Potential Value of Blockchain in Advertising Industry

The World’s First Blockchain Advertisement On-Blockchain Conference and Seminar was held in China in November 2018 and it has reflected the gradual development of the application of blockchain in the advertising industry. In the context of traditional advertising business models, customers enter contracts with digital advertising companies to pay for production costs, distribution costs and the purchase of ad slots. This process lacks transparency and is lengthy, leading to risks such as process clutter and fraud. The risks though can be mitigated through blockchain application. The advertising industry can be benefited in a number of ways: structural optimization, process transparency, fraud prevention, user portraits, and user incentives.

Structural Optimization

Excessively complex ecosystems and the multitude of industry players have led to a gradual decline in the industry’s transparency, making the system ever more complex and bloated. Blockchain can directly connect advertisers and media, skip intermediaries such as advertising platforms; thereby improving efficiency and reducing the number of middlemen. More importantly, it can better price the user’s attention value and reduce the expenditure on services provided by middlemen.

Transparent Procedures

Since all operations are recorded and cannot be tampered with, the transparency of the advertising business process will be greatly enhanced. The use of blockchain for auditing can easily enhance buyer transparency through data collection and media contract validation, while for sellers, blockchain can provide certificates to provide publicly audited log and view counts. This allows transparent disclosure of actual clicks or views of data while information such as ad delivery effects, data, and pricing can be better executed.

TruthAgency, a marketing group based in the UK, is helping to mitigate transparency issues in programmatic advertising by quickly reviewing ad transactions. TruthAgency aims to provide a single view across the value chain and a single clear fee for advertisers.

Fraud Prevention

According to the audit reports of advertising agency companies, The&partnership and Adloox, in 2017, advertisers suffered up to 16 billion dollars in losses due to advertising fraud (robots, using back door of advertising service network, etc.). The existence of Blockchain makes the tampering and mass production of false IP more difficult, avoiding false traffic counting methods such as robot clicks and IP spoofing, thus reducing advertising fraud and its losses.

User Profiling

User profiling collects and analyzes consumer attributes and abstracts a user’s business overview. The traditional advertising network uses different metrics, making the cross-checking by advertisers very difficult. Blockchain can improve the situation with respect to data dimensions. To achieve cross-contrast analysis of multi-dimensional data, each user will have a profile on the chain to accurately describe their preferences, social attributes, lifestyle habits, consumer behavior and other key information. The improved quality of data can uplift the accuracy of user profiles and investment conversion rates.

User Motivation

In order to solve the existing bloated digital advertising market, Basic Attention Token company has issued the BAT token, a digital currency asset used by advertisers and users to solve advertising display and user incentives problems. The company’s ‘brave’ browser uses the ANONIZE algorithm to analyze user behavior, such as which links are clicked the most, or which sites do users stay on the longest. These behaviors can be quantified using the “Attention” unit by embedding the blockchain ledger system in the browser, and the token that this system circulates is BAT token. Usually, when ‘brave’ users watch advertisements or high-quality content, they will be rewarded with BAT tokens because of the attention paid by them. The website owner will attract users’ attention with advertisements and high-quality content while the system will work to reward them. Both the user and the website owner receive BAT tokens from the merchant’s advertising expenses.

The wide application of blockchain technology is changing the traditional media industry and triggering a new round of changes in business processes, organizational institutions, governance systems and business models.