Digital ad supply chain inefficiencies are costing advertisers billions

Digital ad supply chain inefficiencies are costing advertisers billions. Source: Shutterstock

Blockchain — the missing ingredient in fighting digital ad fraud?

  • Can blockchain tech help to stamp out the digital advertising fraud that is costing advertisers billions?

Organizations are spending more on digital advertising than ever before, it seems, forsaking traditional campaigns on television and billboards in favor of where consumers are hanging out nowadays: online.

Broadcast and print mediums are being ignored to prioritize limited ad dollars on digital platforms, where targeted campaign spending should theoretically see better, more optimized returns for what the advertiser spends. Digital advertising is where the most eyeballs are nowadays, which is why the ad spend on digital is expected to eclipse US$335 billion this year.

But while budget expenditures are on the rise, so is the amount of digital ad fraud. Experts say that out of the US$300 billion spent on digital ads in 2019, fake clicks created by automated bots is coming out to US$6 billion annually. These fraudulent clicks or ‘conversions’ are costing advertisers billions in lost revenue.

Chad Andrews, the global solutions leader for advertising and blockchain at IBM, told Cointelegraph that a lack of transparency in the digital media supply chain is causing complications that involve more than a few stakeholders along the process of sourcing, bidding, and buying/selling digital ad inventory.

“Advertisers and their agencies need to deliver digital ads across many thousands of media properties, culminating in millions or even billions of delivered impressions. To achieve this at scale, a vast, complex technology ecosystem of intermediaries is needed,” explained Andrews, citing the demand and supply side, data management platforms as well as online, real-time bidding exchanges as some of the intermediaries who make use of their own data sources to spot, mark up, buy, and resell digital ad inventory.

Andrews pointed out that perhaps even more so than other supply chain issues it might be used in, distributed ledger or blockchain technology might be ideally suited to fixing the vagaries associated with the digital ad supply chain.

“Blockchain’s unique ability to serve as a decentralized, neutral ledger for all fees and summary ad fulfillment data, as well as a platform for verifying identity, make it an effective solution for the problem of wasted ad spend.”

Not only would a distributed ledger framework provide clear, unfettered recognition of all the stakeholders and intermediaries that link within a given digital ad ecosystem, but it would also add identity verification value: any stakeholder with authorized access would be able to monitor and check the stored data.

Ad data on-platform tends to have many variable terms, such as time data, agencies involved, geolocation data and ad platform information– creating a whole mess of data that is not fixed and capable to be confused by ad bots creating fake impressions, which could be exploited by fraudsters. “For the first time, blockchain makes it conceivable that advertisers will only pay for what can be verified at time of delivery to be quality, authentic impressions,” Andrews said.

The technology now exists where the data on the blockchain could be ‘fixed’ or immutable, meaning the data cannot be altered once it is recorded on the blockchain. This could add an additional layer of security and work well for earnings audits, but when records need to be updated constantly, a solution like MadNetwork allows for secure, constant data revisions of ad data. The MadNetwork solution runs on the Ethereum blockchain that allows ‘smart contract’ executions.

A smart contract is a binding digital agreement between two parties that is securely recorded on the blockchain. The network is able to store billions of points of data. “Television ad impressions can reach about 3 hundred billion impressions per month. Tracking all of these impressions will take up a lot of space,” he said, emphasizing the encrypted storage capabilities of the technology.