How Blockchain Will Affect Programmatic Advertising

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What is blockchain?
This is a question that many executives involved with programmatic advertising may soon ask as blockchain emerges as a technology with the potential to be disruptive. Similarly to how programmatic is changing the way TV advertising is bought and sold, blockchain may revolutionize programmatic by opening it up to more publishers and advertisers and by further streamlining monetary transactions. Proponents argue that blockchain technology – which constitutes the backbone of cryptocurrencies like Bitcoin – can be used to allow publishers to sell ads directly online without a middleman, or at least with less intervention.

Blockchain Explained

According to The Wall Street Journal, blockchain can be defined as the decentralized ledger of transactions that serves as the foundation for digital currencies such as Bitcoin. Essentially, in blockchain, monetary transactions are bound together in a data chain that cannot be tampered with.

The most common cryptocurrency is Bitcoin, which is based on artificial scarcity. Artificial scarcity is when users receive newly minted Bitcoins after they lend their computing power to record transactions via blockchain. And, like in Bitcoin, there is no central authority managing and controlling blockchain. Blockchain’s computations are made using algorithms from a distributed network of computers located across the world.

How can Blockchain benefit advertising?

In a nutshell: by allowing faster and cheaper monetary transactions between buyers and sellers. According to a recent interview with Jim Wilson, President of Tegna at GABBCON, Wilson believes that “the opportunity around blockchain is around transparency, authenticity and the ability for companies whether they are adtech companies or publishers to work together in a more seamless and efficient way.”

BitTeaser, an advertising network founded in 2015 by executives from the U.S. and Denmark, was one of the first firms to apply blockchain to programmatic. The company allows users to place ads and pay for them in various digital cash cryptocurrencies, including Bitcoin, Dogecoin, etc.

By allowing ad purchasing through basic cash transactions, BitTeaser and other similar companies remove a lot of the barriers to entry for small publishers such as bank account information and other identifiers. While this may not be a problem in the U.S., it does rule out many small publishers in certain areas of the developing world.

For larger advertisers, blockchain merely removes another layer between buyers and sellers. It is unclear how much of a cut BitTeaser takes from each transaction. On its website, however, the company claims that publishers get the “highest percentage per click.”

Less Centralization

On the other hand, blockchain provides ad-delivery verification through the tracking of all digital ad transactions. According to MediaPost, blockchain can help create a large identity graph of all consumers by merging blockchain technology with multikey encryption. This integration has the potential to take back some of the centralized, data-based power of media and marketing companies.

Programmatic removed insertion orders and the haggling between human parties that used to slow down the ad buying process. However, this process still requires invoices, accounts payable and receivable, and a delay between the placement and reception of funds. Using blockchain-based cryptocurrencies could remove these barriers and make the process significantly faster.

Broadcast television is still figuring out how to embrace programmatic. Accordingly, if blockchain ends up taking off, then it will most likely start to do so via display advertising. In terms of television, making the switch to a digital currency model for all ad-related transactions may seem like a titanic adjustment. However, if the implementation of this technology ultimately results in faster and cheaper transactions, then the market as a whole will find a way to embrace developments such as Bitcoin and blockchain.
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