In all the noise that came out of the recent Cannes festival, there seemed to be strangely little that focused on the problems inherent in the current digital advertising marketplace. Problems that were highlighted in a very articulate way a few months ago by P & G’s Marc Pritchard – namely a murky media supply chain with many hidden middlemen and a lack of transparency in agency contracts, problems with viewability and ad fraud, a lack of accountability and independent verification. Combine this with problems concerning publishers being able to properly monetise the attention that their content is drawing, and you have a market that seems ripe for an overhaul.
When I interviewed (friend of ODF) Gerrie Smits about the role of Blockchain in the organisation (he's writing a book on the subject) he drew my attention to the potential that this technology has to solve many of these not insignificant problems. Intrigued, I did some digging.
So let's begin with some definitions. Blockchain technology has so far been mainly applied in the context of facilitating secure financial transactions. It is effectively a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. Don Tapscott, the author of the book ‘Blockchain Revolution’ has a handy one sentence definition:
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
So a blockchain then is a decentralized and distributed digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network (click to enlarge).
Goldman Sachs have created a useful resource that shows how the technology is redefining the way in which we transact, and potentially ‘the way in which we buy and sell, interact with government and verify the authenticity of everything from property titles to organic vegetables…It combines the openness of the internet with the security of cryptography to give everyone a faster, safer way to verify key information and establish trust.’
A Blockchain browser startup business called Brave has launched a proposition around the Basic Attention Token (or BAT). A few weeks ago the BAT caused a bit of a stir by raising $35m in under 30 seconds. But the BAT is essentially an attempt to use the Blockchain to solve some of these very pressing digital advertising problems (BAT Whitepaper).
BAT is based on a particular type of Blockchain technology called Ethereum. Blockchain is commonly associated with cryptocurrency Bitcoin of-course, but the technology has a far wider range of applications beyond digital currencies (several hundred applications currently use Blockchain technology in different capacities). Essentially, Ethereum is ‘an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications’.
Where Bitcoin represents one particular application of the technology, (a peer to peer electronic cash system, with the Blockchain being used to track ownership of digital currency), the Ethereum blockchain focuses on running the programming code of any decentralized application.
Sriram Krishnan, who until recently worked on revenue products for Snap and also founded the Facebook Audience Network, wrote an exceptional post (HT @addictivemobile) detailing some of the key benefits behind the BAT system, but also some of the potential obstacles it will need to overcome. The BAT works by having the browser (as an independent party rather than the publisher) measure attention. For now, this means users needing to use the Brave browser, but could in future be done through a plug-in or extension. That attention is converted into a token which has monetary value which can then be transacted between the publisher and the advertiser (‘It’s as if the browser has access to the advertiser’s bank account and sends some money over to publishers everytime it verifies an ad is seen’).
BAT thus removes the need for verification and tracking, ensures the ad is seen by an actual human being, replaces multiple layers of the typical ad tech stack, and therefore improves user privacy and helps the publisher to properly monetise their content and attention by ensuring fewer middlemen and a more transparent market. BAT can even go further by rewarding the user for their attention.
Krishnan also details some key challenges for this new and intriguing proposition however, including the fact that together Google and Facebook now account for almost three quarters of online digital ad revenue (US figures) and 99% of all growth in the market. For now, BAT is not focused on the native search ads and promoted posts that are dominant in these platforms but rather the more intrusive ads and tracking that are prevalent elsewhere, limiting its potential impact. BAT is also, for now, dependent on the growth of the Brave browser for widespread user adoption, although plug-ins and extensions may alleviate this issue. There is also the thought that more relevant advertising does actually come from understanding user behaviour which is currently done through tracking, so any replacement would lose this benefit, although given the current state of digital advertising data targeting that may be no big loss. And there is the issue that whilst BAT may be effective in measuring and verifying attention, it is not measuring any outcomes from the advertising and so not solving real attribution challenges.
Nonetheless, BAT is an intriguing idea and one that deserves a lot more discussion than it seems to be currently getting. It feels as though Blockchain technology has the potential to solve a number of key challenges that are currently facing the digital advertising industry, and perhaps even provide the basis for the kind of industry-wide standards and measures that Marc Pritchard identified as being so critical to its survival. Mystifying then, that there is so little discussion about it at big industry events like Cannes.
Leave a Reply