Will blockchain solve ad fraud issues and cut out the jobs of "middlemen"?

While the term blockchain might have been around for years, having shot to limelight in 2008 and famously understood to be the technology behind the cryptocurrency Bitcoin, it is only in recent times that we are seeing the marketing and advertising industry sit up and take a good long look at the system.

Just last week alone, startup Amino Payments brought on board support from ad tech giants such as AppNexus and marketers such as T-Mobile to better understand the theory that blockchain can in fact, curb ad fraud. Also propelling the blockchain technology fame in the past few weeks was a tweet put out by billionaire celebrity and business woman Paris Hilton, where she put her faith in a utility token created by Gravity4 called LydianCoin.

In a recent closed door invite-only conference by Gravity4 held in Singapore, Jeffrey Seah (pictured centre) who is on the advisory board of the company, broke down the term for a room full of investors and media professionals. Given that digital ad fraud is expected to cost brands US$16.4 billion globally this year, he said the industry needs to find a solution “before the perception of advertising changes forever”. Blockchain, as such, can establish transparency and trust by implementing a central and secure way to record, review and execute every deal, creating a better ecosystem for both publishers and consumers, Seah said, adding:

While it will not solve everything, it will take ad fraud head on.

“Right now some of the problems in advertising involve the layers of players creating opacity, where you can’t affirm what you are buying. Blockchain potentially solves this issue,” he explained. As such, the challenge arises when the advertiser, trying to make sense of their ROI, feels that since they might not have full "visibility" into the advertising buying models, they might be "paying more than needed money to layers of middlemen they are not aware of".

Prashant Kumar (pictured left), founder of Entropia who was also on the panel, added that there is a huge misconception that technology is equivalent to transparency and data is equivalent to accountability.

“Unfortunately, we live in times where technology is used to create opacity, and to create walled gardens rather than open systems where you can see what you are really buying. While solutions might be present, it is mostly superficial because there are very few technologies out there that can go down the entire inventory scale,” he said.

Joining them on the panel was Kevin Huang (pictured right), Gravity4's APAC managing director, who added that the discussion around brand safety has never been louder and clearer than it is today, and as such is fuelling these conversations.

“As advertisers and consumers, when we buy something we want to know what we are getting into. Unfortunately, that has been a little murky,” he said. While in the past marketers might not have been questioned on their digital spend, given the rapid pace at which digital spend is rising, CEOs and those in top management positions are questioning and asking for accountability of the digital marketing spend.

"The development of blockchain in all industries from financial or advertising is very new, and I believe it can potentially solve this issue [of lack of transparency and accountability]. Will it solve all our problems? Probably not. Will it solve some? I believe so," Huang added.

Cutting out the middle layers

Seah added that there are two key ways in which he believes blockchain technology will benefit the industry, and bring process and mindset changes to the landscape.

Firstly, by deploying blockchain technology, every member of the supply chain will be operating with the same information. This transparency and clear audit of interactions and metrics would mean that the conversation between clients and AdTech providers will centre on outcome-based ROI, not around ROI-surrogate outputs (or doubt and blame).

Secondly, blockchain might just reduce ad fraud and enhance data value for the industry, if the industry joins hand for the bigger good. As such better alignment is needed.

Unfortunately, because of the speed of the system, the advertising landscape as we know it is bound to change. There will be productivity of systems, but there will be some “middle layers of people who will be removed”, Seah said.  However, Seah also believes that in the long run, this will lead to better relationship between agencies, industry partners and clients.

“Businesses seeking advertising opportunities entrust large sums of money, often millions of dollars, to their advertising agency as their partners who manage investment on their behalf. With focus on output, the incrimination falls on the process of buying. Some marketers start to question whether they are truly getting value for money, when all of the costs are lumped into non-transparent billing structures,” Seah added.

Huang added that in order for the tech to work, there needs to be a circle of trust and everyone needs to be aligned.

From a brand's perspective, alignment is about getting users of quality and reach. From a seller’s perspective, it's about ensuring ad players do their part to propel growth. Huang explained:

We need to solve the issues, build up confidence and let the advertisers make investment in digital. I think we have a duty to do better for advertisers.

Kumar added that blockchain is expected to bring a certain level of transparency and participative governance that can "significantly reduce the unnecessary leakage from the trading ecosystem".

"This has the potential to bring back the trust and drive up digital investment, which then is a win-win for all," he said.