In this industry, trends tend to get shrunk into simple, reductive terms that represent a whole swathe of things people don’t fully understand yet, but know it’s important to talk about. Social. Digital. Big data. AI.
For 2018, we have our new term: blockchain. However, this is not a term or trend to simply sprinkle liberally into conversation. Not a fad that'll be forgotten in a few months. It’s a true game-changer, and everyone in the industry needs to get clued up on the specifics. Its application goes far beyond Bitcoin, to almost every services-based industry one can think of.
That certainly includes advertising, marketing and communications, where it’s no exaggeration to suggest blockchain technology could trigger a paradigm shift in how these services are executed and sold.
Cutting out the middleman
As an extremely broad-brush explanation, blockchain technology allows for the creation of protocol-driven, open platforms that connect stakeholders in a decentralised, digital ecosystem. In short, they are fully transparent networks in which everyone can see who is participating, and what actions they are taking within that network. You can also think of a blockchain-enabled system as a community ledger, visible to all parties, that, thanks to cryptography, can’t be tampered with.
Applied more practically, blockchain could allow businesses to connect directly with consumers, with no intermediaries needed to act on anyone’s behalf. This is significant because it would mean no unnecessary value is extracted from the exchange.
For example, Uber has created a service in great demand, leading to its current market capitalisation of US$51 billion. But someone could use blockchain to build a system that connects drivers directly with ride-hailers. Participants would buy cryptocurrency, or tokens, to use the system and pay each other directly, without Uber taking its percentage, because its ‘middleman’ role would no longer be necessary. The same could be applied to Airbnb, or record labels, or myriad other businesses.
Joe Lubin, co-founder of Ethereum and founder of ConsenSys, explains: “Essentially the world’s moving from businesses offering services to consumers in a somewhat adversarial relationship, to a world in which these protocol-driven open platforms will create an ecosystem delivering services to consumers that were formerly delivered by a company.”
In the marketing and communications world, the middlemen are generally the agencies, or adtech vendors. To look at the latter example, for many years we’ve heard complaints about the amount of value the digital ad supply chain takes out of the system. In 2016, The Guardian’s chief revenue officer said in the worst cases, only 30 pence out of every £1 an advertiser spent programmatically actually went to the publisher.
There’s a sprawling web of players in the middle, and each takes its cut. With blockchain, there would potentially be no middle. Publishers could set up their own in-house ad exchanges and get significantly better CPM rates by dealing directly with advertisers.
“The people and businesses that have made their money being a middleman, or by interrupting people, or agencies that have skillsets of what to do with someone’s attention once you’ve interrupted them, will be removed,” states Ian McKee, a former ad man and CEO of Vuulr, a blockchain-based content platform.
“The blockchain removes them because the reality is, from a consumer point of view, they add no value, and yet they extort economic gain.”
At the heart of the matter in our industry is quality content. Consumers crave it in ever-greater hordes as smartphones provide unparalleled access. For decades, advertising has funded content creation, with the balance of power having shifted dramatically in favour of advertisers and brands in the digital age.
But blockchain could upend this by creating a new content ecosystem where creators are directly connected to brands and publishers, giving them an equal seat at the table for their services. Similarly, brands could deal directly with consumers and serve them ads they are willing to receive, rather than always trying to capture their attention in sometimes intrusive ways.
“In that situation, nobody’s overly controlling, overly monetising, it’s ideally more equitable,” says Lubin.
Put like that, it all sounds rather utopian, or apocalyptic, depending on where you sit. But while we may be some way from the tipping point for blockchain and the marcomms industry, Oliver Eriksson, head of global advisory at VML Southeast Asia and India, has a firm eye on the coming tide.
“The obvious and short-term role will be to enable greater accountability between advertisers, agencies, ad tech providers and publishers—bringing more trust back into the ecosystem,” he posits. “In the longer term, I believe it will fundamentally improve the underlying economic relationship between content creators, brands and consumers.”
Eriksson hits upon a fundamental tenet of blockchain technology that is a huge part of its appeal: trust. Originally developed for Bitcoin exchange, blockchain networks are fully transparent; each action (a block) is logged, creating an immutable record (a blockchain) that everyone on the network has full visibility and co-ownership of.
Anyone trying anything shady would be immediately found out. Hence many people are discussing blockchain as the silver bullet in the fight against ad fraud, a plague on the industry that the ANA estimates cost around US$6.5 billion in 2017.
“The ad world is a real mess [regarding fraud],” Lubin declares. “The fact is a lot of bad actors are just pulling a lot of money out of the system via fraud.”
This would (theoretically) not be possible with blockchain technology, which is music to many advertisers’ ears. On the agency side, Eriksson says while people talk about blockchain spelling the end of programmatic entirely, he believes it will rather force the digital ad ecosystem to clean itself up.
“Blockchain will certainly be enormously disruptive, but I don’t think it will spell the end of the core reason for ‘programmatic’, which is really to create more efficiency through automated trading engines,” he says. “Programmatic will just have to reorient itself so that it connects and works within a much more accountable environment.”
Accountability in digital advertising is already being explored by Adchain, a decentralised blockchain register of whitelisted and blacklisted domain names. Using a ‘token-curated registry’, Adchain token holders are incentivised to keep the best, most trusted list of ad industry actors, because the more users the register attracts, the more the value of the tokens increases. People won’t use it if it is found to be inaccurate.
Moreover, MetaX, a platform powered by AdChain, seeks to provide trustworthy, transparent ad impression verification and tracking using blockchain.
McKee says as well as preventing fraud, blockchain will force transparency between all industry stakeholders. “Everybody is looking at a single version of the truth, rather than the way it is at the moment, where everybody installs their trackers and frankly everybody’s trackers come back with completely different numbers,” he says.
More ominously, he suggests that unless the fraud issue is resolved soon, blockchain may bypass the programmatic system altogether because it creates direct connections between creators or brands and consumers.
“Those trying to clean up the ad industry might end up with a pyrrhic victory, with a clean business that nobody wants,” he warns.
For his part, Eriksson also believes there will be seismic changes even if programmatic adjusts to the new order. “I’d imagine that programmatic will be completely commoditised to the point where it literally is just hyper-efficient trading engines, which will reduce the influence of the incredible number of ad tech vendors vying for the best way to target a person based on their private data.”
Perish the interruption
Talk of private data brings up a broader theme. Heavily embedded in the blockchain phenomenon and its appeal is the burgeoning movement of people leaving behind the established, centralised order they distrust and feel exploited by—whether that’s ad agencies, publishers, banks, insurers or businesses—in favour of a new decentralised system where they are in control.
Blockchain, with its transparency and decentralised currencies or tokens, has the potential to empower consumers like never before, in ways that could shake the marketing and communications world. McKee at Vuulr says the signs have been there for a while.
“Blockchain, adblockers, browsers allowing tracking to be turned off, all of these things are signalling the beginning of the end of this offensive, intrusive, interruptive advertising,” he states. “The brands simply need to learn a new game.”
This growing drive for digital ‘self-sovereignty’ envisages a world where consumers are in control of their own private data, not corporations, and as such are in charge of what ads they choose to see. Lubin at ConsenSys calls this the decentralised Worldwide Web, or Web 3.
“Your identity isn’t going to be sprayed all over the internet anymore, housed on Facebook servers and monetised by Mark [Zuckerberg],” he explains.
Given that Facebook and Google took almost half of all global digital ad spend in 2017, according to eMarketer, largely because of the huge data pools they have on consumers, the current digital ad system of targeting people through online data held by corporations could take a significant hit.
If anyone thinks this is a distant concern, that’s just not true. It’s happening now. Brave is a new blockchain-based browser that blocks all ads and trackers, and uses its Basic Attention Token to let users make micropayments to the publishers they choose to support and let contact them.
Datum seeks to allow users to securely and anonymously store all their digital data on a blockchain ledger, and then share or sell it—in our case to advertisers looking to serve them ads—on their own terms.
Closer to home, companies in the influencer space such as Jet8 and IndaHash have already launched their own cryptocurrencies, which influencers on their networks can choose to be paid with. ClearCoin offers real-time blockchain media buying and selling, and says it has already worked with WPP, IPG, Omnicom and Publicis Groupe, as well as several leading brands.
The glaringly obvious counter to these examples is that they are by no means the norm right now, which takes us to a big issue for blockchain: user adoption.
“Although the technology will be largely obfuscated for the everyday consumer, there is still a big mental shift away from centralised services to ‘this magical new thing that gives me more control over my data’,” says Eriksson.
Getting people signed up and comfortable with digital wallets full of numerous different tokens performing different tasks is still a huge mountain to climb, not least given the severe lack of understanding about blockchain among consumers today. Lubin is well aware of this, and highlights other hygiene factors that must be water-tight for mainstream blockchain adoption.
“All this stuff is getting built, but user experience has to be good enough, and so does reliability. We can’t get consumers into a situation where they’ve lost their identity, or they’ve lost their tokens,” he says.
That’s also not to suggest blockchain means the end of Facebook or Google. They will certainly be affected by it, but as McKee puts it: “they’re smart organisations, I expect they’ll get involved and adapt”.
But it is likely only a matter of time for widespread blockchain adoption. After all, it wasn’t so long ago that typing your credit card number into a computer screen and then clicking a virtual button to purchase something was utterly alien.
“It is something consumers will eventually embrace with open arms,” Eriksson says. In time, he adds, these self-sovereign identity systems will have “something like the functionality of Facebook’s login, but all of the magic sits on the blockchain”.
So, is it the end of advertising as we know it? Not quite, as it is certainly early days and the advertising world has shown it is now paying attention. Last month, for example, saw the introduction of the AdLedger Consortium in the US. The organisation aims to look at the application of blockchain technology to the digital ad supply chain. Members include GroupM, IPG Mediabrands, Publicis Media and Wavemaker.
Eriksson says the immediate priority is addressing the “huge knowledge gap” in the industry and seeing more agencies, and brands, demonstrate a willingness to embrace the coming change.
For McKee, the challenge for the industry, and brands in particular, is much more fundamental. “They are used to spending money to buy control and influence. The future will need them to spend that money on being remarkable and authentic.”