How blockchain can be used to solve the flaws in programmatic advertising

Fridges that restock themselves, banks that tell you when your account is running low; even cars that are now driving themselves. Throughout society, we are becoming increasingly used to the rise of the machines and the usefulness of artificial intelligence (AI) technology to undertake the more mundane areas of our lives.

Programmatic ad buying has also been going on for some time now, and refers to the use of an algorithm-heavy piece of software to purchase advertising online, as opposed to the traditional process that involved human negotiations and often (shock horror) paper-based manual insertion orders.

With the promise of making a brand’s ads more targeted and relevant to their specific audience, spend on programmatic ads has grown from $5 billion in 2012 to $39 billion in 2016.

Has it gone too far?

The digital advertising industry has undoubtedly seen a revolution with the introduction of programmatic advertising technology and there is no debating the speed and efficiency the technology provides.

However, with any progressive new technology there’s bound to be a few teething issues. The biggest problem that we have seen with programmatic advertising is that this desire to automate has started to hit advertisers in the pocket.

There is currently an intrinsic lack of transparency in the exact share of the total ad spend each party takes, automated processes enable fraudulent activity and ad buyers in non-US markets, face exchange rate complications.

It is important that we embrace technology to better connect buyers and sellers through multi-dimensional programmatic advertising platforms.

But this must not be at the detriment of the integrity of the industry that we all know and love.

Unlock the blockchain

The blockchain is the public ledger on which digital currency Bitcoin is built. The blockchain is designed to verify the validity of transactions to provide an indisputable record of events. It provides an effectively permanent, incorruptible and irreversible record, which leaves no room for fraud.

I predict that blockchain technology will become deeply ingrained in how we undertake digital ad buying in the future

Some observers have hailed blockchain technology previously as a solution without a problem. But in the last few months we’ve seen a surge of interest in distributed ledger systems.

The ability for blockchain technology to provide a full audit trail of every transaction that is executed has made it attractive to many industries, with most of the world’s biggest banks admitting to undertaking ongoing trials.

The blockchain could also be the solution to the issues brought upon by automated programmatic advertising. Providing an audit trail would afford our industry with the ability to better track the transactions that are taking place automatically.

This would provide a true transparency, an issue that negatively affects the ad-tech industry because it promotes distrust in advertising, and in some cases can result in loss of revenue. Blockchain ensures then that only fair charges are taking place due to this spend transparency for all parties where both buyer and seller can see exactly what is happening in the media buying and selling process in order to eliminate hidden costs.

Publishers get precise insights into buyer transaction and ensure that charges are only taking place fairly.

The blockchain can redefine an integrity to our industry. It can help combat fraud and work for the greater good of the advertising industry.

It will ensure that the adverts placed by the algorithms are being seen by real people so advertisers are getting the best from their marketing budget and can confidently report on the validity of their advertising campaigns.

I predict that blockchain technology will become deeply ingrained in how we undertake digital ad buying in the future. It will increase transparency by allowing advertisers to see exactly what their spend is and when and where their campaign is delivered.

It will become instrumental to policing programmatic advertising algorithms, thus providing peace of mind to advertisers who are already feeling the pinch of shrinking budgets.

Editor's note: You can read more blockchain news, analysis and opinion on our sister publication, The Block. Find out more here.

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