The advertising industry was forever changed when Wired Magazine debuted the world’s very first digital banner ad in 1994. This marked a revolution in the way advertisements were displayed to audiences.
According to forecasts, the global advertising market has experienced a steady increase between 4-5% since 2011. By the end of 2018, global advertising expenses are expected to reach $592 billion. However, despite its rising popularity, current methods of digital advertising are not without their inefficiencies.
Most digital advertising platforms store large amounts of data on central servers. This makes this system vulnerable to attacks from cybercriminals, which can result in the leak of sensitive user data. In addition, the rapid increase in the amounts of data gathered means that single centralized servers could no longer meet the storage needs required.
Current advertising methods have also seen low advertiser ROI (return on investment) due to artificial bot impressions, inefficient audience targeting, and low engagement levels.
The advent of blockchain technology has sparked a revolution in many industries, and digital advertising is no exception.
Data Management and Storage
Although businesses have recognized the importance of using data to target consumers. Many marketing executives admit that they have failed to make proper use of collected consumer information. In fact, a study conducted by Razorfish found that a staggering 76 percent of marketers were unable to convert behavior data to meaningful behavioral analysis and effective targeting execution.
One of the reasons for this is data held by separate entities (advertising platforms and advertisers) being stored on separate central servers. Since this data is not typically shared (or kept in “silos”), data isolation can occur, which can lead to inaccurate user profiles, information fragmentation, and inefficient delivery of targeted advertisements.
Storing data on a shared distributed ledger eradicates this problem by recording all the user information on blocks that records relevant data such as length of engagement, downloads, subscribes, and purchases. All of these constitute a sequence of events that form a user’s behavioral chain and can be used to represent users’ interests more accurately.
Many businesses have now started to realize that making full use of data is important to increase engagement. In fact, many executives have themselves admitted that they have failed to properly collect consumer information – a huge blunder.
Audience Targeting and Engagement
Companies have now realized that the right technology is required to translate data into better customer experiences. In other words, a unified digital marketing ecosystem where all teams and technologies work together is necessary.
Vast amounts of user data and performance metrics can be recorded and organized using blockchain technology to take full advantage of collected behavioral data to paint an accurate picture of the user.
Comprehensive tools can be also used to track ad campaign parameters such as who viewed the ad, the time the ad was viewed, engagement rates, and conversion rates. By using this data, advertisers can conduct meaningful analyses to better understand user patterns generated from advertisement interactions and better identify performance gaps in their advertising strategies.
Fraud Prevention
A growing concern for online advertisers for some time has been ad fraud (also known as click-fraud). This involves artificial ad impressions created by traffic bots meant to mimic human interactions to generate revenue to the website’s creators.
According to recent studies, ad-fraud sites designed specifically for bot-traffic accounted for 20% of all domains. Furthermore, it is estimated that bots account for almost 60% of all web traffic. These fraudulent practices depreciate the efficiency of the industry and results in excessive costs and reduced ROI for advertisers.
Blockchain transactions can utilize complex algorithms to easily track and verify that ads were delivered to the right audiences in the right places and at the right times. Since the decentralized nature of the blockchain requires that all members on the network be approved and verified by other participants, fraudulent traffic can’t enter the system, ensuring that all impressions are legitimate by clamping down on bot traffic, spoofing, ad stacking, etc.
Buying and Selling of Commodities
Buying and selling of online commodities have traditionally involved intermediate e-commerce payment gateways such as PayPal or SecurePay. These third-parties, though currently necessary for e-payments, have often been associated with hidden fee structures, high costs, and lack of functionality for simple actions such as recurring payments.
Smart contracts, on the other hand, can be used to define specific conditions to which all parties agree. This way, credible transactions can be performed without the need for third parties.
By setting a specific set of “rules”, predefined actions on the contract can be executed once all conditions are met. These contracts are self-executing and self-enforcing. For example, blockchain smart contracts can allow advertisers and publishers to buy and sell ads directly.
Ad insertion orders can be set up as a smart contract on the blockchain whereby an advertiser’s campaign is tracked through the supply chain while the smart contract verifies each stipulation along the way. Conditions that are not met will void the smart contract automatically while allowing the advertiser to see exactly at what point the contract was violated.
Privacy protection
To advertisers, the methods used to gain data might not be of top priority; however, to users the world over this issue is of paramount concern. With massive corporations having almost unlimited access to user data, and with users not knowing exactly what is done with their data, the need for a solution is apparent.
Blockchain technology has many positive attributes that can significantly benefit the digital advertising industry. Increasing advertiser ROI, protecting users’ data, and getting rid of fraudulent activity in the supply chain, are some of the major advancements blockchain technology can create. Although this technology can still be considered to be in its infancy, its potential to revolutionize digital advertising can go well beyond the scope of this article.
