellogg Co., Bayer AG and Nestle SA are some of the advertisers already using blockchain to figure out whether their ads are viewed by real people and not bots, and hence reducing ad fraud and siphoning of budgets by middlemen. Most important, the customer or marketer will be able to gauge the value of what is provided against the costs and decide whether the purchase is worth it and hop to a different providers when circumstances aren't agreeable.
Nestle is testing a product that pays advertising vendors at the same time who fulfill their job commitments. Lucas Herscovivi, global marketing VP at Aneheuser-Busch said that the technology is helping them to verify that they are reaching consumers in the most relevant ways, adding that most programmatic media will move to using blockchain in the next three to two years.
AT&T and the pharmaceutical giant Bayer earlier this year listed the services of Amino Payments, a startup that employs blockchain technology to find solutions to problems of transparency in advertising. The two would use the blockchain to track advertisement and expenditures as ads travel through the media supply chain. Amino is working with AppNexus, which provides Amino with data on the identities of entities across online advertising supply chains.
AT&T said the technology would help them to gain insight into who the tech providers are in the ad space and how much fees they are accessing to the company's working media dollars. This would help companies understand who and which middleman is providing what value at what price.
Amino Payments relies on ad tech adopters AppNexus and IAS. AppNexus started experimenting a blockchain solution in order to resolve various problems in the ad space. Bayer, which previously run a ran a portion of its programmatic spend through AppNexus, would have its spend on the platform come with guaranteed reporting on fees paid to intermediaries and the amount spent per unit of inventory.
Richards Group in partnership with partners AppNeexus and IAS tech adopters have done some tests on a blockchain-based ad platform for client Lucidity, a blockchain ad startup, and the test revealed that such a platform can massively reduce impression discrepancy.
According to AppNexus, programmatic needs more transparency for three reasons: can help reduce ad fraud, help advertisers to effectively evaluate their ad tech partners and because it will help the best ad tech providers to get stronger. The company says if providers can ensure transparency conversation with their customers and provide more value, then they can improve ROI and become better as best players in a competition.
To solve payment problems resulting from reconciliation problems
Tyson Foods is also working on blockchain pilots in its supply chain to improve transparency and traceability. The solution helps them to improve digital payment and reconciliation cycles because it takes months or even a year to settle campaign performance data. The company also uses blockchain to reduce food waste and track packages should contamination issues arise.
For ad platforms and publishers, reconciliation problems lead to disputes with marketers and clients in the programmatic ad space and this leads to delayed payments. SaaS blockchain technology startup FusionSeven originally planned to solve rights management disputes in digital media but shifted to reconciliation.
The payment feature inside a blockchain ad platform is what would make any blockchain ad platform with a cryptocurrency be much better because it helps solve the payment problem with instant settlement.
Thus cryptocurrency is almost a near natural fix to the payment problem on these platforms, although most blockchain companies do not want to introduce cryptocurrency features into early-stage deals. They eventually may. Jason Kelley, IBM’s global GM of blockchain services said cryptocurrencies are often set aside due to their being associated with new and sometimes scammy online cons people buy and trade.
Amino Payments has an internal cryptocurrency called Grains but deals with clients only in dollars. IBM has “tokens” which play the role of completing payments usually for operational cases like requesting office supplies or shipping products internally. Kelly has said that crypto elements could simplify media transactions and that enterprise companies will grow more comfortable with them.
MetaX, which is a blockchain advertising platform, transacts in cryptocurrencies and is a place many crypto startups go even as Google continues to block ICO and crypto-related ads. Publishers on the MetaX cover Bitcoin or other crypto news and also trade in cryptocurrencies. The company however has fiat support when to facilitate dealing with "non-blockchain based" media companies and agencies.
Helping reduce legal disputes related to ads
In addition to reducing ad fraud and increasing ad accuracy and transparency, using blockchain can help reduce legal disputes related to alleged malfeasance as happened in the Uber's lawsuit against Dentsu Inc. which owns Fetch Media Ltd., and The Guardian's suit against Rubicon Project. Uber went to court against Fetch Media Ltd. for alleged click fraud arguing that the firm improperly billed Uber for "fake" online ads and took credit for app downloads it had nothing to do with. Uber said it canceled a campaign on the conservative website Breitbart where Fetch was placing Uber ad, after discovering something was amiss. The company was seeking $40 million in damages.
Fetch replied by saying that the claim was unsubstantiated and completely without merit, and was a "purposefully inflammatory so as to draw attention away from Uber’s unprofessional behavior and failure to pay suppliers.”
Uber dismissed the lawsuit in December 22.
In its part, The Guardian was suing Rubicon Project (RUBI) arguing that the tech vendor failed to disclose fees it levied on advertisers looking to buy the newspaper's online ad inventory and that it breached the contract by taking "secret commissions" from ad buyers.
Rubicon later sued The Guardian with high court claims saying that it did receive buyer fees but maintained it was "entitled to do so" because they were for its real-time bidding service, which was not part of its contract with the paper.
Such disputes can be avoided by improving transparency by using blockchain.