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Facebook and Google Watch Out: Blockchain Is Changing the Advertising Industry

Users are continuing to adopt technology to be part of their day-to-day lives. In the US, 240 million users – 85 percent of the population – will go online once a month. Businesses will eventually have little choice but to engage their customers through digital channels. As such, online advertising is set to become indispensable for marketers.

Ad spending across all media is expected to grow to $628.63 billion in 2018, 43.5 percent of which will be spent on digital media. By 2020, digital media is projected to account for half of total ad spending. The success of internet giants like Google and Facebook reflects this growth. Ads remain to be their bread and butter. Google reported ad revenues of $28 billion in Q2 of 2018 while Facebook earned $13 billion in the same quarter.

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However, there is a crisis going on in the online advertising space. While the ones controlling the ad networks are enjoying healthy growth, the same cannot be said for advertisers and smaller ad networks. Many advertisers are simply wasting their budgets away due to way online ads work today.

The Online Ad Crisis

The current mechanisms of online ads heavily favor the likes of Google and Facebook. These companies impose the terms and policies that govern their platforms. Advertisers and content creators have little choice but to relent.

Malicious actors are also able to game their systems. Pay-per-click (PPC) advertising, where advertisers are charged for every click made on their ads, has been victimized by unscrupulous developers and publishers. These entities employ click farms and bots to produce fraudulent clicks and boost their ad revenue. These clicks, regardless of origin, are ultimately charged to advertisers. Google and Facebook can still make their money while advertisers’ budgets go to waste.

Users are also becoming “ad blind.” Display clutter is conditioning users to ignore ads. Personalization supposedly fixes this. Targeted ads that are served based on users’ preferences work well in catching user interest. However, data privacy laws and regulations now restrict data gathering and profiling activities which hamper the effectiveness of personalization engines.

Because of these issues, it is estimated that there is 20 to 30 percent of waste in the media supply chain. This dismal outlook even compelled some companies to pivot their digital strategies. Consumer goods giant P&G cut its digital ad budgets by $200 million from last year’s allocation. This can be disheartening to many online marketers as they face the pressure to deliver and guarantee returns for their efforts.

Blockchain Solutions

Fortunately, various projects aim to solve this advertising crisis. Blockchain – the technology behind cryptocurrencies – has now found its way into marketing and advertising. Blockchain’s immutability, decentralization, and smart contracts are being put to use to create better online ad mechanisms.

Blockchain venture Zinc, who recently partnered with the in-app advertising monetization giant, ironSource, is currently working on a platform that aims to bring back trust and transparency to digital advertising. Through the platform, app users can selectively share their data to advertisers and ad networks. This allows advertisers to serve back personalized and relevant ads to users through the apps they use. As reward for sharing their information, users receive Zinc tokens which can then be used to unlock premium content, features, or ad-free app usage.

Image source: Zinc.co

Image source: Zinc.co

Such a mechanism provides several benefits to advertisers. To start, they get to access verified user data which allows them to personalize and create targeted campaigns. Such campaigns increase engagement and promise better conversions. Amazon is a classic example of this. Its recommendation engine, which displays personalized selections of products, contribute to over a third of the company’s sales.

Since the data is also shared willingly by users, advertisers are also assured that they remain compliant with data privacy laws. These platforms also secure user information which provides a much-needed layer of protection given the risks of data breaches that is rampant in today’s computing landscape.

Other projects are zeroing in on other issues. Kind Ads, for instance, focuses on ensuring that ads enhance the viewers’ experience. Traditional ad networks have been known to serve up irrelevant and obtrusive ads which contribute to ad blindness. Through the platform, publishers and developers are able to select ads that appeal to their audience.

Image source: Kindads.io

Image source: Kindads.io

Another ad-focused blockchain project, 2Key is providing a very interesting solution embedding a multi-step tracking system into HTTP links. Users can share links of products and services, much like with traditional affiliation programs. Once a conversion is made, those who shared on the chain are rewarded accordingly. 2key’s solution works in contrast to Facebook, which takes home a lion’s share of the profits for all conversions made.

2key.network

Image source: 2key.network

Better Engagement

For advertisers, these measures help them prevent waste. Higher quality ad placements in websites and apps with great user experiences could result in optimal conversion rates for their campaigns. By preventing click fraud, advertisers can also save on the costs brought about by these malicious actions.

Users also become more involved and engaged in the process. They can now contribute to the improvement of their own experiences by helping companies serve ads that fit their preferences. Incentives also help create more synergies between consumers and businesses. Every stakeholder gain from these new mechanisms.

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