Chatchawin Jampapha/123RF

Blockchain For Advertising: 12 Possible Use Cases

  • 7 November 2018
  • Sam Mire

In some ways, digital advertising has devolved into the worst of both worlds: the average digital advertisement costs 12% more than it did two years ago, yet average site time per visit fell 6%. Despite advertisers increasing their total spending on digital advertising by 42%, they are seeing visits to their sites as a result of those ads increase by only 11%. You don’t have to be a math or advertising major to figure out that bang-for-the-buck in digital advertising is heading in the wrong direction.

It’s not always those selling the ad space who are to blame, however. In an age when personalization is key, a 2016 survey found that 55% of respondents said advertising content was either not tailored to them or uninteresting, both fatal flaws for sites aiming to attract unique visitors. The biggest problem with these figures is that there’s no surefire way to know what kind of return you are getting on your advertising budget, because digital advertising metrics are notoriously untrustworthy and kept close to the vest by those who seek to charge high prices with few results. Plus, the use of advertisement blockers was up 30% from 2016 to 2017, and mobile ad blocking is becoming an even greater threat to advertisers.

Some believe that part of the solution to these problems lies in the adoption of blockchain-linked ad platforms on which users can directly benefit from consenting to view advertisements that they believe suit them, providing advertisers a more serious audience that is more likely to take long-term action instead of providing only fleeting page views. This system could provide far more insightful metrics by which advertisers and ad space sellers could engage in more equitable, transparent negotiations while also lending more credibility to digital advertising’s reputation.

Blockchain for Advertising - Possible use cases

Immutable Advertising Metrics

Blockchain use cases in the advertising industry - Immutable Advertising Metrics

As it stands, companies who purchase advertisements are often left to take the word of ad brokers when it comes to how much traffic an ad is directly responsible for creating. Metrics are flawed, and the opacity in determining precisely how much impact a single ad or campaign has on a site’s success bleeds into the negotiating process. More transparent metrics linked directly to the advertisements themselves would manufacture stronger, more reliable numbers in terms of clicks and impressions, also decreasing any vulnerability to manipulation. Logging these metrics on a single record that both the ad purchaser and broker can access will be a strong start towards letting the hot air out of the room where ad-related negotiations are being conducted. 

Advertising Smart Contracts

Blockchain use cases in the advertising industry - Advertising Smart Contracts

The implementation of self-executing smart contracts could facilitate a more performance-based system of payment between advertisers and those who purchase their ad space. In some cases, these contracts could be paid based on the performance of an ad, assuming that both parties agree to this model. Even if advertisers and those who employ their services would prefer a more formal, less variable pay model, the ability to log those terms on a smart contract to be paid out at a certain date could lessen legal costs for both parties.

Companies Trying to Solve This Problem

  • XCHNG – Eliminating fraud in real-time using smart contracts. Check out our interview with the CEO in episode 40 of Blockchain Disruption. 

Transparent Media Buying and Selling

Blockchain use cases in the advertising industry - Transparent Media Buying and Selling

The digital advertising industry has a trust problem. One study found that in the United States, agencies were routinely reselling ad space to their clients at markups of up to 90%. In 2016, Facebook admitted that their video ad viewing metric only counted videos that were watched for more than three seconds, a catch that led to an estimated 60–80% overstatement of how effective video ads on the platform were. YouTube lost critical clients who spend a combined $4.5 billion in domestic advertising annually due to lack of knowledge about the nature of videos their ads were being displayed on.

The blockchain’s ability to collect and make data easily shareable could reduce or eliminate a number of pain points in the ad buying process — ads posted to fake sites, hyperinflated and fraudulent metrics, etc. The chain’s private keys and ability to show who has accessed data should provide a measure of comfort for advertisers leary of sharing such information, too, making the negotiating table leveler than ever. 

Companies Trying to Solve This Problem

  • IBM – Working to restore trust in media Ad buys with blockchain.
  • AdBank App in Beta. Increasing transparency on payments between advertisers and publishers.
  • AdBit – Blockchain media marketplace. 

Accurate Audience Targeting

Blockchain use cases in the advertising industry - Accurate Audience Targeting

Approximately $204 billion was spent on digital advertising in 2017, but a lack of sophistication in advertising techniques has left advertisers’ clients in the dark about how effective the campaigns they fund truly are. Statistics show that the majority of marketers run relatively unsophisticated campaigns, as 70% of marketers fail to target consumers with behavioral data. While Google AdWords has helped provide a better understanding of metrics, such as cost-per-click, the cost to tap into these services is steep — $100,000–$120,000 per year for the little fish, and as high as $50 million per year for giant retailers. And these services often leave much to be desired in terms of target demographic hit rates and meaningful interactions with the ads.

It’s thought that the blockchain could provide the opportunity for transparency that allows advertisers to know more about those interacting with their ads with the user remaining anonymous. Other proposals, such as paying members of the target demo directly to interact with ads using micropayments, have been floated as an attempt to remove intermediaries, who by and large take home the greatest cut of the current digital advertising game.

Companies Trying to Solve This Problem

  • BitClave  Matching sellers with targeted buyer needs. 

Reducing Ad Fraud

Blockchain use cases in the advertising industry - Reducing Ad Fraud

Marketers lost $7.2 billion due to digital advertising fraud in 2016. This was nearly a $1 billion jump from the previous year, evidence of how rapidly the problem is spreading. Approximately 22% of video ad spending was fraudulent, while some advertisers reported that as much as 37% of their impressions could have originated from fraudulent clickbots. It’s truly shocking to consider that for every $3 spent on digital advertising, $1 is burned up by fraud of some kind.

The primary purpose of the blockchain for reducing ad fraud would be to trace advertising dollars to their ultimate endpoint. Those who purchase ads would see on what videos or sites their ads are being run, and a record of transactions between brands, ad buyers, and the sites where the ads are being run could provide an even more complete picture of precisely how advertising dollars are being put to work. 

Companies Trying to Solve This Problem

  • AminoPay  Using blockchain to ensure proper billing and payments.  

Decentralized Ad Networks

Blockchain use cases in the advertising industry - Decentralized Ad Networks

For every dollar an ad purchaser spends to purchase digital advertisements, they are receiving only 44 cents in estimated value. A substantial amount of this poor ROI is due to the number of hands that ad space passes through. Exchanges where intermediaries sell ad space has its perks, such as bundling, and networks and private exchanges accounted for a combined 50% of the means by which surveyed advertisers planned to acquire ad space. But these advertisers are likely unaware of the extent to which intermediaries drive up the cost of the ad space they are buying.

Blockchain-based platforms aim to bring advertisers and publishers directly together by detailing the terms of purchase and other specific parameters within a smart contract. By cutting out the middlemen who peddle ad space as a means for profit, advertisers will ultimately see lower costs and more quickly deployed campaigns by dealing directly with the publishing source. For publishers, the reward of removing these middlemen has been estimated to be a rise in their cost-per-thousand impressions (CPM) from $1 to $5. 

Companies Trying to Solve This Problem

  • Basic Attention Token – Creating an exchangeable token for advertising.
  • Kind Ads  Better deals for advertisers, better outcomes for publishers.

Clearer Attribution of Views / Impressions

Blockchain use cases in the advertising industry - Clearer Attribution

Click fraud is estimated to be growing at a rate of 50% per year. In a sample of 135 million online ad impressions logged on Internet Explorer — not the gold standard of browsers, but still — half of the impressions qualified as non-human traffic. Meanwhile, 20.5% of the impressions logged on Google Chrome were considered non-human. Because the blockchain possesses the capability to provide greater transparency into the metadata of somebody viewing an advertisement, many believe that a blockchain-based attribution system could provide far greater insight into whether the viewer is a human or bot. Further, the ability to compensate internet users for their metadata could allow even greater intel into their age, interests, and other demographic information to understand which demographics are most interested in a given campaign, providing a much stronger basis for targeted advertisements.

Companies Trying to Solve This Problem

  • MetaX/AdChain – Using AdChain to increase the accuracy of attribution data.
  • Killi – Using consumer participation for improved attribution data. 

Improved Ad Exchanges

Blockchain use cases in the advertising industry - Improved Ad Exchanges

The top ad exchanges facilitate the purchase and sale of media advertising on a host of sites. The top ad exchange platform, AppNexus, hosts nearly 81,000 sites, and the next four ad exchange players all host advertisements on between 40,000 and 50,000 sites. These exchanges grant advertisers the ability to bid on ad space that is relevant to their target audience and suitable for their budget. But exchanges can be improved upon. A decentralized ad exchange would allow users to input critical parameters, such as their price range and demographic requirements, and automated systems built on blockchain technology could pair bidders with ad space sellers automatically. This process is sure to be cheaper and more efficient, and could lead to a rise in decentralized autonomous organizations populating the ad exchange space.

Companies Trying to Solve This Problem

  • NYIAX – Nasdaq partnered decentralized Ad Exchange.
  • XCHNG  Decentralized ad exchange by Kochava. Check out our interview with the CEO in episode 40 of Blockchain Disruption. 

Protecting Personal Data

Blockchain use cases in the advertising industry - Protecting Personal Data

47% of advertisers in North America plan on increasing their use of third-party data in the next year, relying on second and third hand sources to purchase behavioral data they don’t already own. With more potentially sensitive data in a greater number of hands, the need for greater data protections is apparent. Today, more than one-third of marketers say they have collected more data on their customers than they could possibly analyze effectively, yet 62% of consumers report being “very uncomfortable” with companies being able to sell their personal data. The disconnect between users’ concern for privacy and the way their data is being handled is clear, and these stats paint a picture of advertisers cavalier with the personal data of a public growing increasingly wary of their data’s security.

The advent of decentralized applications could provide a sort of lock on a user’s personal data, granting them the ability to decide who has access to their activities and for what purpose. A paradigm shift toward voluntary payment to support sites, as opposed to highly secretive, shady cookie and data collection, could also prove to be another benefit of blockchain introduction for data-protection purposes. 

Companies Trying to Solve This Problem

  • Brave Blockchain powered ad-blocking.
  • Civic  More secure identity solutions.  

New Advertising Channels

Blockchain use cases in the advertising industry - New Advertising Channels

Over 60% of digital advertising investment in 2017 was collected by two companies, Google and Facebook. This equated to $35 billion in total digital ad revenue for Google and $17.37 billion for Facebook. In the United States marketplace, the dominance of these two advertising channels — which includes Alphabet-owned YouTube and Facebook-owned Instagram — contributed to the fact that no other digital ad platform has a market share greater than 5%. Using promising blockchain-based platforms where users interact — the Reddit alternative Steemit, as one example — as digital advertisement hubs is a worthwhile use case…until such a platform is inevitably absorbed by either Google or Zuckerberg, of course.

Companies Trying to Solve This Problem

  • Ternio Working on scalability solutions to increase the speed of advertising transactions, opening up to new applications. 

User Data Self-Monetization

Blockchain use cases in the advertising industry - User Data Self-Monetization

In 2016, Facebook alone collected almost $27 billion from their advertising products, which are inextricably linked to the trove of user-generated data that the platform is known to collect. This comes out to approximately $20 per monthly active user, leading some to conclude that user data is worth at least $240 per year. Other simple calculations, such as the division of the $83 billion in revenue from digital advertising in 2017 by the roughly 297 million internet users, equates to a figure of just over $289 in user-generated revenues per annum. Other measures put the figure per user at $7,600.

The ability for consumers to own and dole out their own data based on incentives could put more coin in their pocket while also reducing the amount of “bad data” that is generated by legacy data collection methods. Permissions for specific information, and the user’s willingness to trade this information along a secure blockchain network at a price that suits them represents a more mutually beneficial system than is currently in place. 

Companies Trying to Solve This Problem

  • Killi  Empowering consumers to monetize their data.
  • Kindads – Consumer control of personal advertising data.
  • Datawallet  Securing consumer data on the blockchain. 

Data Curation

Blockchain use cases in the advertising industry - Data Curation

The variety and volume of data collected today for advertising purposes has made the data itself very volatile. Poor marketing data costs businesses an estimated $611 billion per year. And with corporate data growing at a rate of 40% per year and 20% of the average database being “dirty” — populated with bad data — the rise in costly, inefficient data curation processes will continue to be exponential.

Data curators track and add value to datasets spanning a consumers’ traceable internet history. But to do this effectively, they must identify which data is accurate, and which is going to grant them true insight into effective targeting methods and campaigns. The algorithmic nature of blockchain technology can help sort and consider only necessary, valuable metadata, adding a level of automation to curators’ jobs that will help filter the dirty data from the clean.

Companies Trying to Solve This Problem

  • BigToken Introducing improved data systems for advertising.
About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.