How Blockchain Can Solve Ad Fraud

Blockchain, News, Opinion | March 4, 2019 By:

Criminal activity flourishes in the dark and fraud in digital advertising is no different. If there is one industry that can benefit from blockchain technology in the near-term, it’s digital advertising

Consumers flocked to the Internet for access to nearly unlimited content. Advertisers flocked to the Internet for access to all of those consumers and their trail of data. The hope was that advertisers would be able to not only reach consumers at a massive scale, but also be able to finally measure how well they did it.

Impressions, clicks, and conversions create a consumer’s digital footprint. These metrics, tracked by technology, are the standards by which advertisers assess the effectiveness of their spend.

The problem facing advertisers today is that a lot of these metrics are misleading. Digital advertising is powered by a labyrinth of technologies, most of which are siloed and have their own way of doing things. Inconsistencies in measuring impressions, clicks, and more are common, creating confusion and inaccuracies. Often, it’s up to the marketer to try to piece things together from the tangled array of black boxes.

It’s in this opaque, confusing landscape that fraud thrives. According to eMarketer, marketers around the world estimate that about 26% of their marketing budgets are wasted. According to Juniper Research, $19 billion in fraud was estimated for 2018, with that figure expected to grow to $44 billion by 2022.

Blockchain has been praised as a technology that brings transparency. So how can it help fix the ad fraud problem?

When a supply chain like digital advertising is siloed and opaque, it’s easy for self-serving practices to manifest behind the scenes at the expense of the buyer, seller, and everyone else. It’s also easy for outright fraudulent actors to gain a place in the supply chain without the knowledge of the true, honest actors.

At a high level, through its shared ledger, blockchain exposes any manipulation and enforces agreed-upon-standards. Through consensus protocols, blockchain can expose discrepancies, allowing marketers to move spend away from wasteful ad placements that are in the best case ineffective and in the worst case fraudulent. This allows marketers to optimize campaigns in real-time with full 360-degree optics into what’s actually going on.

More specifically, this is done by “codifying” and enforcing standards so everyone along the supply chain is measuring things in the same way. Blockchain does this by using automated computer programs called smart contracts, which can be programmed to enforce the way different technologies measure different marketing metrics.

Based on an agreed-upon standard, signals from different supply chain members can be judged as either valid or invalid automatically. That’s how we know the numbers reported by every member of the supply chain are accurate.

Specific examples of types of ad fraud that can be detected as a result of enforcing standards across multiple parties include bot traffic, domain spoofing, and programmatic auction games like bid caching. At the end of the day, any kind of discrepancy is an indicator of waste.

Putting Blockchain to Work for Advertisers

Blockchain provides digital advertising with a clear view into an agreed-upon set of data that is unavailable in today’s ecosystem. This level of clarity gives us an understanding at the event or log level about what impressions or clicks are potentially fraudulent or where there are breakages in the supply chain.

So, instead of trying to reconcile one month’s worth of data from a publisher with the same month’s data from an agency, all parties are now able to look at one set of unified data that is confirmed at an event level on the blockchain in real time.

More reliable data means more informed decisions, better performance, and an increased return on investment.