Blockchain tech being used in the advertising sector
In October 1994 the first on-line adverts are thought to have been placed. Now the value of this global advertising is expected to be in excess of $664 billion p.a.by 2026. However, it is estimated that, at the same time, the level of fraud in this sector is between $6.5 billion to $19 billion which, in turn, is a factor undermining those people who buy Digital adverts in the USA.
The Association of National Advertisers in America that only 58% of all the advertising spend goes to a publisher, the other 42% going to supply chain data and transaction fees. Blockchain technology offers an independently verifiable and decentralised way to trace the money being spent. It allows all parties greater clarity and transparency into where the advertising money is spent and so ought to enable many of the current third parties and intermediaries to be removed. Therefore, more money is spent on attracting human viewers, thus making digital advertising more efficient and effective. Using a Blockchain-powered platform it is also possible to introduce smart contracts and tokens. If someone were to click on an advert and make a purchase, the media outlet could earn additional income. A record of all sales being generated the income would be recorded and potentially shared with the relevant parties.
One firm that is using Blockchain technology is Adbank , based in the US, which is aiming to bring greater transparency to the advertising sector. Others include AdCoin, based in Holland, and Adex.
A report from PwC on the impact that Blockchain technology can have on the advertising sector summarised in its findings: “Blockchain’s ability to conduct trusted transactions, manage and record data securely and increase automation could reduce fraud, increase data reliability, protect privacy rights, enable better data flows among partners and deliver the right ads to the right consumers in the right places”.
Blockchain technology offer benefits for various parties that are involved in the digital advertising space. Consumers can be rewarded for their attention as they look at adverts and make purchases i.e. rewarding consumers for their attention and activity. For advertisers it offers greater transparency, so potentially reducing ad fraud and middlemen fees, thus making their ad spend more effective and efficient. Finally, for publishers it can improve their income linking adverts to actual transactions, therefore enabling the publishers to be paid automatically using smart contracts by the companies doing the advertising.
Challenges holding back mass adoption of Blockchain technology
Scalability:
There has a been concern that, before Blockchain technology can be truly embraced, the challenge of scalability needs to be addressed. However, a former Microsoft researcher claims he has created a new Blockchain protocol, called Asenys, which offers a very fast and scalable Blockchain solution. Also, the creator of Ethereum talks about the ‘scalability trilemma’ where it is easy to have two, but not three, attributes from a Blockchain. The three are decentralisation, security and scalability and to date it has been hard to improve the scalability without impacting on security, or a Blockchain being decentralised. Asenys uses the concept of “consensus zones” which offer parallel transaction processing, thus distributing the amount of work at any one time. Brendon Wang from Asenys believes that Asensys’s Blockchain could process up to 100,000 transactions per second and sustain a user base of more than a billion!
Source: Blockchain.com
The first large-scale and most valuable Blockchain is Bitcoin, which has a transaction speed of typically less that 10 transactions per second. Ethereum, which gave rise to the many Initial Coin Offerings in 2017 and 2018, typically process 14 transactions per second. Meanwhile, Cardano is able to offer 256 transactions per second and has recently announced that its Blockchain will also be able to offer smart contracts, so giving Ethereum some real competition.
Regulation:
Regulation is another factor often quoted as holding back the greater adoption of Blockchain technology. However, it is very unusual for jurisdictions to regulate a technology, even though they do tend to regulate and give guidance on the outcome or how the technology itself is used. For example, the UK is currently not looking to regulate Blockchain technology but the High Chancellor, in November 2019, proposed that smart contracts ought to be executable and digital assets should be recognised - see here for his report. Similarly, we are seeing laws in Germany and Switzerland being changed to allow the issuance of digital assets in the form of debt and equity securities. Meanwhile, central banks are also looking to use (not regulate) Blockchain technology and issue their own Central Bank Digital Currencies. Finally, the US Government is looking into using Blockchain technology to create its own Digital Currency!
Use case:
One very common reason quoted by people not involved in the Blockchain or Digital Assets sector is, that no one is using the technology so why should I bother? All you have to do is to simply ‘Google’ the industry you are interested in to find a case study, and you will be presented with a plethora of examples. Corporations and governments are undertaking numerous trials and tests as they research both the potential and the challenges Blockchain technology offers. The need to illustrate use cases of how Blockchain technology is being used commercially on a day to day basis is another reason why Digital Bytes is produced.
User experience:
To date, it has not been an easy user-friendly experience to engage with the technology. The whole experience of dealing with private and public Blockchains, hot and cold wallets, memorising 27 words for your private keys, not to mention the geeks’ chatter with their ‘sharding’, ‘forking’, ‘nodes’ and ‘hashes’. But don’t let the technical speak put you off as, after all, some of us struggle with how to use our smart phones yet we use them all day! In terms of user experience as we see Blockchain going mainstream, people will rightly focus on the how the technology is being used, not how does it work.
Standards:
The lack of standards and the potential risk that different Blockchains cannot work together is a continued challenge. Organisations are often reluctant to use one Blockchain, then finding in the future that it will neither be supported nor able to communicate with other Blockchains. In the meantime, there are organisations such as Global Digital Finance which are trying to set standards, as is the Government Blockchain Association.
The landscape for Blockchain technology has altered considerably in just the last couple of years as we have moved from it being seen as a niche technology (with some uses in the financial sector) to a technology that is likely to impact on all industry and society as a whole as we continue to transition from our analogue systems to an increasing digital economy.
“Blockchain technology isn't just a more efficient way to settle securities. It will fundamentally change market structures, and maybe even the architecture of the Internet itself”. Abigail Johnston, CEO Fidelity.
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