If you’ve been a CMO for the past five years, you remember those times when entrepreneurs looked at blockchain through hype-filled eyes. Some regarded it as an opportunity to make big bucks, while others were scared of the “Wild West” label that the media put on crypto markets due to their free regulation.
Ultimately, this kind of hype has largely died down. Yes, the global blockchain technology market is expected to climb to over $23.3 billion by 2023 (paywall), but I believe this is because businesses are shifting their gaze toward completely different purposes: redefining advertising and marketing processes, management, accounting and communications with users. In 2019, almost no one I know confuses blockchain with bitcoin, and this is the first and foremost of blockchain’s accomplishments with which we should begin.
When we look at global service industries, advertising stands out: Digital ad spending worldwide could reach a total of $427.26 billion by 2022. Still, it is an area affected by fraud and insufficient transparency. From that standpoint, we have yet to gain great efficiency.
Blockchain Startups In Advertising: Now And Then
Advertising fraud can take a severe toll on advertising income, to the tune of an estimated $6.5 billion in losses in 2017. But in 2017, some of the first blockchain-based advertising projects were also getting press and seemed promising for resolving issues of fraud.
Stage two, the year 2018, proved the great potential and willingness of companies to invest more money into blockchain projects. That’s when Toyota managed to raise its site visits by 21% (paywall) with help from a blockchain analytics company. AB InBev also ran blockchain-enabled ad campaigns for several beer companies in 2018. Around the same time, Google Trends illustrated a peak in searches for “blockchain advertising.”
The outcome of this is tremendous growth; by 2019, research from Never Stop Marketing (via VentureBeat) showed that the number of blockchain marketing companies multiplied to a total of 290. In 2017, the landscape featured only 22 companies. Altogether, these projects belong to various areas in which marketing could benefit from further innovation, including social media, data, e-commerce and programmatic advertising.
Big names like Unilever, Kellogg’s and Kimberly-Clark joined a consortium for ad-buying blockchain solutions last year in order to eliminate middlemen and enable buyers to audit advertising spending. Additionally, MetaX merged ads.txt (a register of authorized sellers) with Ethereum in order to make media-buying transparent on an inventory level. Recently, startups like Lucidity have worked to create “advertising supply chain transparency which should reduce fraud and minimize reconciliation discrepancies.”
How Blockchain Can Reshape Advertising
Let’s recall why AdTech reached out to blockchain in the very beginning. Digital advertising is based on an open system fueled by Internet connections. This openness creates immense media-trading opportunities, but it also creates gaps and a lack of transparency in the media supply chain. These challenges make the entire ecosystem vulnerable to fraud. With no source of consistent information and no centralized marketplace, digital advertising lacks a common data source that could identify and prevent fraud.
Blockchain creates a distributed database that can serve as a single source of truth about ad impression for both demand and supply partners. Think of it as of huge database that constitutes all data related to advertising. All related kinds of actions and information are automatically recorded on the distributed ledger. Within the chain, demand and supply partners can detect questionable activities and delete the wrongdoer. It is exactly the event-level transparency basis for which we all strive, and this is what we as entrepreneurs and marketing leaders should use to redefine our business relationships in the long-term.
What It Means For CMOs
By creating tools that enforce trust along the advertising chain, CMOs can restore dollars back to the working media side. By adding a blockchain ledger to their systems, CMOs can ensure better accountability for all internal processes, not only those related to media-buying. For example, your team can use event-level data and cryptographic transaction verification to create a new safety layer and secure automatic information processing when breaches occur.
You can also use the blockchain to track and help customers understand how your business handles their data and tracks their activities. This way, they can trust you and feel at ease with your business practices.
When obstacles associated with a regulatory framework are left in the past, CMOs face a new kind of challenge — learning how to combine profitability and privacy. So far, it’s largely been a one-way street. Websites collect user data and sell it to advertisers, who then use it for the purposes of advertising personalization.
Entrepreneurs, startups, publishers and advertisers should direct their efforts toward rewarding user attention in exchange for their data usage, which is especially important in regard to the General Data Protection Regulation.
Like every great work, it won’t be easy. Advertising entities will need to redefine their approach to hiring and the day-to-day workflow if they incorporate blockchain into their advertising approach. For this, they will have to attract specialists in both advertising and blockchain and partner up with publishers who understand the significance of fair play for every participant of the advertising process, including users.
Will this all be embodied in the next wave of user-rewarding startups, or should we expect existing advertising companies to reform from the inside? In either case, I expect that it won’t be a matter of function but rather of form in which changes will arrive, and only the future will show which one will be taking root in digital advertising.