Advertising is big business globally – economists predict that the global advertising spend will jump from $534.8B in 2017 to $557.99B this year to mark a consistent 4.3% annual growth rate over the last couple of years. Digital advertising is gradually becoming the biggest segment of the advertising market as media agency Magna forecasts that digital media will account for 44% (about $237 billion) of ad spend globally in 2018. The percentage of the digital ads market is expected to rise to 50% or ($291B) by 2020.
Interestingly, North America is the largest regional ads market, followed by Asia and Western Europe. Hence, it is not surprising that American companies such as Alphabet Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) are the biggest drivers behind the global ads industry. In 2017, both Alphabet Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB) took a combined 61% of the global ad spend. In specifics, Alphabet Inc (NASDAQ:GOOG) made about $95.4B in total ads revenue in 2017 and Facebook Inc (NASDAQ:FB) made about $39.9B in ads revenue in 2017.
The problem however is that current ads are somewhat intrusive, disturbing, and frustrating because they often interfere with the user experience when users consume online content. Interestingly, many users have learnt to ignore ads or stop them altogether with ads blocker on their browsers. Unfortunately, when users ignore or block ads, the advertiser rarely gets decent ROI on their ad spend. This piece examines how blockchain technology could change the way users experience and interact with ads.
Blockchain is decentralizing the ads market
Blockchain technology is an incredible disruptive force sweeping over the tech, economic, and socio-political landscapes globally. Blockchain technology has already disrupted the financial markets with the introduction of cryptocurrencies – smart contracts are rewriting the way we do business, and now blockchain has shown potential to change the way we view ads.
Kind Ads wants to change the way users interact with ads by leveraging the decentralized nature of blockchain technology. Kind Ads bills itself as a decentralized ad network that allows publishers to serve user-friendly non-invasive ads..
Kind Ads is especially focused on a user-friendly ads system by utilizing a domain rating score which protects advertisers and leveraging newer technology such as push notifications or chatbots. For one, publishers who sign up with Kind Ads get to choose to work with advertisers with products that their users might find useful. Users get to opt-in and choose the kind of ads they want to see or totally opt out of receiving ads. Advertisers also get to choose publishers based on interests so that they can send more targeted ads.
Kind Ads also believes that decentralizing the ads network will remove the middlemen and ultimately reduce advertising spend for marketers while helping publishers earn more money from hosting ads on their online properties. The more interesting feature of Kind Ads is that it integrates with existing internet browsers such as Google Chrome through a native browser extension.
The tokenization of the ads industry is underway
Critics have argued that blockchain is a solution looking for a problem to solve; however, in the case of global ads industry, blockchain technology is a priceless solution solving an important market need. Several firms have debuted different kinds of solutions aimed at solving the attention span problem of the ads industry.
For instance, AdEx Network introduced a blockchain-based ad exchange designed to stem ad fraud and minimize privacy violations. AdEx is leveraging Ethereum Smart Contracts to decentralize the Ads industry by helping advertisers to deal directly with publishers without needing a third-party to facilitate the deal. The problem with AdEx however is that its solution is not ripe for the mass-market – the complexities involved in setting up a smart contract between users, publishers, and advertisers makes it impractical.
Basic Attention Token (BAT) has debuted another blockchain-based digital advertising platform designed to improve the efficiency of the digital advertising process by tokens. The firm submits that combining the Brave Browser with BAT could be a potentially smart way to eliminate middlemen, help publishers earn more money, and reduce ads fraud for advertisers. The problem with BAT’s proposition is that it wants to people to stop using familiar web browsers such as Google Chrome and Apple Safari in the place of its Brave browser. However, Ad blockers are doing a decent job of stopping ads on existing browsers; hence, users don’t have a strong enough reason to start using a new browser just because they don’t want to see ads.
Kind Ads understands that there’s more to revolutionizing the global ads market than just cutting out middlemen from the ads value chain. Hence, forcing people to download new browsers won’t solve all the problem because advertisers will continue pushing out the same kind of intrusive ads. Kind Ads’ (KIND) token could potentially be a tool to incentivize users to opt-in into the ads ecosystem because they’ll be rewarded for their data. Advertisers can leverage the tokens to purchase ads spots directly from publishers.
Disclosure: No positions in Alphabet Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB).