Could Blockchain Technology End Ad Fraud?

More often than not disruptive changes in an industry come from outside, rather than from within an industry. People inside the industry tend to tinker at the margins, not trying to alienate any of the existing constituencies. In that way, industries are like democracies. But just as innovations in healthcare came from outside the industry, innovations in the digital media ecosystem are beginning to come from outside as well.

One place we predict will change how advertising is bought and sold is the fairly new cryptocurrency space. Over the last five years or so, people have become familiar with Bitcoin, digital currency units that are created out of bits and bytes and fluctuate like the securities market or the currency exchange.

Bitcoin, like other cryptocurrencies, relies on an underlying technology called the blockchain, which is a decentralized network of personal computers. Being part of a blockchain network requires connecting to the blockchain through software, almost like connecting to a social network. People on the network can add new records  (assets) through their computers, and the new records are double-verified and added to a ledger of all other blockchain transactions around that asset.

Unless you’re speculating in Bitcoin, you don’t care about any of this. But there’s a related cryptocurrency, Ethereum, that was developed specifically to transparently facilitate contracts. And that’s where advertising could get disrupted.

Blockchain technology through something like Ethereum contracts could monitor ad placements and conduct real time audits of ad delivery. That would solve the problem of transparency in programmatic media buys. Each digital asset ( ad) could be located in real time.  Blockchain’s advantages could include

 verification of ad delivery; immutable contracts with consumers; handling consumer data in a way that is completely transparent; and verifications about products’ authenticity that track from the point of origin, like sustainable fishing. Shanghai-based Vechain is using blockchain tech to authenticate fashion products, as well as provide background info on the items.

Last year, MediaPost similarly pointed to blockchain opportunities for managing huge numbers of consumer relationships, settling of multiparty payments and user ID verification.

Other observers have suggested global payment systems and, especially, smart contracts that are secure and transparent, available throughout a network even as they get modified.

Blockchain technology could also be used to decentralize transaction data, which would offer clients and agencies security and anonymity benefits.

I’m sure there are more exciting uses of blockchain technology than to monitor ad fraud and track wasted digital media ad expenditures, but since this technology has already graduated well beyond the buying and selling of illegal drugs on the Silk Road web site (see Nick Bilton’s terrific new book American Kingpin) and is now being investigated by the big banks to change the way the entire financial system works, we think there will be a day when someone builds a platform that truly brings the advertising industry into the 21st century.