Major brands like Unilever and P&G have been clawing back ad spend as they publicly address the challenges facing digital advertising. Marc Pritchard of P&G has referenced the digital advertising ecosystem as “murky at best, fraudulent at worst.” Existing technological limitations allow middle men in the ad supply chain to transact in a black box. Incentives are not aligned causing both advertisers and publishers to feel they are on the losing side of the deal.
Blockchain inherently brings trust to a trust-less environment and is the ideal solution to address these issues. Lack of transparency, ad fraud, and lengthy payment terms are just some of the problems with the current ad supply chain. Ternio, which provides blockchain based technology, can improve and/or solve 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 getting what they pay for.
Digital advertising spend is $224 billion a year. 70% of that spend is transacted programmatically and $18 billion each year is wasted on ad fraud.
Ad fraud comes in the form of domain spoofing and non-human traffic. Ternio’s technology helps fight this by using cryptographic keys to verify the publisher’s ad inventory. The key uses 256-bit encryption which is relatively uncrackable and used by major websites for secure purchase processing - such as buying a product on Amazon.
There are currently more bots on the internet than humans. This number continues to increase yearly. Non-human traffic will always be a cat and mouse game of detection, 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 mouse movements.
Payment float is a way some companies maintain their position in the supply chain. They collect payment upfront or Net 30 and pay out Net 60-120. Publishers suffer the most in this scenario as they deliver an impression and are then left waiting months to collect. Digital advertising is one of the only industries where a product is delivered, but isn’t paid for until months later. Publishers using blockchain technology will be paid instantly on impression delivery- giving them the capital they need to run their business.
Like all new technology, there is an education process that must occur for broader adoption. Blockchain is still in its infancy, but the underlying technology is here to stay. Advertisers, agencies, and publishers should be looking at how it can help to improve their business.
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, advertisers get a better ROI and publishers are able to collect a higher percentage of ad dollars at the point of impression delivery.
Ian Kane is co-founder of Ternio.