Why Digital Advertising Needs Blockchain

“Murky at best, fraudulent at worst.” Those are the words Marc Pritchard of P&G used to describe the digital advertising supply chain. As P&G cuts their ad spend, the digital advertising industry has been trying to devise a solution. The issue is that incentives are not aligned, causing both advertisers and publishers to feel they are on the losing side of the deal. Blockchain is the solution to bring transparency to the supply chain because it inherently brings trust to a trustless environment.

Lack of transparency, ad fraud, and lengthy payment terms are some of the problems in today’s ad supply chain. Blockchain (as hyped as the term is) has the ability to improve and/or solve all of these issues. By utilizing a decentralized ledger with the ability for an open audit, all participants in the supply chain can feel confident they are not being mislead. However, like all new technology, there is an education process that must occur for broader adoption.

Lack of transparency is due to the technological limitations of how ads are implemented today (e.q. tag based). Blockchain offers a feature called smart contracts which enables credible transactions without third parties. Insertion orders can be setup as smart contracts on the blockchain to fix this and still utilize tag based integrations. As an advertiser’s campaign transacts through the supply chain, the smart contract verifies each intermediary along the way. If the advertiser’s requirements are not met by an intermediary then the contract is canceled and the advertiser has the ability to understand why.

Ad fraud arises in the form of domain spoofing and non-human traffic. Blockchain helps to solve this by using cryptographic keys to verify the publisher’s ad inventory. The keys use 256 bit encryption which is relatively uncrackable. It is also beneficial as it solves the current issues surrounding publisher subdomains and ads.txt. Non-human traffic will always be a cat and mouse game, however blockchain provides the underlying platform to significantly improve on the fundamentals used by today’s anti-fraud companies such as identifying user agent, IP address, time spent on content, and other characteristics.

Payment float is a way that a lot of companies maintain their place in the supply chain. They collect payment upfront or Net 30 and pay out on Net 60, 90, or even 120. Publishers suffer the most in this scenario as they deliver an impression and are left waiting months to collect. Digital advertising is one of the only industries where a product or service is delivered, but isn’t paid for until months later. Blockchain will enable publishers to be paid on impression delivery which gives them the capital they need to run their business.

Ultimately, the companies that will be resistant to blockchain or look to discredit it are the companies that are providing little to no value relative to their cost or are participating in outright ad fraud. By reducing the number of bad players in the supply chain it enables the good companies to thrive. Most important, publishers are able to collect a higher percentage of the total ad dollars entering the ecosystem and will do so at the time of impression delivery. Blockchain is still in its infancy, but the underlying technology is here to stay and all ad tech companies should be looking at how it can help to improve their business.

Ternio is a blockchain system for programmatic advertising months in the making that will change the way advertising transact’s with publishers, work’d with advertisers, and verifies users.

More information at: https://ternio.io