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An Introduction to Blockchain for Advertisers

Thanks to soaring interest in crypto currencies like Bitcoin, more attention is beginning to focus on “blockchain,” a digital technology that underpins the growth of these alternative monetary systems. But virtual currency isn’t the only application of blockchain. In fact, a number of blockchain boosters believe the technology will soon make inroads in the digital advertising sector as well, with the IAB noting earlier this year that it is a “natural fit” for digital video advertising. But what exactly is blockchain? And what should advertisers know about how it might be used in their campaigns? Here’s an investigation into this rapidly-evolving innovation.

What Is Blockchain?
“Blockchain” refers to a distributed database that’s managed by a network of buyers and sellers who keep track of, and verify, any transactions that occur in their marketplace. Every transaction made within this network is recorded in the database, and every buyer and seller who uses the system instantly gets a copy of those transactions when they occur. This allows a blockchain to serve as an automated master document that keeps a never-ending record of all activity, almost like a massive Google document viewable by all buyers and sellers. The benefits of this approach are many:

  • It’s difficult to manipulate – While blockchain has some similarities to a Google Document, there’s actually a key difference. Unlike a Google Doc, which is stored in a single location, a blockchain is saved to millions of different computers simultaneously, making it nearly impossible for any single user to tamper with or edit a transaction once it’s been recorded.
  • It eliminates middlemen – The highly public nature of a blockchain, visible to literally anyone who participates in buying and selling online, reduces the need for third parties to verify purchases and sales.
  • There’s no single point of failure – Every user who makes a transaction using a blockchain has a copy of the database, making it very difficult to destroy or corrupt.

How might it be used by the ad industry?

While real-world implementation of blockchain is still a year or two from happening in the advertising industry, there are a number of potential applications for the technology. “In the coming year, we expect to see some significant beta tests from both traditional media and new entrants,” said Alanna Gombert, chief revenue officer for digital ad blockchain firm MetaX, in an interview with Ad Age. Here are a few of the most promising possibilities:

  • Simplifies buying and selling of premium video and TV – Thanks to the relative scarcity of inventory and high CPM’s, the IAB believes premium video and TV offer great test cases for blockchain tech. “Long-form, premium video and TV advertising, with their high CPMs and low volume, is a compelling use case for blockchain,” said the IAB whitepaper.
  • Prevents media supply chain fraud – The fact that blockchain makes it easier for ad buyers to verify the correct publishers and resellers means that the technology could put a stop to at least one type of digital ad fraud. It would be far more difficult for unethical media sellers to profit from selling inventory on fake site that are designed to look like authentic ones.
  • Makes it easier for ad industry partners to share data – Many advertising industry players are rightly concerned about sharing their proprietary data related to rates and audience segments. But blockchain technology could make it simpler to track which parties have accessed such information thereby helping to put companies more at ease with sharing. Comcast is one company that’s already trying to do this, forming a blockchain-based group including Cox, NBC and Disney that lets trusted media partners share information to build campaigns.

Digital advertising can feel like an increasingly complicated discipline. But thanks to the industry’s commitment to continued innovation, and new technology solutions like blockchain, the simplification of buying, selling and measuring ad campaigns should become easier and safer for everyone involved in the near future.