Blockchain has been a contentious issue in adland over the past couple of years. One the one hand, many of those talking about it are the people who are themselves working on blockchain-based products. On the other, the sceptics aren’t often particularly blockchain-savvy. This can make it hard to work out how much of what is claimed about blockchain is actually true, and whether it can really live up to its promise.
I-COM, a trade body for data professionals, sought to help solve this problem with the formation of its Data Science Blockchain and Advanced Research Subcommittee last August. The Subcommittee’s aim is to answer questions which remain of what blockchain is and what its drawbacks are, and to offer guidance on the subject matter to industry bodies, companies and researchers.
VAN spoke to three committee members – committee chair Joshua Koran, Dr. Kajal Mukhopadhya, and Luke Mulks – about their views on the real benefits blockchain will bring, as well as the challenges the tech still faces.
Where can blockchain add value?
The I-COM subcommittee members VAN spoke to all believe there are a large number of potential applications for blockchain on both the buy-side and the sell-side. Blockchain is often lauded for its potential to introduce transparency and trust, but this can happen in lots of different ways throughout different parts of the supply chain.
For the buy-side Joshua Koran, chair of the blockchain committee and managing director of Sizmek, splits its uses into workflow-level transparency and transaction-level transparency. At the workflow level, he says blockchain will introduce new clarity into media planning, verification and attribution, while at the transactional level, he says negotiation and real-time bidding will be improved by enhanced transparency.
Dr. Kajal Mukhopadhyay, editor-in-chief of the Frontiers of Marketing Data Science Journal, outlined some specific buy-side uses.“The first and the most critical part is to track the impression delivery – from the primary source to the actual display of the assets – keeping an accounting the value-chain tying back to the measurement of the proper value of the ad delivered,” he said. He believes blockchain can be useful for the following:
- Ad call and ad server authentications: verifying the ad has been delivered through the ecosystem;
- Partner validation: viewability and fraud verification, making sure the ads themselves are viewable, and that traffic is legitimate;
- Guaranteed audiences: validating that demographics and custom audiences have been reached;
- Pricing and value-added distribution through the delivery chain: fees, data cost, verifications and data matching all handled through the blockchain;
- Smart contracts (contracts that are automatically executed when all their terms are met) replacing insertion orders: streamlining the invoicing process and overcoming payment delays due to verifications;
- Billing and reconciliation for the final transaction;
For the sell-side Luke Mulks, senior ad tech specialist at Brave Software identifies three key uses for blockchain.
He says that recording verifiable transactions to the blockchain will provide a clear record for settlements and other supply-chain data, and that direct exchanges executed through smart contracts will help reduce inefficiencies and the intermediary costs involved in the process. He also sees potential for a blockchain-based token that could be traded in exchange for gift cards and access to premium content.
Existing use cases
Some of these use cases are still only theoretical, but there are quite a few companies already offering blockchain based services, and several more set to start trading this year or next.
Many of the big tech companies are leading the way in development of supply-side oriented blockchain solutions, according to Mukhopadhyay. “So far, there haven’t been a lot of players in the advertising space to develop, enable, and implement blockchain based technology architectures tackling the issue of transparency,” he said.
“However, IBM is taking the aggressive initiative in the space, and quietly the big three players – Microsoft, Google, and Apple – are building their own framework for applications in all software sectors.”
He has also been impressed by Brave’s use of blockchain for its “adoption based browser”, and NYIAX’s blockchain-enabled trading platform. Brave uses blockchain-based utility tokens to enable payments between users and their favourite websites, as well as to distribute ad revenue to users as well as publishers. NYIAX (New York Interactive Advertising Exchange) uses Nasdaq’s blockchain-based tech for automated buying and selling of advertising.
Koran however suggested that some of the use cases we’ve seen so far don’t really play to blockchain’s strengths. “Given the computational cost of adding new records to a public blockchain, the most successful companies are offering side-chains, smart contract references to information outside the blockchain or private-blockchain solutions,” he said. “However, this means all market participants have to trust that centralised entity, which defeats the goal of having a decentralised marketplace that validates the content of the information being transacted.”
Challenges to overcome
Koran’s example highlights that while blockchain is already being used within the digital ad ecosystem, the tech still has significant challenges to overcome before it reaches its full potential.
“The most prominent hurdle the Blockchain has in the advertising space is the technology and the underlying principle of executing ‘smart contracts’”, said Mukhopadhyay, saying that many existing implementations come with a massive amount of “ifs and buts”.
Koran explained that at the transactional level, blockchain has a way to go before it’s able to process the millions of ad decisions which are made every second within the digital ad ecosystem. At the moment, adding new information to the blockchain is expensive, due to how every addition has to be validated by multiple actors, and storing this information is also very pricey. He said progress is being made though: “Both processing costs and storage costs are declining, so at some point there may be a way to cost-effectively apply blockchain without the need for a company to control the marketplace.”
However he also says problems remain at the workflow level, due to the lack of a standard language all market participants can use to communicate in. “While RTB specifications have come a long way to automate how buyers and sellers can programmatically communicate, there is still no common way across all market participants to classify information,” he said. “Multiple systems use their own unique taxonomies to classify information.”
This problem is compounded by the fact that unlike financial markets, ad inventory has wildly varying value depending on the context, time, and the buyers interested. Until these problems are solved it will be remain difficult for ads to be traded over a blockchain in the way many have predicted they will.
Those working on the tech therefore have plenty of work ahead of them then for blockchain to be able to fulfill its apparent potential. However, the three experts VAN spoke to also emphasised the importance of those within the ad industry wrapping their heads around blockchain before they start partnering up with blockchain platforms and solutions.
Mulks believes that having a basic knowledge of what blockchain is and how it works will be sufficient. “It’s important to understand what the blockchain fundamentally is, compared to a centralized system,” he said. “Beyond that, it’s not terribly important for those in the ad industry to know all of the technical details and mechanics involved with the blockchain.”
Mukhopadhyay meanwhile described blockchain as “one of the least understood pieces of ‘hype’ in terms of its use and applications.” He believes that “it is critical that practitioners in our industry thoroughly understand the nuances of the ‘blockchain hype’, and are able to distinguish, compare, and objectively judge what and how blockchain can change.”
Koran gave an analogy: “Taking a simple example, I know the fundamentals of how my car’s engine works, but I still rely on an auto mechanic to make repairs.” Similarly, ad industry professionals don’t need to be able to explain blockchain at a technical level in order to use it, but they should know enough to be able to discern which issues it is actually able to solve.
This is one of the problems to blockchain subcommittee is trying to solve. “One of the goals of the I-COM Data Science Blockchain and Advanced Research Subcommittee was to help marketers better understand what blockchain technologies are and how they work,” said Koran.
This article was produced as part of a media partnership between VAN and I-COM. Blockchain will be one of the topics under discussion at the 9th edition of the I-COM’s Global Summit this week, taking place in San Sebastian, Spainand, and also one of the subjects of the upcoming Frontiers of Marketing Data Science Journal, a biannual digital publication, which will be launched during the event.