Blockchain in the Adtech Ecosystem

Advertisers have (seemingly) always been trying to analyze the effectiveness of their advertising dollars.  The old adage “I know that 50% of my advertising is working – I just don’t know which 50%” has never been more true.  While technology has provided advertisers with tremendous insights into their ad campaigns and audiences, the more advertisers learn, the more questions they have – especially as we move to a multi-channel ad environment where countless ad impressions across several channels (display, mobile, TV, email, etc.) impact a single consumer decision.

Blockchain is being seen as the latest tool to solve this problem.  Advertisers hope that by utilizing Blockchain’s unique open ledger structure, they can share ad transaction data anonymously (even amongst competitors) which will help them better understand path to purchase, media spend accuracy, and ultimately the true impact of the campaign.

There are a few challenges with utilizing Blockchain in digital advertising:

  1. Speed.  Blockchain can only process a limited number of transactions per second.  While the number has improved from 2016, when it was 6 transactions per second, it hasn’t caught up with programmatic advertising which is millions of transactions per second.

    The solution may lie in hybrid Blockchain solutions, which eliminate the time intensive elements of Blockchain but keep the key anonymous accounting functions.  For example, minimizing the historical look-back window to cut down on the transaction time to generate a new block.

  2. Quality.  Blockchain is truly a “garbage in, garbage out” solution.  Providers have to be vetted and trusted to transparently supply accurate data, which if they were truly doing in the first place there wouldn’t be a need for a Blockchain solution .  Blockchain is a “trust but verify” solution as it pertains to the data providers.  And Blockchain still can’t (currently) connect the offline component, where a consumer sees a digital ad but makes a purchase offline.
  3. Reach.  In order for Blockchain to be an effective tool for advertising, it will need to process substantial advertising transaction data points across the entire ecosystem from publisher to advertiser.  The more data inputs, the more valuable the network is … and conversely the fewer inputs the less valuable it is.  Publishers, DSPs, advertisers, etc. all have to adopt the same Blockchain solution to enable accurate tracking.

Fortunately these hurdles are not insurmountable.  Blockchain technology will most certainly improve transparency in advertising ecosystem; it just won’t happen overnight.  It’ll take influential advertisers leading large publishers and other adtech companies to create a more transparent (and consequently efficent) advertising environment.