Let’s face it. We have a problem. Last year, a WPP report estimated that the amount of global advertising revenue wasted on fraudulent traffic, or clicks automatically generated by bots, could reach $16.4 billion. Blockchain is the new buzzword in Adland, but is it our saviour when it comes to programmatic?
The problem with digital advertising is that it has become less transparent – and in the eyes of some – increasingly untrustworthy. There are more and more middlemen and more scope for fraud.
Blockchain is a promising solution. It provides much-needed transparency, making accountability and measurement much clearer and easier. A blockchain is an ever-growing series of records – blocks – linked by encryption that sit across a distributed database stored on computers all around the world. When a transaction is made a message is sent to the network to verify (or not to verify) that the transaction is legitimate before giving approval. The bigger the chain, the stronger the system.
By having a decentralised, fully transparent record of activity which can be viewed by each stakeholder, there is no doubt that confidence in programmatic will significantly increase. Fraud aside, blockchain has the potential of prohibiting agencies and platforms from sneaking in extra fees and misrepresenting performance data.
So should we all start investing in blockchain? One major concern is speed. Quite simply the speed of real-time bidding is too fast for blockchain technology to keep up with. In this game, speed matters. Every second, demand-side platforms process millions of transactions because ads must be sold and served pretty much instantly. Under IAB guidelines responses have to be returned in less than 100 milliseconds in real-time auctions, and most occur in under 75 milliseconds. In fact, Bitcoin, which is the most well known of all blockchain applications, can only process four to seven transactions per second. While its open-source rival, the blockchain-based Ethereum, can do 15 transactions per second, and running a blockchain privately could potentially speed things up a bit more, it is still not enough. At this point, machine learning is a more viable alternative to blockchain, as it is scalable, rapid and can learn and adapt over time to keep up with fraud. We don't see this being a long-term barrier though, cryptocurrency is deemed particularly slow within blockchain and this is an area of focus for those building on this technology.
And what about security? Supporters of blockchain say it’s 100% safe, but is that really true? Blockchain is mostly used for cryptocurrencies, and in the past decade or so, a fifth of all Bitcoins have been stolen, hacked or scammed – that equates to over $2bn worth. Although blockchain can mitigate some fraud, it cannot cover all types of fraud yet. We are better off sticking with the options available to us right now like Double Verify or IAS before taking a huge and expensive leap of faith in blockchain.
For now, we say, keep watching. There is a huge amount of investment in advertising-focused blockchain from the likes of IBM, Amino Payments, MetaX or NYIAX, which is great and we should all be keeping a very close eye on their developments. Don't let the scaremongering of cryptocurrency put you off of this technology. It will be a part of the future and understanding its wider application can only be a good thing.
New to blockchain - If you want to brush up on your knowledge then click here to read this great article on what Blockchain is in plain English.