The industry is crying out for a solution that allows the digital advertising supply chain to coordinate in a scalable, trustworthy, and secure way – and blockchain could be the answer.

‘Blockchain’ is the buzzword of the moment in the ad tech industry. This year, we’ve already seen three companies come to market bringing the blockchain protocol (typically synonymous with crypto-currency Bitcoin) to the digital advertising supply chain: MetaX, NYIAX, and MadHive.

What is blockchain?

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” – Don & Alex Tapscott, authors Blockchain Revolution (2016)

The key benefits of the blockchain are:

– The ledger cannot be controlled by any single

– There is no single point of failure

– Transparency: data is embedded within the network as a whole, by definition it is public

– It cannot be corrupted

Why does the online advertising ecosystem need blockchain?

The volume of ad impressions traded grows continually, as more people gain access to the internet and spend more time consuming content online. The vast majority of content online is free to view, meaning those publishing content have to rely on advertising to fund their business.

The scale of online ad trading is rapidly surpassing the processing capabilities of standard industry protocols. This has created the gaps in the ecosystem that are exploited by bad actors and taking USD$8.2bn (£6.6bn) (eMarketer, 2016) out of the supply chain every year.

There is also huge concern about the lack of transparency that is causing publishers to receive a very small percentage of the cost of the advertising they make available. With so many middlemen in the supply chain taking undisclosed cuts, publishers are not realising the revenue they deserve.

Ken Brook, Co-Founder, MetaX

“Blockchain has a number of exciting implications for digital advertising. Fraud prevention is a natural first application, given the transparency and security blockchain brings, and because fraud is such a major issue for the advertising sector”, says Ken Brook, co-founder of MetaX (pictured right).

How does it work?

The diagram below explains how the adChain protocol works across all digital advertising channels and across the supply chain (from advertisers, to DSPs, to publishers, to safety vendors).

Source: MetaX

The approach allows the whole supply chain to coordinate and work together to create a new healthy ecosystem free of fraud, bot traffic, and malware.

Blockchain provides a detailed audit trail – something every advertiser wants. All transactions are auditable within the blockchain’s universal, immutable ledger. The end result is a scalable, trustworthy solution for tracking and verifying all advertising impressions that provides media buyers 100% transparency into the supply chain.

In order to create this new transparent ecosystem devoid of fraud, the entire display advertising industry, minus runaway leaders Google and Facebook, need to adopt the protocol. “The mandate is coming from the advertisers”, Brook says. Only time will tell if MetaX can convince enough advertisers to make this the dominant approach.

Key benefits:

– End-to-end transparency: For the first time, brands and media buyers have a trustworthy holistic view of all data related to an impression

– Campaign coordination and auditing: Advertisers and publishers have a comprehensive audit trail for everything related to a campaign (e.g. participants, media, and placements)

– Exposes fraud: Activity can be identified and blacklisted in real time at a protocol level, before significant damage can take place

– Real-time reconciliation and data collection: Advertisers, and their vendors, can see where other problems arise across the supply chain and take advantage of coordination efficiencies to help track/solve issues

– Cryptographically secure event processing: Advertisers and publishers can execute massive transaction volume, while maintaining integrity and security of their impression data

– Comprehensive data: Complements existing safety/verification vendors by providing secure and comprehensive data

– Ad-friendly implementation: Simple tracking beacons and basic scripting allow seamless integration with the industry’s existing solutions, enabling interoperability and easy adoption by the digital advertising ecosystem

– Using the MetaX platform to hook into and access the adChain protocol is as easy as setting up a normal campaign. There is zero change to existing systems and no deep integration is necessary, according to MetaX.

What about GDPR?

The upcoming GDPR is going to make it much more difficult for third parties to track and process personal data. New data privacy laws will also invite regulation. “One of the elegant benefits of blockchain and smart contracts is the ability to ensure compliance. For example, the blockchain allows us to develop applications and protocols that lawfully track/process data. Compliance can be verified and cryptographically proven; which is why I think blockchain came to us just in time”, says Brook.

There are other ad companies using blockchain too. Two weeks ago, Nasdaq announced that it was going to launch, later this year, the New York Interactive Advertising Exchange, which will let inventory be sold using blockchain technology. It uses blockchain in a different way: smart contracts, which let you facilitate exchanges when used on the blockchain, will let certain contracts execute automatically, as long as conditions are met. “Once the exchange achieves critical mass within digital, we will begin supporting TV, print, radio, and out-of-home markets”, Lou Severine, NYIAX’s CEO, told Reuters.

MadHive is developing blockchain technology for OTT television in an effort to stay ahead of Google and Facebook. For MadHive, the idea is similar to adChain – brands would track an ad impression in real time through TV Everywhere or other OTT apps.