We’ve been around since before the dot com bust, which gives us the authority to predict the future (just kidding). But one thing we know, because it has been more a reality than a prediction in the past, is that the IAB under Randall Rothenberg is a powerful industry group that can drive change in our industry in the direction it chooses.
The last two big changes involved visibility metrics, and verification metrics. Now IAB Tech Lab is moving the industry in the direction of the block chain.
The blockchain, a technology that really isn’t new but became prominent when Bitcoin, a cryptocurrency built on its technology, briefly became a “store of value” last year. When we say store of value, we mean people began to invest in Bitcoin the way they invest in gold or the stock market.
Although Bitcoin crashed, blockchain remains as an interesting option for the advertising industry because it is an “immutable, distributed ledger or record of transactions between a network of participants. The entries in the ledger are governed by pre-defined rules and validated by the network. The network can be public like bitcoin or private with only select participants.” IAB says there are benefits to the blockchain for advertising:
What are the benefits of blockchain in the media and advertising space?
Given the complex nature of the digital advertising supply chain, blockchain technology can offer greater efficiency, reliable and high-quality data.
Blockchains can create a more efficient medium by which two or more completely anonymous or semi-anonymous parties can complete various types of transactions potentially at a low cost.
Since blockchains are decentralized peer-to-peer networks, there is no single point of failure and no single access point for malicious hackers. Thus, it enhances safety and security for data.
This ability to keep a fully verifiable and immutable ledger or database that is available to all members of the blockchain provides a layer of trust and transparency that isn’t always available within media and advertising processes.
While blockchain will not cure all of ad tech’s problems, it can be beneficial in situations where there is censorship and both sides of the supply chain (i.e. publisher and advertiser) are disadvantaged by not having access to that information.
Here’s what is being tried, according to CMO Australia:
Members actively involved in the IAB program include FusionSeven, Kochava Labs, Lucidity and MetaX, with each piloting emerging blockchain-based offerings with supply chain partners including advertisers, agencies, DSPs, exchanges, publishers and technology vendors.
As an example, IAB said Lucidity’s ‘Layer 2’ infrastructure protocol is being used in a pilot to verify ad impressions and improve programmatic supply chain transparency through a decentralised, shared and unbreakable shared ledger. This will be followed by other pilots looking into fee transparency, digital publisher signatures and audience verification.
Another company not involved in the IAB Tech Lab’s group is Brave, creators of the browser that pays publications through its own cryptocurrency, the Brave Attention Token (BAT).
There’s almost no way that the blockchain will turn out to be completely useless to advertising, since the entire purpose of Ethereum’s technology was to create smart contracts. However, unless it can scale in speed, you won’t see it in ad tech any time soon to do things like serve up ad calls.
All publishers will not survive the latest onslaught of Facebook changes and GDPR compliance. At least not with an advertising model. But should they? The combination of an almost limitless content supply of sometimes questionable quality, the “Amazon effect” on brands, and the intolerance of consumers for slow-loading pages and interruptive ads will cause a Darwinian contraction among publishers.
The internet saw the rise of almost countless niche publications, each one fighting for ad dollars. That led to a proliferation of targeted ads, which in turn led to the need to collect personally identifiable information. The fact that 65% of companies weren’t ready to comply with GDPR shows how complicated the ecosystem has become.
That number includes brands and publishers. The brands have already taken steps. P&G cut its ad spend last year by $200 million, and said its reach was 10% greater. It will take more steps this year. In related news, WPP lost 15% since last year.
What will happen? Only the fittest will survive.
We think a combination of things will move the ecosystem forward, including the decline of publications who bet the farm on Facebook to get traffic, as Little Things did, the introduction of more transparency in the media buying system, and a diversified revenue stream will keep the best publications in business.
Mixed revenue streams have already begun to keep the largest publications, such as the New York Times and the Washington Post afloat. Some sites (The Information and Stratechery) do well by subscription alone, although the subscription model won’t scale across the entire industry because there are a limited number of sites to which any one human can subscribe.
That’s why after all is said and done, advertising will remain the best way for keeping content free, and those sites who design for the new ad formats recommended by the Coalition for Better Ads and IAB will see less competition for ad dollars and probably higher CPMS. The new site designs will be cleaner, pages will be faster loading, and desired content will be easier to read — all of which should have already happened.
The internet presented a temptation to put too many ads on too many sites, resulting in the digital equivalent of a swap meet and what we are seeing is a natural fallback of the market from excess to normalization. A market with too much merchandise is just as difficult to shop in as one with too little.
This is not very different from what happened to the cryptocurrency space lately as Bitcoin’s price fell from $19,000 to $11,000.
Bitcoin is a good analogy here, both because the regulators are coming both for digital media and for cryptocurrency, and because its price did not fall to nothing, just like advertising won’t go away. What we are seeing in advertising, as in blockchain, is the adoption of new technology inducing a hype cycle, and the market coming off the hype cycle into something more normal.
The quality publishers will still succeed, most supported by advertising. Publishers, just try to keep the flight to quality in mind. We’re here to help.
Everyone is trying to “fix” digital advertising. And now the “geeks” who “disrupt” things have entered the picture, which always reminds me of how the geeks realize healthcare, too, is broken and needs fixing. But the geeks don’t know much about healthcare and have a tough time building products that really offer value to that industry, and the same thing will happen in advertising.
A few months ago, we learned about the launch of the Brave Browser, a browser that blocks ads and pays content providers with something called a Basic Attention Token (BAT), which is a form of digital currency. As a visitor to sites, you buy BATs and they are paid out to content providers in micro payments when you use the browser. Although we’re following this, we’ve seen too many attempts to replace advertising to believe any of them will work. People want their free digital content.
Now we’re seeing another attempt to use the blockchain to fix the digital advertising ecosystem. This one is called Papyrus, and it doesn’t attempt to replace advertising, but merely to make it safer and more transparent. It hasn’t raised its money yet, but here is an excerpt from its whitepaper:
The Papyrus project aims to provide just such a next generation ecosystem for a fair exchange of value between users, publishers and advertisers. We aim to deliver a postIndustrial marketplace where users control which ads they want to see, who has access to their personal information and market determined compensation for their data, attention and actions. In the decentralized Papyrus digital advertising market ecosystem, all parties will be incentivized to find equilibrium between their interests and resources to obtain maximum value for themselves or the organizations they serve.
That sounds fair. It takes into account the publisher’s need to have revenue, and the user’s need to control of her data, in addition to the advertiser’s need to reach its markets.
Its objectives are laudable:
Preserve sensitive data that users want to keep private while still enabling precise audience targeting using appropriate data processing; Compensate users directly for voluntarily sharing their personal data; Build a sophisticated value-based reputation system that significantly decreases the level of non-human traffic and other types of fraud between participants; Minimize the risks for advertising businesses from excessive government regulation, criminal attacks and security breaches; Increase the agility of all business processes by enforcing everything in real-time via blockchain smart contracts and state channels 3 to eliminate transactional bureaucracy, corresponding offline paper work and the need for traditional bookkeeping; Create an economy that incentivizes the developer community to produce more and more efficient applications that solve practical tasks in advertising; Dynamically balance the interests of users, publishers, advertisers and developers for smooth, accelerated and economically viable progress towards new and more efficient advertising products.
However, scanning the team we think that the company is probably located outside the US, which means the tech stack may be first rate, but the marketing will be slow. Adoption of the blockchain won’t happen tomorrow, but it will probably eventually happen. While this is nothing to think about today, but at ZEDO we constantly think of both today and tomorrow. It’s how we keep our product development teams ahead of the game.