Why Centralized Solutions Won’t Solve Problems in Digital Programmatic Advertising
Frustration from advertisers has been boiling over relative to the inability/unwillingness of some in the ad tech space to really address the transparency and fraud issues that have been plaguing the digital programmatic advertising industry. In many ways the ad tech community has holistically failed their clients and nearly everyone has reached consensus that something must change.
And the efficacy of blockchain as a solution in programmatic digital advertising has been at the forefront of the conversation as people realize the status quo is failing and fast. Now — up till now — blockchain’s ability to handle the scale within a programmatic environment has been suspect. Without the ability to build a fat pipeline that can handle millions of ad transactions per second — there is no real workable blockchain solution to solve the problems that ail the industry. As many know — Ternio (to whom I’m a proud co-founder) released a 3rd party audit which certified that the technology we’ve built is not only real but has demonstrated the ability to handle incredible transaction speeds never before seen in a blockchain technology.
Now to some — this is impossible. Dare they say that it’s inconceivable. But just as the light bulb was not some incremental innovation from the candle and email was not some incremental innovation to sending mail via the USPS — blockchain scalability is not tied to some sort of incremental innovation. Just this week — a very reputable company who’s significantly interested in blockchain told me to my face their engineers didn’t think it was physically possible to write a million transactions a second to a blockchain; they actually believed it was physically impossible. But if history has shown us anything — it’s that very few things truly are impossible.
So to resolve the glaring issues with in the system — some are looking to employ yet MORE centralized solutions to solve the ad tech problem. Build a product — slap “blockchain” on the box and hope that nobody notices the difference. That’s not only dangerous — it’s woefully inadequate. If it’s a centralized solution — it’s not a blockchain solution; it’s as simple as that. If you can’t audit the data — it’s not blockchain.
Advertisers and agencies who run ads through Facebook and Google have no way to verify that the numbers they are seeing on their reports are accurate. One central company says “here are your numbers” and those are the numbers they are expected to use when it comes to settling up and paying the bills. The same exists within the programmatic ad ecosystem except it’s far more complicated because everyone’s data doesn’t match. The advertising industry is filled with data discrepancies. Centralized solutions can become gatekeepers of data and processes. Advertisers have been working against gatekeepers and trying to find a more efficient way to spend their ad $.
But thanks to technological advances — there is a new, better way forward. Blockchain gives advertisers the ability to trust the data because the data is verified not by one centralized player — but by many third parties unanimously and simultaneously. The decentralized nature of the verification process can give tremendous trust in an environment where trust has been lacking for far too long. In addition — unlike with a centralized solution where one company tells the advertiser what their data is, blockchain is auditable and the data is immutable. If an advertiser wants to verify the transaction data — they can verify it at the transaction level and they can be 100% confident that the data is uncorrupted.
Blockchain is emerging at an inflection point in the ongoing story of digital ad technology; it’s a major step towards helping better perfect the idea of what programmatic digital advertising was intended to be. There are two potential futures:
#1 — Advertisers and agencies embrace more centralized solutions that give them more of the same ultimately leaving Google and Facebook with unchecked dominance. Agencies will lose business to their clients who are increasingly choosing to bring their marketing in house (because anyone can run Facebook and Google ads). Advertisers continue to pay the FB and Google premiums for the security of knowing they’re not wasting their ad $ in the toxic morass that is the current state of the digital programmatic ecosystem. And the rest of the programmatic supply chain continues to be marginalized with a large number of players fighting over a very small sliver of the pie.
#2 — Agencies and brands embrace blockchain based advertising to help ensure transparency of where their money was spent and how much to each player. Total visibility to the supply chain ensures reduction in domain spoofing and eliminating low value and unnecessary intermediaries. And with a cleaner programmatic ecosystem — more ad $ will be spent on the rest of the non-FB/non-Google universe thus ensuring the existing DSP’s, SSP’s and publishers see higher revenues as a result of their participation in a cleaner, less toxic and — ultimately — much more efficient ecosystem.
And since blockchain is an emerging technology that will prove to be useful in 2018 — it is to the benefit of all of those major agencies and brands to nurture and support many different players in the ecosystem to see who ultimately will help them deliver better profitability for their clients and stakeholders.