Why Projects Are Turning To Blockchain-Powered Advertising

The following is a contributed article from a content partner of Benzinga

Advertising is a necessary practice for any business looking to expand, and is especially crucial for startups looking to get the word out, onboard new customers, and grow.

But the marketing industry is plagued by issues, which can make getting results both costly and inefficient, making it difficult for firms to promote their products and reach their target audience.

As with most things, blockchain is becoming a disruptive force in the advertising industry and could be set to significantly boost the cost-effectiveness of advertising in the months and years ahead. 

Overcoming Ad Fraud

Right now, fraud is a major problem in the advertising industry — particularly from the perspective of the advertisers. According to a recent report, around $66 billion was lost due to ad fraud in the last year, equivalent to around 20% of the total advertising market.

Understandably, losing as much as 20% of the advertising budget to crooks and thieves isn’t just frustrating, it’s also uneconomical, making it more difficult for firms with a smaller marketing budget to see a reasonable return on their ad spend.

With fake traffic, click farms, bots, and ad stacking becoming increasingly difficult to detect, most advertisers had practically no recourse — given that the vast majority of ad marketplaces do very little to detect or deter publishers that use these fraudulent methods to increase their revenue. 

But things are beginning to change with the advent of blockchain-enabled platforms like AdEx, which uses a clever protocol to easily check and filter fraudulent clicks and traffic ensuring advertisers only pay for real views.

It achieves this by using a network of validators, which work to verify that the traffic generated by publishers is genuine. Only once 2/3 of the validator quorum sign off on the campaign is it then considered valid.

Overall, this system allows advertisers to improve their return on ad spend by up to 25% right off the bat — without even considering the other capabilities AdEx’s solution offers. 

Intermediaries Are a Problem

Middlemen are found in every industry. In many cases, they can help smooth a deal, by arbitrating terms, working out the specifics, and generally providing a value-adding service for both sides of the equation.

But oftentimes, these intermediaries do little more than add an additional hurdle to dealmakers, drive up costs, and are generally just an unwanted stepping stone to getting things done. According to a 2018 Entrepreneur post, intermediaries can eat up as much as 70% of an advertising budget.

This is exactly where blockchain flourishes. As a decentralized database, blockchains allow users to transact without intermediaries, helping to improve the speed and efficiency of payments and agreements.

When it comes to the advertising industry, these intermediaries frequently take a chunk of the campaign budget, either forcing the advertiser to pay more, or reducing the earnings of publishers. Naturally, this isn’t the most efficient way to go about things. If advertisers and publishers could easily and securely broker agreements between themselves without having to pay a middleman, this would significantly boost efficiency for all involved parties.

Until only recently, this wasn’t easily possible, due to the risk of scams and fraud. But now, with the advent of blockchain-powered advertising solutions, it’s becoming increasingly commonplace. Nowadays, platforms like AdEx and AdsDax offer easy to use blockchain-powered marketplaces that allow advertisers and publishers to buy and sell advertising — slowly squeezing intermediaries out of the picture.

But more than this, blockchain looks set to boost transparency in an otherwise opaque industry, since all transactions can be verified on-chain and traffic reports can be quickly monitored to identify low-quality traffic before it has an effect on their marketing budget — helping to ensure quality publishers are rewarded, while fraudulent ones are quickly weeded out.