Advertising boomed with the digital era. It is now an estimated $160 billion industry that has seen immense expansion and delivered great rewards for advertisers but it hasn't come without its challenges.
Advertising has grown into a complex landscape with numerous players and middlemen who connect advertisers and publishers. One notable cause of frustration for advertisers is that the industry has seen a tremendous sweep in ad fraud that costs advertisers millions every year.
There is hope though, new technologies are emerging that work more efficiently and provide greater security for everyone in advertising. In this post, we will discuss how blockchain may be the perfect solution to combat ad fraud.
The value placed on ads typically comes from views (CPM) and clicks (CPC). A view or a click has a dollar value that is charged to the advertiser.
However, there are some flaws in this model that can easily be exploited to charge more money to advertisers.
Bots and click farms are people or software view and click on ads with no genuine intent to purchase. Bots are used with fraudulent intent to make more money out of advertisers by saying that more viewers saw or clicked on their ad. While this is technically true these clicks and views have no value.
This is a tactic used by some illegitimate publishers who keep ads out of view of real users. However, they still create a technical footprint that demonstrates a view. This is similar to the old blackhat SEO trick of keyword stuffing but making the text the same colour as the page background so users can't see it, but search engine crawlers can.
A fraudulent tactic that involves displaying an ad for one brand but sending the user to another brand when they click the ad. The second brand pays for the click but the user does not have the intent to buy from them.
These fraudulent tactics are a major concern for advertisers and while there are ad servers and platforms trying to combat this issue it is still prevalent in the industry. So how can the blockchain help?
Let's first cover a simple explanation of the blockchain. Blockchain is often synonymous with Bitcoin, the cryptocurrency. However, it is a separate technology that helps crypto function. The blockchain is essentially a digital ledger that’s shared across a network of computers.
The way the blockchain records transactions and saves them means that no one is able to manipulate the records. This security that supplies reassurance to users who purchase cryptocurrencies can provide additional security for advertisers and help combat some types of ad fraud.
The three problems mentioned above stem from the same issue – a lack of transparency and trust in advertising. Blockchain can provide a solution to these problems.
Blockchain provides an opportunity to remove some of the issues that advertisers are facing. Here's how.
Everyone who participates in the blockchain has equal access to all of the data. The fact that no one person or business owns and controls the data eliminates the need for intermediaries and provides greater transparency for advertisers.
There is not a ‘primary’ data source. The blockchain is made up of many nodes in a network which are all connected and have direct access to all of the other nodes in the network.
All transactions are visible to all participants in the blockchain. The data that identifies a participant can be anonymous, however once a transaction is recorded into the blockchain it cannot be altered and is there for everyone to see.
Algorithms can be created within the blockchain. This means that you can trigger actions based on transactional characteristics which then reduces the amount of manual work that has to be done in creating transactions.
The blockchain is becoming more “mainstream” and as it grows in popularity, many industries are seeing how it can be used within their field. Within marketing, ad sales on a blockchain could be the future we are looking to. The principles mentioned above make blockchain a formidable model to address and manage the challenges of digital advertising such as fraud and could save advertisers millions on their ad budgets.
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