Internet advertising has never been simple. While a mainstay of most websites, the methods used to deliver and measure them have changed greatly over the years. We have gone from per-print to per-click, and today some ads are even paid per-sale. As the internet penetration deepens, ads have grown more and more targeted and specific on their metrics.
Companies and particulars interested in advertising usually hire ad space through an ad delivery system. For example, Google AdSense or Facebook Ads are common ways to get ads to people. Some individual and systems offer independent ads, but for the most part, people defer to the big players.
These big players usually use either pay-per-print or pay-per-click schemes. They allow the customer to choose their target sites by narrowing down their audience and subject matter. Beyond that, the whole process is handled automatically by the system. Users receive a report at the end of the period with performance data and then get charged for the service. All these can be better with blockchain technology.
The Existing Challenge
The main problem faced in the advertising model of the internet is the reliability of the reports customers receive. It is currently very difficult to measure the reach of a campaign, particularly the amount of times an ad is shown. While most ad servers have their metrics, they’re far from reliable. Current methods offer clients no way of confirming said data to be real.
Blockchain technology offers a change to all this. Blockchain is a decentralised network that works as a ledger where parties can make transactions. These transactions are written into the public ledger and can’t be tampered with. This makes it a secure, reliable way to track all kinds of movements and actions between parties.
In other words, blockchain technology offers transparency. Anything you can keep on a ledger can work with blockchain, and every day we find new uses for the technology. When it comes to advertising, the proposal is simple, yet groundbreaking. Instead of reporting a number of views or prints that can’t be confirmed, the system will report directly from the blockchain. If any of the parties has doubts, they can defer to it and make sure the information is correct.
By increasing the reliability of ad reports, we foster a healthier advertising environment where less of the money is wasted. Some companies might not want this, as the lack of transparency benefits them, but as the market adapts they’ll be pushed into adopting it. In the end, the ad delivery system with the fairest terms will win.
A New Paradigm
There are more possible uses of blockchain in advertising. The first reason why the current auction system is problematic is speed. As ad delivery systems grow larger and larger, they need to make more operations each second. Each time a user loads or refreshes a page, it must serve ads for it. And each time the system must serve ads, it has to repeat the auction for it.
This comes down to thousands of operations a second. Tens of thousands for bigger systems, even. And each time a user clicks on an ad, extra calculations must be made to charge the user. Then, there’s the transaction itself. This adds up to millions of calculations and transactions a day. With the rise of AI, billing and invoicing can be optimised just like a crypto trading bot dishing out the latest trading results.
So, ad systems will only charge the user at the end of a period, but many more would like to do this in real time. Credit card systems won’t allow it, as fees would eat up the earnings, but there’s no reason the blockchain couldn’t. The other vista is the joint use of the ledger and blockchain’s operational capabilities to improve speed on ad sales. To better understand this we need to explain how ad sales work on a deeper level. These days, most ad providers work using an auctions methodology. When the customer submits the ad, then a maximum amount of money they are willing to pay per click. This is then added to the system as a bid.
As ads are evaluated, it compares all bids for that specific ad space and displays the winner. This is a great method for ad delivery systems, as it maximises their income. By pitting advertisers against each other, the user is the marketplace king. This mirrors what obtains with the bitcoin leverage signals where efficiency matters.
However, bid methodology in adverts might as well be done away with. One sore point is transparency, as there is no trace of which space was sold to whom. Just as well, there’s no record of bids exactly how much each print and click cost. Some systems, like Amazon’s AMS for Kindle, have come under fire for this lack of transparency.
Using blockchain, we could have a public ledger of who bought which space and for how much. This would make end-user ad delivery systems transparent, thus making individuals more likely to invest in them. It would also help customers make informed decisions on what sites or keywords to target based on actual data.
A Subdued Optimism
In fact, the blockchain could well be the perfect home for internet transactions. It’s ledger-like system helps prevent fraud, so the delays considered common with credit cards don’t exist there. Using blockchain, and crypto, for this would greatly speed up transaction times, making them instant in most cases.
We’re not there yet, however. At the time, the fastest blockchain we have can only process a third of the transactions VISA can. Sometimes, blockchain transactions can take hours, as has happened with the Bitcoin blockchain. And, as mentioned before, VISA couldn’t possibly process the amount of transactions real-time ad serving would require.
Source : Business Insider
However, technology advances quickly. While blockchain is relatively slow nowadays, new methods and paradigms are being looked into. The aim is making blockchain not just as fast as, but faster than current payment processors. This would help with the adoption of cryptocurrencies and blockchain in general, as a business would flock to the better processor.
Another important way in which blockchain will revolutionise internet advertising is its smart contracts feature. Smart contracts are contracts between two or more parties held on the blockchain. They’re deemed “smart” because all transactions needed to fulfil them are automated. You can, for example, use a smart contract to divide any earnings from an ad between several individuals.
The potential of these contracts lies precisely on their automated revenue sharing. While the pay-per-click model is the main ad-serving model today, it doesn’t have to be like that. In the future, we could have systems where ad servers receive a percentage of the revenue for the traffic they drive.
For example, imagine you have an online store and drive people there through AdSense. Currently, you pay per click, but most of your clicks don’t drive any sales. Each click that doesn’t generate a sale is a lost click for you.
With a revenue model, you could instead pay Google a part of your earnings for every sale. If a click generates no sales you don’t pay, but if said click generates hundreds of dollars in revenue, you’d pay them a lot. This would potentially maximise profits for ad servers while making sure customers never go in the red.
It’s easy to dismiss this idea. After all, any ads showed that don’t generate revenue could mean a net loss for ad servers. But today we already face that; an ad that is shown but not clicked on is lost revenue. This is why ad-serving systems demote ads that don’t get clicks, even if bids are very high. If nobody clicks on your ad, it isn’t working and thus gets demoted.
There are other ways in which blockchain technology might change internet advertising. There are several current efforts to use blockchain to better direct ads, for example. By allowing users to willingly share some of their data, BitClave aims to show ads to users who have specifically shown interest in them.
Such a change would be huge, as one of the reasons ad campaigns fail is not being shown to the right people. With internet privacy a growing issue, data gathering has become an uphill battle. Users grow weary of where they put their data each day, which makes showing the right ads to the right people quite difficult. Allowing them to willingly share could help alleviate the issue.
On top of that, the idea of paying customers for watching ads is beginning to take flight. This has existed on the internet for a while, but usually from shadier sites that often didn’t pay at all. Coming from proper blockchain-based companies would help legitimate the method.
Of course, that method isn’t all about paying customers. The goal is data retention, both allowing users to share their data and gathering info on which ads perform best. Having willing users test these ads is the better way to gather such data.
In summary, these observations above are only some of the current proposals on how to change internet advertising via blockchain. Not all of them might prosper, but we will doubtlessly see more of these appear as time goes on. After all blockchain, as a technology, is barely in its infancy and we’re yet to realise its full potential.