AdTech with Blockchain – How Smart Contracts are Transforming – MarTech Series


By: Katherine Tuluzova, Executive Director of Growth at Sigma Software US and Olga Paramonova, Department Manager at Sigma Software

Revolutionizing AdTech with Blockchain - How Smart Contracts are Transforming the Programmatic Advertising Industry

The use of blockchain technology is revolutionizing the programmatic advertising industry. Not surprisingly even IAB has a Distributed Ledger Working Group that continuously investigates applications of emerging technologies in distributed ledger and cryptography and how to apply them to solving advertising challenges in connecting consumers with brands and managing consumer privacy and transparency in the supply chain.

Blockchain technology is the future of programmatic advertising and can be used to bring transparency into the AdTech industry. Let’s dive deep into the details.

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Mistrust in a programmatic world

The main issue of programmatic advertising is that it requires a lot of technologies to do it correctly. Digital advertising is a rather fragmented ecosystem which incorporates brands, agencies, data companies and so on. With the introduction of programmatic systems, the fragmentation has only grown larger. 7-15 vendors are normally required to execute a simple ad campaign.

Vendors have different ways of tracking and measuring campaign performance introducing inconsistency and making it difficult to understand for marketers. As they decide on pricing, this also has a big influence on the market today.

Marketers often lack accurate data on how well or poorly their campaigns are likely to perform. As a result, buyers are unsure who should be getting paid for what, which impedes valuable insight for businesses.

How Blockchain Establishes Trust

Blockchain is a distributed ledger that records transactions across a peer-to-peer network of computers. It allows people to transfer contents without going through a centralized intermediary. This is because it uses a decentralized consensus that is verified by every node on the network. For this reason, blockchain establishes trust without any need for a third party.

Fig. Future of AdTech with Blockchain

Digital advertising is one of the most crucial sources of revenue for publishers. But it is fraught with problems, with advertisers often paying for ads that are never displayed or viewed. A smart contract can solve this problem by making sure that there are no disputes and the transaction will happen only when both parties agree on the terms and conditions.

Smart contracts can be built in many popular programming languages, including Java, Python, Go, JavaScript and Scala. In advertising, smart contracts can solve issues such as ad fraud by ensuring that what was promised is delivered and gets rid of all the middlemen who take a cut from each transaction. In other words, it can remove ad fraud entirely from the equation, which provides advertisers with greater peace of mind while also saving them money

Programmatic Advertising Players are ready for Blockchain

Programmatic advertising is used by agencies, advertisers, publishers, and ad networks for buying and selling media inventory. The technology relies on data from multiple sources from different companies that are compiled in a single place for buyers to make decisions about where to spend their money.

Fig. Featured members of AdLedger – a nonprofit consortium working to build rules and standards for the application of blockchain and cryptography into media and advertising.

Programmatic advertising players both on the buying and selling side of the digital advertising space are interested in new trends which is Blockchain in AdTech now.

Blockchain technology can be used in programmatic advertising in many ways:

  • The integrity insurance of the entries in the audience data label
  • Fraud and Malware records could be maintained and used to build up an immutable and transparent “risk profile” when running ad campaigns
  • Consent Management Systems could potentially benefit from running on blockchain as the integrity of the consent signal given by the user can be structurally guaranteed
  • Viewability scores, brand safety ratings, or overall targeting accuracy of inventory or inventory bundles can be publicly documented and contribute to establishing a gold standard or “industry currency” regarding impression quality
  • Assuming an agreed upon industry standard regarding performance measurement via a scaled attribution system, it would in theory be possible to establish a blockchain-based public library to help advertisers quickly identify the most promising placements and thus also serve as a price point reference framework for publishers.

The Future of Ad Tech Lies in Blockchain Technology

Blockchain is a revolutionary technology that has the potential to fundamentally change the way we do business. It establishes trust, reduces costs, creates new opportunities for innovation and collaboration, and decentralizes power from large institutions and gives it back to the people.

Blockchain technology is the future of programmatic advertising. Blockchain can be used to bring transparency into the AdTech industry. Smart contracts are an application of blockchain that allows advertisers and publishers to execute deals at any time. This way the participants of the programmatic advertising ecosystem will know where their money is going and how it is being spent.

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Beyond the hype

Gartner analysts don’t expect blockchain to be fully operational across marketing for another 5-10 years.

Part of the reason blockchain isn’t ready to be wholly implemented in programmatic strategies is because its latency issues make real-time buying a near impossibility. A blockchain transaction can take up to 1.5 seconds, while digital advertising needs a 10 milliseconds time frame.

So, while the distributed blockchain scaling problem will be solved soon, there is still a long way to go until all digital advertising players have come up with a feasible strategy to innovate within their business. It’s important that they invest in research to determine how blockchain technology can complement their company’s services quickly and easily.

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About the Author: Kate