Advertisers and brands are concerned with advertising agencies and other actors about the lack of transparency in the digital advertising space. Digital advertising revenues for the first half of 2017 reached a record $40 billion dollars, compared to $31 billion the previous year, and were estimated to have reached $85 billion dollars by the end of the last year.
The fight for transparency intensified in 2017 after The Times of London published a report on how big brand ads appeared alongside racist videos on the huge YouTube video platform. Several brands temporarily stopped spending on YouTube advertising until YouTube assured them that it had taken steps to correct the problem.
How Does Traditional Ad Buying Work?
Typically, the advertiser – the brand that seeks to connect with its audience – hires a digital advertising agency to manage its entire advertising campaign, with the advertiser having an established goal that it intends to achieve with the campaign. The advertiser pays the advertising agency an amount that would cover both the total cost of creating the advertising content and the cost of distributing the advertising content to the target audience/clients of the brand; these two types of costs are what digital media experts call joblessness and labor costs, respectively.
Once the advertising agency has developed the content for the desired channels, it buys advertising space – also called ad inventories – where the desired audiences would see the content. The advertising agency has two options to buy advertising space: buy directly from the publisher and buy programmatically through an ad exchange platform.
This process, which is often lengthy, encourages a lack of transparency (hidden fees, fraudulent activities, traffic, measurement and visibility), especially with the purchase of programmatic means. For the sake of clarity, transparency issues can be divided into two main parts: 1) Tariffs and charges from vendors and other actors along the supply chain. 2) Fraud and visualization.
The first part is encouraged by the long nature of the programmatic ad supply chain. In many situations, the advertiser is not aware of what each player in this system takes. According to a report by the advertising industry trade group IAB, 55 percent of programmatic advertising revenue goes to ‘ad tech’ services, while publishers receive only 45 percent of the revenue.
The IAB findings show that advertising spending that doesn't work (advertising dollars that didn't reach the publisher) costs advertisers more than advertising spending. There are two problems here 1) Advertisers often do not receive enough information about these costs. 2) Publishers, which actually provide the platform for brands to reach their audiences, are paid less than intermediaries.
Advertising fraud and displayability arise from general transparency issues that are related to publishers selling fake impressions (fake clicks and robot traffic). Domain spoofing, whereby an editor somehow presents his or her domain as a domain of a larger publisher, is another part of the fraud problem.
For Greater Transparency In Purchasing: Blockchain For Auditing
The advertising fraud reportedly cost the US advertising industry some $6.5 billion dollars in 2017. Again, as with hidden fees, all users of the ecosystem need to have sufficient information on how publishers verify their traffic and the processes that advertising agencies and other intermediaries follow to ensure that they work with publishers with verified traffic.
This is where Blockchain comes in. In fact, the blockchain in advertising is likely to be where we will see the fastest adoption. They're a couple made in heaven. Advertising lacks transparency of data and process. Blockchain offers transparency of data and processes.
Here are some practical ways in which blockchain can help bring transparency to the ad buying process.
Truth Agency, founded by The Marketing Group, based in the UK, is working to help alleviate transparency issues in programmatic advertising, primarily through the rapid audit of advertising transactions. As CEO Mary Keane-Dawson has stated:
“We believe that advertisers are not seeing the full picture, in some cases money flows backward through the supply chain to pay for fees not exposed to the advertisers.”
Because the problem of transparency is systemic rather than technological, Keane-Dawson believes that bringing the entire ad buying process to blockchain is an unnecessary and complex effort, and that's why Truth Agency only wants to use this technology to audit ad transactions
The implementation of the blockchain analyzed the way in which some of the existing audit services operated and simplified their processes by dividing them into two key parts: data collection and verification of media contracts.
Once Truth has the contract and the data stored in the blockchain, it processes each transaction from each supplier based on the rules written in the contract and publishes an audited version to blockchain every hour. The company marks any transaction that cannot be verified through the data it holds, so that both the advertiser and the team involved would be notified of the discrepancies.
For Transparency In Sales: Vision Test To Fight Fraud
Transparency issues on the sales side are related to fake traffic counts, robot clicks and phishing. Verasity, a blockchain-based video-on-demand platform similar to Vevue, is working to improve publisher transparency with its blockchain Proof of View (PoV) technology.
PoV, which is currently patent pending, is built to verify and securely record content consumption within the Verasity ecosystem. PoV has publicly auditable records that contain all view counts, as well as anonymous viewer information for media buyers to view, according to Verasity. The company claims that the information contained in the records is GDPR, PCI DSS and ePrivacy compliant.
The conclusion of our conversation and blockchain research in the media space is that this technology can definitely play a role in advancing the media world, especially in the advertising field. However innovative blockchain itself may be it cannot solve all the problems that the industry is facing by itself. Companies will have to heavily invest in new techniques to avoid fraud and other of the problems mentioned in the article.