The digital marketing industry has an unenviably long track record of shiny new object syndrome. This condition – compounded with marketers’ ever-present fear of missing out – has led too many brands to invest too much, too early in new initiatives for more than 20 years. Given all the hype and noise around blockchain right now, does this new, foundational technology really have the potential to be a game changer for financial transparency in media trading? Is it too soon for brands to even consider what their blockchain strategy might be? Or should marketers focus their limited energy, attention, and resources elsewhere?
In theory, blockchain offers the perfect antidote to the endemic lack of transparency that exists in many corners of the overly-complex transactional chain that characterises much of the digital trading ecosystem. Smart ledgers – and the opportunity to enshrine transparency-by-design into every transaction, every step of the way – sound like the kinds of solution marketers have been crying out for ever since the 2016 ANA report and Marc Pritchard’s 2017 ANA and IAB keynotes. And other industries, from energy to motor manufacture, are already benefitting from blockchain. In theory at least, it represents a way of working that has the potential to change business by reducing friction, by automating trust, and by redefining relationships.
But to be frank, blockchain solutions for media trading are still only at proof-of-concept or beta stage. There are lots of problems blockchain could solve in media trading, in particular in the digital ecosystem – from a lack of financial transparency to better supplier management – but as an industry, we’re in the very early stages. It’s great that blockchain is even on the agenda, but many of the problems the industry has faced in recent years can be laid at the door of our tendency to build new kit to solve small problems and then market them heavily to create FOMO and drive up tech stack valuations. This approach results in additional layers in the ecosystem, and too much complexity. More complexity is the last thing the industry needs right now.
A significant challenge for blockchain is that, to function as intended and so deliver smart, open ledgers that are transparent to all, it requires all (or at least the most important) players in a market to participate. Until advertisers, media agencies, tech stack vendors, and inventory suppliers all opt in to be part of the blockchain, full transparency is not possible. Without full participation, such a blockchain would be like a game of Prisoners’ Dilemma, requiring all actors to have at least some degree of blind trust in others to do the right thing and not act in their own, vested self-interest. Some of the smaller, independent players in the ecosystem are claiming to do more to usher in transparent ledgers for media trading than some of the bigger players, setting an example for the industry. But without advertisers being allowed to participate, it’s likely that a blockchain for media trading can only ever be an aspiration.
There are a number of critical issues and questions about blockchain as yet unanswered in the media trading ecosystem. These include:
- The computational power needed for a sustainable, future-proofed blockchain for media trading, especially a system encompassing real-time bidding for digitally-delivered media.
- Many of the first iterations of blockchain solutions have been focused on ad fraud. But there are already many industry-accepted anti-ad fraud technologies on the market. So, the premise of cleaning up ad fraud promoted by many blockchain solutions is in a sense non-sensical. As long as advertisers and agencies are using already established tech companies to monitor and block ad fraud, arguably blockchain adds no additional value here.
- Standards and best practices for operating a blockchain. While the US Internet Advertising Bureau has been tasked with doing just this, the guidelines are not yet in place. So, we can’t yet know how blockchain might help, or what a robust and scalable blockchain infrastructure for the digital advertising industry might look like.
- What would happen to both contracts and contractual obligations between advertisers, agencies, ad tech and martech providers, both existing contracts and potential new contracts. As there are bigger commercial terms and rules of engagement at play in partner contracts, we don’t expect to see advertisers forsaking the need for contracts or their need for auditing adherence to terms any time soon. Blockchain will still only solve part of the problem of transparency focused on the transactional process of distributing advertising. It cannot address the wider transparency issues faced by advertisers when managing their contractual relationships with marketing partners.
What’s more, as this handy primer in the Harvard Business Review argues, blockchain is a foundational technology and not a disruptive technology. Foundational technologies – and the analogy in the HBR article gives the example and analogy of TCP/IP, the transmission control protocol / internet protocol which “laid the groundwork for the internet” – can take decades to have their true impact. TCP/IP was introduced in 1972 to create “an open, shared public network without any central authority or party responsible for its maintenance and improvement”. But it took until the 1990s before sufficient businesses had invested behind TCP/IP and it started to take off. The same is true, argue the HBR authors, of blockchain. Nice idea, but it won’t change things overnight.
Blockchain does offer great opportunities to help clean up the media trading ecosystem and make it fundamentally transparent in a way it hasn’t been for years; to simplify and make media trading more accountable in a way that advertisers deserve and agency and tech partners should welcome. And while there may be the will and the skills required within the industry, the fact that blockchain is foundational and not disruptive technology will likely mean it takes many years before it is a reality.