The digital ads industry is broken. Can blockchain fix it?
People’s trust in governments and businesses around the world is crumbling. This comes as no surprise as the list of broken promises is a long one. People were promised their savings will be protected, and yet the financial crisis of 2008 wreaked havoc. Tech companies promised to safeguard our personal data, but hackers stole it again and again. And in retail, for instance, products are too often marketed in a misleading way. As a result, people’s “trust in all four key institutions – business, government, NGOs, and media – has declined broadly”, the 2017 Edelman Trust Barometer reports. And as people lose trust, businesses face a serious problem.
Old marketing tactics have become ineffective, and companies are scrambling to regain consumers’ trust. Digital advertising is part of the problem as well. Dishonest marketers use fake pictures, videos, and social media followers to appear authentic and trick consumers. At the same time, the entire digital ads industry is plagued by fraud. Juniper Research claims advertisers “will lose an estimated $19 billion to fraudulent activities” this year, as almost half of web traffic is generated by online bots. On top of that, ads could unintentionally appear on hate sites, damaging the advertiser’s brand. It’s evident that the marketing industry needs to be fixed.
Fixing the digital ads industry
Blockchain technology is a potential solution. As a distributed ledger that runs its software on thousands of private computers, blockchain records transactions in cryptographically protected public blocks that form a chain. By using this technology, the marketing industry could enjoy absolute transparency. Advertisers could check how their ads were served, while consumers could verify the authenticity of online content. And although the application of blockchain in marketing is still in its early stages, startups in this sector have ambitious plans.
The key issues they want to solve are ad fraud and fake views. To achieve this, startups rely on the fact that data about visitors and ads stored on blockchain would be immutable and public. Advertisers could access it and, for example, analyse and block bot traffic. On top of that, blockchain tech could prevent ads from being accidentally published on extremist sites as nobody wants their ad published next to an ISIS video. Solving this problem would “help to restore trust and transparency at a time when it is most needed”, argues Direct Line Group’s managing director, Mark Evans. But this alone won’t be enough to fix the digital ads industry.
People are still suspicious of the authenticity of pictures and videos posted online. Who can guarantee that the picture of a hotel room they want to rent, or a bicycle they want to buy, is authentic? Blockchain developers claim they can, as several apps now verify the authenticity of digital pictures and videos. But still, authentic pictures could be posted by fake advertisers. The tech author Paul Armstrong claims this can be solved, too, as “Blockchain, for example, gives you the opportunity to verify the identities of sellers or the authenticity of products, which could be huge for the luxury goods market and healthcare.” For example, producers such as Louis Vuitton could use blockchain technology to help customers verify the handbag they bought is genuine. But despite the optimism of blockchain advocates, there are many obstacles in the way.
Can blockchain replace Google and Facebook?
The key challenge is guaranteeing the validity of clicks that web owners report to advertisers. In the existing system, companies such as Google and Facebook act as the central authorities and ensure fair game. Replacing them with blockchain would be complicated. The only scenario in which that could be possible is if “many, many companies signed up to the same procedures”, says Atom Bank’s head of marketing, Neil Costello.
At the same time, ad reporting standards change often. Getting every participant of a particular blockchain to approve the change could be “time consuming and potentially not feasible”, explains Yoyo Wallet’s CEO, Alain Falys. And when it comes to storing customers’ data in blockchain, experts argue it’s a premature move as we don’t fully use even the advantages of existing centralised databases. Nevertheless, blockchain startups are popping up, and many have caught the attention of investors.
A blockchain app used across the globe – from Syrian war zones to Reddit forums
One of these is Truepic, which closed an $8 million Series A round of financing this year. Its software authenticates digital photos as it stores them in a digital vault, assigns a URL and a six-digit code, and logs them onto the Bitcoin blockchain. And when you receive a picture taken by the Truepic app, you’ll notice a code in its right-hand corner. Once you enter that code on the Truepic website, the original image taken at the moment of creation will appear. You’ll be notified if it’s been modified in any way. The app is used across the globe, from documenting war atrocities in Syria to ensuring the authenticity of pictures on e-commerce stores, real estate websites, or even Reddit forums. The demand for this app shows how deeply people distrust online content.
Don’t underestimate the change that’s about to come
And as fake pictures and videos flood the internet, blockchain appears to be the solution we’ve been waiting for. Companies could use it to prove their marketing claims and regain people’s trust. At the same time, the absolute transparency blockchain entails could fix the digital ads industry that’s swarmed by bot traffic and shady practices. And while many businesses are understandably wary of using an unproven technology, the world is changing fast. Savvy entrepreneurs would do well to at least stay curious about the latest trends. As Bill Gates says, “We always … underestimate the change that will occur in the next ten [years]. Don’t let yourself be lulled into inaction.”
This article was originally published in 2018 on the Richard van Hooijdonk’s blog.