How is Blockchain Affecting Advertising?

How the promise of Blockchain is solving ad industry main challenges

When we think about blockchain we think about criptocurrency, however both of them are not the same thing. Blockchain was invented as the technology to support Bitcoin to become a secure decentralized currency. Blockchain technology has now arrived to the ad industry and Technology firms are scrambling to become the first to successfully roll out a decentralized platform to house programmatic media buying and eliminate the transparency issues that have long plagued this arm of advertising.

What is Blockchain

According to Interactive Advertising Bureau (IAB) “Blockchain for Video Advertising” whitepaper, blockchain provides a way for two parties to make a secure transaction on a decentralized network. It is an immutable, distributed and transparent ledger that cannot be altered in any way. This means that once the data is stored on the blockchain’s distributed peer-to-peer network, its authenticity cannot be brought into question and its value can be verified at any point throughout the network.

The Advantages

Transparency: The problem with digital advertising is that it’s become less transparent – and in the eyes of many clients – increasingly untrustworthy; the very opposite of what was supposed to happen. A fully transparent and trustworthy ledger would mean that, for the first time, brands could see where all their digital media dollars end up, and be sure that if they thought they had purchased ads from a given publisher, it really happened. Having this information will allow to make inform decisions that were not able to do before.

Cheaper: As fraud and automation increased, more and more middlemen were introduced into the advertising supply chain in order to fix the problems. Third-parties within the process chain can lead to cost inefficiencies for all parties involves including content publishers. The introduction of Blockchain will eliminate the middleman cost as it does not suffer the transparency/fraud issue.

Faster: Programmatic removed insertion orders and the haggling between human parties that used to slow down the ad buying process. However, this process still requires invoices, accounts payable and receivable, and a delay between the placement and reception of funds. Using blockchain-based cryptocurrencies could remove these barriers and make the process significantly faster.

Blockcahin does have some challenges in the future including concerns on slow processing based on the storage size and from an environmental perspective the high energy consumption the technology needs and how it affects global warming. As of now, the technology is helping on one of the biggest challenges the ad industry has suffered, fraud and transparency.