Blockchain in advertising is currently a subject of controversy. Some industry experts believe that demand-side platforms and supply chains can benefit from it, while others deem the solutions too crude for implementation.
Today, programmatic advertising is plagued with serious problems such as ad fraud, which consumes around $7.2 billion of annual ad spend. Also, advertisers express their concerns over fees and commissions that the digital advertising system fails to explain. Plus, advertisers have another major headache: it's crucial for them to track attribution with precision along with every added commission cost. It’s time for advertisers to start rethinking how to boost the effectiveness and safety of their digital campaigns. And this is where this technology could step in and lend a helping hand.
What is Blockchain, and how does it work?
Blockchain is a decentralized and secure data storage technology that allows transactions to be recorded in an immutable form. Essentially, blockchain is a continuous, sequential chain of information blocks structured according to specific rules.
You can think of it as an electronic ledger, where the data is available to all participants, but only one can actively modify it at any given time.
In traditional transactions, such as money transfers or currency exchanges, there is typically an intermediary or central authority that oversees the process. In contrast, with blockchain technology, a token (the unit of account) is the carrier of value, which is determined by the market itself.
What’s also particular is that every participant in a network possesses and constantly updates the ledger. Essentially, this ledger can record any event, from cryptocurrency transactions like Bitcoin and Ethereum to fixing election results or identification data.
Plus, the "pages" (or blocks) of this ledger are stored by all users simultaneously, continually updated, and linked to previous pages. If someone tries to tamper with the system by altering a page, the network instantly checks thousands of other versions of the ledger and detects the inconsistency.
Blockchain in ad tech: The basics of safety
Many experts predicted blockchain would be the next big breakthrough in programmatic since it is incompatible with ad fraud. Blockchain represents an opportunity to register every step and action performed inside the programmatic platform. Technology's public ledgers can store data about financial operations, contracts, credits, or sales.
That’s why blockchain adtech is the next big thing for the industry.
Since the distributed ledger is stored on the computers of all participants simultaneously, the chain is almost impossible to hack. Unlike other databases, this one consists of interrelated blocks built upon each other. The minute the publisher or advertiser makes an action, a block is added to the chain that stores information about all previous operations.
It also promises salvation for everyone who is concerned about hidden fees and inflated prices charged by ad tech providers. This problem in programmatic advertising exists because the chain includes DSP, SSP, DMP, Ad Network, and other programmatic players. Each party individually defines a commission the tracking of which today is borderline impossible.
In peer to peer network, everyone has a unique identifier and a digital signature, at the same time, personal data can remain confidential. This way, the adtech industry can benefit from total transparency and safety. The publisher and advertiser can see all information about transactions, audit the origins of clicks, and find out details on served impressions.
Benefits of Blockchain in marketing
Here is the list of numerous challenges that blockchain marketing can solve:
Enhancing transparency and reducing ad fraud
Blockchain can create a chain of blocks that records every transaction and action in the advertising process. This ensures the authenticity of each step, helps prevent fraud like fake clicks or misleading reports, and builds trust in the brand. Since it provides complete transparency at every stage of an ad campaign, it eliminates the possibility of hidden fees charged by vendors.
Protecting customer data
This technology can safeguard clients' personal information and prevent unauthorized access, boosting customer loyalty and the company's reputation.
Protecting intellectual property
Blockchain ads are getting protected – technology helps combat piracy of ad content by securely storing information on product origin and authorship.
Eliminating intermediaries
Thanks to this technology brands to bypass middlemen and offer products directly to consumers, reducing costs and commissions which will ultimately improve campaign efficiency.
Improving targeting
This technology can power new targeting systems that give advertisers access to verified consumer data, helping refine ad delivery and reduce irrelevant content. Crypto- and NFT-based marketing could help pinpoint audiences and encourage desired actions.
Loyalty programs
It can create decentralized, transparent loyalty programs, helping businesses attract and retain customers with appealing rewards.
Streamlining contracts
It makes contracts more transparent and efficient. Smart contracts automatically execute and verify terms, reducing fraud or errors—like auto payments tied to KPIs.
Automating ad campaigns
With smart contracts, the process of buying and placing ads becomes simpler and cheaper because such contracts automatically execute predefined terms, streamline negotiations, and eliminate the need for intermediaries.
So, advertising blockchain perks are evident. Even though it’s hard to predict further trends, one thing is clear: the ad tech players are paying the interest, and the first market-ready solutions have already been built and are successfully used by companies.
But how big is the market? MarketsandMarkets estimates that the global blockchain market will exceed $94 billion in revenue by 2027, growing at a compound annual growth rate (CAGR) of 66.2%. Seeing great perspectives of this technology for digital advertising, IAB created a blockchain working group in 2017, which will contribute to the standards development and clear up the legal aspects of technology implementation.
The impact of Blockchain on digital marketing
Currently, media companies are using distributed ledger perks to automate contract execution, create inventory lists, and avoid intermediaries for traffic acquisition like Google and Facebook. More so, blockchain in programmatic advertising offers many benefits, but its legal framework is still under construction. This is why small brands are afraid to experiment with it until solutions are widely adopted.
The advantages are so far are more understandable to large advertisers like Procter & Gamble, Unilever, or Nestle, which invest a lot of money in innovative solutions. Comcast, the data service provider, has created an alliance of broadcasters, including Altice USA, Cox, NBC Universal, and Disney, which will also utilize smart contracts.
Smart contracts, meanwhile, ensure trusted relationships between parties. For instance, if the advertiser wants to blacklist certain traffic sources, this is getting registered in the smart contract of all participants simultaneously, which regulates the process and brings it to standard.
Future trends in Blockchain advertising
So, what’s coming in the near future? What should we expect?
- Improved ad buying in programmatic
- Less ad fraud in programmatic
As we’ve already discovered, the main advantages of this technology for marketing are improved data safety and ad buying. It is especially important for programmatic advertising blockchain endeavors. In the future, the technology will enable the standardization of ad contracts and enhance their transparency, as concerns about traffic quality sometimes arise even in this niche.
- Implementation challenges
- Development of the regulatory landscape
It is worth noting that implementing this tech requires restructuring large systems with numerous participants. Therefore, it’s easier to start integrating it on a smaller scale. A prime example is the Swedish government, which is gradually transitioning its land registry to blockchain technology.
Additionally, it is currently unregulated by any legal framework and is quite far from achieving this. For the technology to gain trust, it must meet established standards.
- Enhanced energy demand
- Aligning technology with sustainability
Supporting this technology demands significant computing power and energy, making it crucial for industries to consider how to align this trend with sustainability in advertising.
- Tokenization
- NFTs as rewards
On the bright side, in the future, brands have the opportunity to create loyalty programs that strengthen their relationships with customers and build lasting loyalty. These initiatives can offer customers representations of brand or product ownership. Additionally, tokenization enables brands to discover new ways to engage with their audience. Non-fungible tokens (NFTs) have become increasingly popular as collectibles. Brands can leverage NFTs as rewards or incentives for events and competitions, generating buzz and promoting active participation.
- Integration of NFTs and metaverses
One additional trend that is expected to evolve in the future is the integration of NFTs and metaverses within the adtech landscape. As brands begin to explore immersive virtual environments, they will have the opportunity to create engaging experiences that resonate with consumers on a deeper level. For example, companies could host exclusive virtual events or product launches in a metaverse, allowing users to interact with their products in a 3D space. Additionally, brands may issue limited edition NFTs that grant access to special offers, experiences, or loyalty rewards, further incentivizing customer engagement. This convergence of ads, gaming, and digital ownership will not only redefine brand-consumer interactions but also open up new avenues for creativity and storytelling.
Wrapping it up
Blockchain in marketing and advertising opens up numerous opportunities, ranging from increased transparency and trust to enhanced loyalty programs and data protection for users. Brands that choose to adopt this tech can significantly boost their competitiveness and strengthen customer trust. However, it is essential to approach the implementation of it thoughtfully, taking into account all potential challenges, trends, and advantages of this technology.
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