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Digital Perspectives
New views. Applied now.

Digital Perspectives

New Views. Applied Now.

December 05, 2017
Can blockchain save digital marketing from its demons?
By: Amir Jan Malik

When it comes to the media buying process, there’s a real dearth of transparency. Over the years, the supply chain has grown long and complicated, served by various partners often not known by the advertiser. Of course, some of these partners add great value—but some don’t.

As is often the case with technologies that have developed very rapidly, it’s often difficult for the people investing in the supply chain to differentiate between the two. Partners can take more money than they declare in hidden fees-or tech taxes, but they can also deliver very little return on investment. The advertiser, who has entrusted their media agency to oversee the purchasing process is often, almost entirely, kept in the dark.

Enter blockchain

Blockchain can be a solution to this problem. The technology distributes what would have previously been a centralised record system across multiple users and devices, all of which hold a copy of the ledger. When put together, this completes an audit trail of transactions, or blockchain, in which the rewriting of information is near impossible.

We’re seeing that the principles of blockchain, which were historically developed to prevent fraud in banking, can be applied to programmatic media buying. By using the system to monitor and govern budget spend, advertisers can to track investment from the initial transfer of the media budget to the final publication of creative with the media owner; reducing the risk of overcharging and underperformance.

Interest in this space has been made notable by Nasdaq, which is building a programmatic exchange called the New York Interactive Advertising Exchange (Nyiax). Earmarked to launch in 2019, Nyiax will leverage the stock exchange’s Financial Framework architecture, host transactions in the cloud, and run on blockchain technology. Advertisers and publishers will see improved efficiencies and rid themselves of unnecessary costs and risks through the technology.

Overcoming the barriers of blockchain

Nyiax is currently still in development. This is because blockchain technology still comes with a delay that is incompatible with the real-time nature of programmatic buying. Clearly, this discordance in pace must be solved before blockchain becomes the norm in media buying. However, while blockchain may not be here yet, its development is important for digital marketers.

As we wait for blockchain to help resolve many of the industry’s transparency problems, there’s much that can be done. Better framed contracts between advertisers, their agencies and the limited amount of data provided by some of the biggest advertising companies, and a greater amount of in-house control, would weaken the current opacity around results and margins.

When blockchain arrives, it will offer incremental gains; but it won’t cure the behavioural problems that we see across the industry. And the jury’s out on how it will scale. For blockchain technology to transform marketing it will require critical mass, and due to the transparent nature of the offering, it wouldn’t be surprising if market leaders resist exposing their margins for as long as possible. However, those that hold back in the long-term will no doubt be questioned on what it is they have to hide.

For now, we’re focusing our efforts on increasing market efficiency, by making sure clients have more information on spend, value, and what they need to do to increase this value. When blockchain becomes a more realisable component, it will be another tool that we add to our kit to keep delivering that value for advertisers.

Can blockchain save digital marketing from its demons? Yes, but only when coupled with a supply chain-wide change in attitude towards transparency.

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