Opinion

To prove its worth, programmatic must embrace blockchain

The problems around programmatic transparency are well documented. Despite industry resistance, blockchain is the only way forward, argues Daniel Gouldman.

When I talk to people about blockchain – I often ask them if they know anything about the story of TOR.

Most have no idea what TOR even is. TOR is an anonymous internet browser that allows for people to get on the internet even when restricted; it also gives access to the “dark web” where many illicit things happen under anonymity.

The NSA funded TOR so that political dissidents and others could have access to the internet even when governments block use of certain types of sites (access to information). There are many people in the NSA’s whose job it is to patch holes and make sure it continues to work without exploitation.

Simultaneously – there are many people in the NSA whose job it is to exploit loopholes and kill TOR’s anonymity in order to protect the homeland. It’s quite the dichotomy.

And what’s happening with blockchain in digital advertising isn’t significantly different. There are many within the digital ecosystem at all levels: ad agencies, DSPs and ad exchanges who understand that blockchain’s unique ability to resolve the issue of transparency within the digital programmatic ecosystem is both necessary and good business for the advertising industry.

There simply is no existing technology outside of blockchain that will be able to resolve this supply chain transparency problem that plagues the industry. Not one.

The people pushing for this transparency are not only visionary and fearless pioneers, they also understand this is an opportunity to help make more money for their clients and themselves.

Creating a successful programmatic ecosystem that works for clients builds confidence and trust and will lead to marketers wanting to spend more money to drive sales. Make the customer happy and they’ll continue to give you business. Not only will there be a bigger overall market – the good actors will see bigger margins as they gain from the elimination of low value participants and fraudulent actors.

But just like with TOR – there are also those in the digital advertising ecosystem who are afraid to embrace this transparency. And that’s funny (not funny ha ha), because every major player in the ecosystem has their website plastered with messaging of a commitment to quality and transparency. Everyone is committed to quality and transparency and yet somehow the system is a complete and utter disaster (50% of all digital ad spend is spent on the ecosystem itself).

So, it’s not surprising that the idea of a more transparent marketplace enforced through a decentralized, immutable blockchain gives pause to some who may worry about what that means for profits and margins.

So instead – some work to subvert transparency in clandestine ways; this could come in the form of actively dismissing the benefits of blockchain. Some would rather just ignore it like an ostrich putting its head in the sand hoping that this too shall pass and everything will stay as exactly as it is. But the status quo is an existential threat to the industry. Short term thinking will lead to long term problems.

Some like to claim that blockchain isn’t ready for primetime; they say it can’t scale to the level necessary for digital programmatic. But those dissenting voices will find they were proved wrong – not at some point in the distant future but in 2018.

The status quo means Facebook and Google eating up even larger percentages of the digital advertising industry giving marketers and agencies less leverage and ad tech companies fighting over what’s left. The status quo has been blood all over the streets. The status quo has led to regular headlines like “Is the agency model dead?”. The status quo has led to advertisers thinking of digital programmatic advertising as being synonymous with the $18 billion in annual fraud that exists in the system. The status quo must change.

Facebook and Google’s dominance in the ad world should not be a foregone conclusion. Advertisers have regularly complained about many issues they experience from brand safety to a lack of transparency to simply a lack of trust in either of those companies.

And advertisers are paying a premium to those two companies for the pleasure of doing business with them even though they’re walled gardens. But many advertisers would rather deal with the devil they know than the toxic morass of unknown that is presently the digital programmatic advertising ecosystem.

“We’ve allowed centralized trust managers such as banks, stock exchanges, and other financial middlemen to become indispensable, and this has turned them from intermediaries into gatekeepers. They charge fees and restrict access, creating friction, curtailing innovation, and strengthening their market dominance.” ~Michael Casey from the MIT Media Lab

The same could be said of the ad tech ecosystem. Of course – using Facebook and Google is easy. It’s so easy that any company can decide to take all their marketing in house and just hire a bunch of Facebook and Google ad specialists right out of college. Not only is that not in the long term interests of advertisers by limiting their own access to a much broader set of customers at cheaper prices – it certainly isn’t in the interest of agencies or the rest of the digital programmatic ecosystem.

And it is this desperate need for what blockchain can do in combination with the technological advances that have been made within the last few months that will lead to blockchain based advertising playing an important role in digital programmatic advertising in 2018.

Daniel Gouldman is co-founder at Ternio Blockchain.

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