Filled With Promise, Not With Doubt: Why Marketers Are Climbing Aboard The Blockchain Bandwagonbr>
Towards the end of last year, analysts argued that blockchain had slid into the Trough of Disillusionment and that it would take at least another decade for the technology to make a significant, “transformational” impact. While this has mirrored sentiments of cautious executives and traditional industries reluctant to embrace the innovation taking place, other sectors have taken a more progressive stance. The digital advertising industry, no stranger to change, is instead sharpening its focus on blockchain’s potential. Positioned at the Innovation Trigger where an openness to experiment has shaped sentiments, advertising firms have jumped at the opportunity to run pilots, putting the technology’s utility to the test.
As an industry that has grappled with mounting costs associated with a lack of transparency and an overreliance on middlemen, blockchain has presented a logical springboard from which to radically upend existing standards. Digital advertising industry committees such as JICWEBS that determine best practises for the sector have conducted blockchain pilots with the goal of seeing whether the technology can offer a permanent, long-term solution to tackle these challenges once and for all. Well-known brands, surprisingly enough, have jumped on the bandwagon, with firms such as Unilever, Nestlé, McDonald’s, having all opted to test whether blockchain is indeed the solution to optimising their marketing spend. Other well-known household names, like PepsiCo and Toyota, have individually participated in pilots that address areas such as digital media supply chain optimisation or improved auditability. And yet, the reluctance to transition from pilots to long-term implementation remains.
With 83 percent of marketers for large organisations feeling the pressure to keep abreast of the wave of emerging technologies entering the space, the reluctance is understandable. Systemic issues span the prevalence of intermediaries and a bloated supply chain, a realisation that British daily newspaper The Guardian came to terms with when they bought programmatic ads and found that almost 70 percent of their ad spend was lost to process inefficiencies. Programmatic advertising today arguably represents one of the greatest advancements in process automation, referring to the automated purchase and sale of digital media. Today, 85 percent of all digital advertising in the United States is programmatic.
Yet, this involves multiple stakeholders spanning demand-side platforms which brands or agencies use to decide which impressions to buy and publishers leverage supply-side platforms to sell ad space. The trouble comes at the point of reconciliation where payouts are determined based on whether impressions have actually been viewed by consumers. Losses estimated due to ad fraud in programmatic campaigns climb to as high as US$19 billion, cited as one of the biggest roadblocks to greater ad spend.
Blockchain certainly has the potential to address these areas. Smart contracts, for one, allow for the codification of pre-agreed metrics, ensuring that an agreement is only executed should certain conditions be met. As data is aggregated from multiple data sources, smart contracts can help to siphon out impressions that are verifiably viewable and fraud-free. That being said, the success of blockchain depends on the willingness of all stakeholders to participate in this system.
Simultaneously, a growing mistrust directed toward the existing data-driven model has led to innovations in personalisation and targeted marketing efforts that leave marketers scrambling to adapt. The evolution of privacy frameworks has led to an increased emphasis on explicit consumer consent, full transparency of the scope, intention, and length of use of data, and the right to be forgotten. Moreover, methods of browsing activity tracking such as cookies which have been relied upon by marketers since the dawn of digital advertising, have come under fire. Google Chrome recently announced its decision to phase out third-party cookies within the next two years in a bid to reduce tracking and trading of user data.
One of the core clauses in today’s privacy frameworks, be it in the European Union’s General Data Protection Regulation (GDPR) or in the California Consumer Protection Act (CCPA) pertains to that of provenance. As a ledger of transactions, blockchain not only monitors the current state of data but keeps a historical record of all the changes that have ever been made. In the case of consumer data, blockchain provides a historical record how consumer data has been used over time. With its method of governance which relies upon key participants to validate any changes taking place on-chain through a consensus mechanism, blockchain can help to ensure that this record is tamper-proof, free of falsification and manipulation while ensuring transparency across all authorised stakeholders. To abide by data privacy regulations, sensitive personal identifiable information (PII) does not need to be stored on-chain.
In tandem, one promising solution to further bolster the protection of personal data on distributed networks is differential privacy, an algorithmic system that allows for sharing the attributes of a dataset by introducing sufficient noise to mask its specificities. As a result, only the patterns identified from the group itself are shared, mathematically guaranteeing that an individual’s privacy can be preserved with no chance of reverse-engineering. Within the world of digital marketing, this means that only behavioural profiles and interest graphs derived from these masked data sets would be stored on-chain for authorised participants to access, ensuring that individual data points remain appropriately encrypted while the provenance of data is assured on an immutable, transparent ledger. Enabled by high-fidelity first party data, these aggregated patterns can provide the needed accuracy for personalisation. Though the technology is promising, as evidenced by its use by big tech giants such as Google and Apple, uncertainty still remains as to its precision when applied at scale.
A changing landscape
As an organisation, we work with marketers and brands to ensure that they can easily reach their target audiences in a meaningful, effective manner while ensuring that privacy and provenance takes precedence. Be that as it may, today’s efforts at automation and personalisation need to adapt with the times as more challenges threaten the integrity of the digital marketing ecosystem. From threats of data breaches to the intentional collection of data for the purposes of social manipulation, as well as the many millions, if not, billions, lost to processes that have yet to advance, a great deal of work must be done. Blockchain is but one of many pieces to this puzzle and even without rose-tinted glasses, it’s a fit.