Can Blockchain Technology Solve Digital Marketing’s Ad-Fraud Problems?

IAB, GroupM and Nasdaq aim to find out

ABM could be key to turning leads into cash. Getty Images
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It might still be early days for digital currency, but marketers are increasingly piggybacking on the rise of tender like bitcoin and applying those concepts to digital advertising. In a nutshell, they’re seeking a more transparent and efficient way of running online marketplaces.

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Tech companies, publishers and media buyers have begun experimenting with marketplaces built on blockchain—a digital ledger that records transactions using encryption for security and accountability. And although it’s still uncertain whether blockchain is a game changer or a pipe dream, some say the system has the potential to create the kind of transparency that advertising desperately needs by cutting off bot traffic and protecting brands from unsavory content.

Industry organizations such as the Interactive Advertising Bureau’s Tech Lab and the Data & Marketing Association are taking notice. In fact, the IAB is quietly developing a blockchain working group to explore how advertisers can use the technology. And while the names of the companies involved have not yet been divulged, the initiative illustrates the kind of interest that industry players have in the emerging technology.

“It is no longer the year of data—now it is the year of blockchain,” said Alanna Gombert, outgoing general manager of IAB Tech Lab.

For the past six months, Purch and a dozen other publishers and advertisers have been testing a new blockchain-enabled advertising marketplace using technology created by Nasdaq, which is expected to launch in the fourth quarter of this year. A separate company, New York Interactive Advertising Exchange (NYIAX), will allow media buyers to purchase and sell future advertising inventory. Richard Bush, NYIAX’s chief product and technology officer, said the advertising industry, in some ways, missed a part of the automation revolution that Wall Street got right.

“We’re not focused on the blockchain because we want to build the underlying blockchain [just for the sake of it],” Bush said. “We’re focused on it because there is a very tangible use case.”

“It is no longer the year of data—now it is the year of blockchain.”
Alanna Gombert, outgoing general manager of IAB Tech Lab

Because blockchain is such a broad technology, various industries are developing very different verticals on top of it, according to Jake Brukhman, co-founder and managing partner of the blockchain technology research and advisory firm

“You have decentralized ride-sharing companies here and decentralized storage over there,” he said. “And you sort of have a mirror of all of the traditional technology areas but within the blockchain space being redeveloped on top of this technology, and then additionally some new verticals that really haven’t existed before.”

Others seem to agree with blockchain’s promise—and have started their own marketplaces. In March, Los Angeles-based startup MetaX teamed up with software firm ConsenSys to launch adChain, a curated white list of publishers and advertisers that will use blockchain to vet sources of inventory with a democratized voting system. Just in June, Bulgaria-based AdEx, an ad exchange built on the blockchain, debuted with a focus on streaming video. Another company, Brave, launched by the inventor of JavaScript and co-founder of Mozilla, Brendan Eich, uses the blockchain for advertising and micro payments. Still another, MadHive, is already making its way into the OTT space as well—an area of advertising that for a while was slower to adopt programmatic and addressable systems.

“The innovation of blockchain is that nobody actually owns that ledger,” said MadHive CEO Adam Helfgott. “It’s a shared resource, just like electricity.”

All this activity doesn’t mean blockchain will be mainstream this year. There are also major limitations, the primary one being that the speed of real-time bidding is too fast for blockchain technology to keep up with.

At the same time, major media buying powerhouses like WPP’s GroupM are just beginning to experiment. Jack Smith, chief product officer for GroupM North America, said he’s “really bullish” on the technology.

“I don’t see any available solution that’s ready to be scaled with a significant number of transactions by 2019,”Smith said. “I just haven’t seen it in the market.”

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This story first appeared in the Aug. 7, 2017, issue of Adweek magazine. Click here to subscribe.
@martyswant Marty Swant is a former technology staff writer for Adweek.