Blockchain & Advertising — New Solutions to Old Problems
By: Jan Wozniak
Tags: Crypto, Advertising, Cryptocurrency, Blockchain, Ethereum

Blockchain & Advertising — New Solutions to Old Problems

I wonder how many online advertisements you have been subjected to since you started browsing the internet? Hundreds of thousands? Millions?

If you are like me, very few of them register, but rather operate on the periphery of my browsing experience, providing nothing but an occasional distraction to be ignored or quickly clicked away. Of greater concern than the visually intrusive nature of online ads is the tracking technology behind them.

Wherever you go online, you leave behind a digital footprint, with data from website visits, searches, cookies, and your browser being accumulated in an attempt to figure out which ads you’re going to be most interested in seeing. The giants of the internet are all in on this game — Google, Facebook, Amazon, etc. — and then there are layer upon layer of subsidiaries who collect, harvest and distribute this data among themselves. It’s an opaque and sometimes predatory infrastructure, that provides the end user very little value but takes a surprising amount.

For publishers as well, the current system leaves a lot to be desired, with Google and Facebook taking 99 percent of growth and 73 percent of ad dollars. Ad revenue has recently decreased 66 percent and bots caused $7.2 billion in fraud in 2017!

Finally, advertisers lose out a due to lack of information. They suffer from poor targeting, which hurts the ROI of their ads, and marketers can be fooled by fake websites that commit fraud.

Thankfully, however, various entrepreneurs have begun to think about how to renegotiate the relationship between the advertising industry and the consumers it serves. Leading the charge are various blockchain solutions that leverage an immutable, distributed and transparent ledger to provide previously unforeseen benefits for consumers as well as adtech companies themselves.

Just a few improvements blockchain can offer include:

Making contracts faster and smarter and speeding up payments

Reducing ad fraud by creating an immutable audit trail between brands and consumers

Augmenting or replacing digital advertising infrastructure, allowing publishers and advertisers to buy and sell ads directly

Exposing or eliminating middlemen who benefit from programmatic ad deals

Transforming how attention is valued online (i.e. rewarding brand interactions, allowing surfers greater control over their data and the ability to sell their data to advertisers, empowering consumers to play a more active role in the digital ads ecosystem)

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The current MVP in the blockchain-based advertising sector is Basic Attention Token.

BAT is the native token of Brave, an ad-blocking web browser, which anonymously monitors user attention, then rewards publishers accordingly with BATs. Recently Brave has also started trials to reward viewers for watching ads, which will be shown directly in the browser in a private channel to users who consent to see them. When the ad system becomes widely available, users will receive 70% of the gross ad revenue.

What’s inspiring thing about the Brave browser is it’s noble aim to deliver privacy as you browse, and also speed load times. It blocks trackers and ads that learn about you without your consent, which at first glance would seem set up to punish the advertising industry. Since getting a new laptop about a month ago, I’ve switched mainly to Brave for browsing, and was impressed by what it has picked up.

It also makes it very easy to select which sites you reward with micropayments. The browser identifies where users spend the most time and then uses this information to calculate the proportional reward for each publisher using BAT.

This project deserves to be taken seriously on the credentials of its team alone, which has been assembled by Javascript inventor and Mozilla co-founder Brendan Eich. Moreover, the Brave browser has been downloaded 5 million times on Google Play store, has 2.3 million monthly active users across all versions, and 14,000 verified publishers who have signed up to receive BAT payments.

The network statistics for BAT are also quite impressive. It is currently sitting on a marketcap of $217 million, making it the 14th most valuable ERC20.

Last month (May), there were 6,780 Daily Active Users (*defined as “distinct senders that sent the tokens using ERC20 transfer() method.”) and 64,692 holders.

Further Stats for the last 30 days are below:

Data Source: https://www.trivial.co/t/0x0d8775f648430679a709e98d2b0cb6250d2887ef

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Bitclave is also working towards giving consumers full control over their personal data and providing compensation for the advertisements they view.

Bitclave aims to achieve this with a unique approach to consumer engagement, by creating a decentralized search engine with the option to reveal searches and browsing habits to interested parties, who are then able to serve targeted ads. The user gets paid with the Consumer Activity Token for their attention or for providing access to their data. It is certainly an interesting and ambitious model that aims to cut out services like Google Adwords, who make money by selling user information to millions of advertisers around the world.

BitClave’s search engine — BASE — will allow savvy consumers to decide exactly what they want to share, how they want to share, and for how long. This will allow them to recognize and crucially benefit from each and every party that is using their data. The platform is scheduled for launch soon (July?), so it will be interesting to see if it can attract many users.

Currently Bitclave has a rather small marketcap of $5.5M.

Last month (May), there were 771 Daily Active Users, and 221,982 holders (it was heavily airdropped)

Stats for the last 30 days are below:

Data Source: https://www.trivial.co/t/0x1234567461d3f8db7496581774bd869c83d51c93

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A key problem which blockchain solutions aim to alleviate is ad fraud.

Bad actors find increasingly clever ways to create fake web traffic, with bot armies driving clicks rather than actual human visitors. Juniper Research estimates that advertisers will lose $19 billion to fraudsters in 2018, or 9 percent of total digital advertising spend.

Eliminating ad fraud is a difficult proposition because the ecosystem has become more complex and opaque, especially with the prevalence of programmatic ad buying employed by a wide range of intermediaries such as agencies, exchanges and networks.

One solution is adChain, a curated list of non-fraudulent websites that serve digital advertisements. Underpinning adChain is The adToken, a utility token that provides economic incentives for holders to curate the list’s contents judiciously. Anyone can apply to add a website into the adChain Registry, but there is a rather more complex process of challenging and voting.

adChain also has a real-time buying platform that finds target audiences in ad exchanges. Buyers can purchase an impression, which is encoded in a block, and then shared with all participants. When the impression is verified by the publisher it is added to the ledger, creating a comprehensive audit trail that allows buyers to determine how many times it was seen, who saw it, where it ran, and how budget was spent throughout the process.

adToken has a marketcap of $7.5 million.

Last month (May), there were 139 Daily Active Users and 1,237 holders

Stats for the last 30 days are below:

Data Source: https://www.trivial.co/t/0xd0d6d6c5fe4a677d343cc433536bb717bae167dd

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AdEx is another interesting project taking on traditional advertising networks by creating a distributed marketplace that allows brands to connect directly with publishers without the need for middlemen.

In the AdEx platform, buyers are able to bid for specific advertising slots with the specific CPM/CMC they’d like to pay. Publishers can select the most attractive bids, and the whole ecosystem is set up in a transparent way where advertisers are able to directly engage with publishers.

AdEx also combats ad fraud, and allows users control over which ads they see. This should translate into more precise targeting for advertisers, lower opportunity for mistakes, and higher conversion rates.

Currently AdEx has a marketcap of $26M.

Last month (May), there were 1,153 Daily Active Users, and 14,360 holders.

Stats for the last 30 days are below:

Data Source: https://trivial.co/t/0x4470bb87d77b963a013db939be332f927f2b992e

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There are plenty more blockchain projects getting involved in the advertising sector. Its beyond the scope of this article to mention them all, but for those interested in digging even deeper, check out:

ATMChain — open platform ecosystem with a focus on media advertising. The project aims to help advertisers locate and reach target viewers through social media and other means and, via blockchain, directly reward them in order to increase conversion rates and obtain better metrics for advertisers.

ProChain — building a transparent digital advertising data ecosystem: connecting advertisers, media and developers to improve the efficiency of settlement of advertising business, reduce the loss of advertising traffic fraud, and allow intermediaries in digital advertising to participate and share the maximum benefits.

DATA — advertising protocol and technology stack to resolve data fraud. In order to prevent fraud propagated into the network traffic and deliver the heightened security with the consensus from the community, the platform will leverage the blockchain technology and Artificial Intelligence to register the user’s attention patterns over a decentralized P2P protocol.

Adbank — online ad platform using blockchain and AI technologies to remove the costly middlemen and also mitigate ad fraud. Publishers will be able to get paid for their content while charging advertisers less and creating a transparent ecosystem that benefits all key stakeholders in the industry.

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There is no doubt that blockchain technology has a very valid usecase in the digital advertising sector.

It can work towards solving key problems like fraud, exploitative middlemen, and user attention, while increasing anonymity and trust. The ability to provide accurate, real-time information about the content people consume and the ads they receive without costly, assumptive data-sharing contracts should certainly make digital advertisers sit up and pay attention.

Increasingly consumers are becoming more concerned about their private data, and how it is being used and shared without their consent. With systems now coming into place to control and monetize personal data in a transparent way, more and more people will begin to ask why they shouldn’t share in the massive revenues that adtech giants consume. Given the choice, who wouldn’t want to be paid in a fungible cryptocurrency everytime you search for a product or view an advert?

However, it is also important to note some limitations. A lot of consumers are barely aware of Bitcoin, and have no idea of the solutions that are being developed in the wider blockchain ecosystem. It will take a number of years and clever marketing before any project sees mass adoption, as the incumbents in the advertising industry will be difficult to dislodge.

Another issue is that current blockchain systems are not scalable for the requirements of real world usage. For example, ad exchanges operate at incredible speed. Every second, demand-side platforms process hundreds of thousands of transactions because ads must be sold and served near-instantaneously. In real-time auctions, responses have to be returned in fewer than 100 milliseconds under IAB guidelines, and most occur in under 75 milliseconds. This will require an evolution in blockchain architecture (…its being worked on) that even optimistically will take a few years to achieve.

The ad industry is a fascinating space to keep an eye on, as old and highly lucrative practices are on the verge of being disrupted. Blockchain can return power to users and publishers, but also offer some very significant advantages to advertisers.

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You can get more details and track the projects mentioned above using Trivial’s token discovery platform that i’ve been working on — I recommend it as a launch pad for researching new Ethereum-based projects!

Here’s a guide about how to get the most out of the features of the platform: https://medium.com/trivial-co/how-to-use-trivial-co-to-explore-the-ethereum-network-af8848090fd7

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Peace ✌️ + Decentralization 🌌