If you’re like most people you probably think of Bitcoin when you hear the word “blockchain.” While Bitcoin was the first application of blockchain technology, the fundamental principle of how “digital ledgers” work has many more applications than just cryptocurrency. One which I’m keen on watching unfold is the potential use in digital marketing and advertising.
Disclaimer: This article is not investing advice, and should not be interpreted as such. If you get rich, it’s your own fault.
WTF is a Blockchain?
Alright so first of all, a short description of how blockchain technology works is in order. A blockchain is a decentralized ledger of sorts; code which doesn’t live on any single computer but rather is distributed across nodes. The best analogy I’ve heard is to compare blockchain to Google Docs, whereas traditional processing is more like a single Word document. Rather than waiting for the other party to finish up editing and send it to you, multiple people can contribute at the same time with no version control issues.
The blockchain is also very secure, since any application running on it is distributed across a wide network, not an individual database. Because of this, it is virtually impossible to corrupt since the entire network is needed to commit changes. No middle man, no central ownership, no single point of failure. Bitcoin was the first use of this technology, but as with any first version, flaws exist and improvements can be made.
Bitcoin was the pioneer of the blockchain, but soon the problems and limitations of it were exposed. One of these was scalability – the more transactions completed on Bitmain (the Bitcoin blockchain) the slower the network became (because of this, Bitcoin will fork on August 1). There are more shortcomings which many people debate about which I won’t go into in this post.
Ethereum, developed by then-21 year old Vitalik Buterin (if you don’t know his name, don’t worry, you will) sought to take the lessons learned from Bitcoin and develop a better system which is more scalable and can support virtually any program written in any coding language. This new network does not have scalability issues, is extremely versatile, and is already backed by major corporations for its use in “smart contracts.” But it can support much more than that. If you were to compare Ethereum to the Internet, smart contracts would be the equivalent of Email.
The cost to run programs on the Ethereum network is a token called Ether – a cryptocurrency which most believe will eclipse Bitcoin very shortly due to the strength and potential of the entire project. If you’re an investor, interested in cryptocurrency, or just like money, I suggest you learn about Ether. As you’ll see below, other cryptocurrencies can be built on top of Ether (via the ERC20 token standard) to form new coins and tokens, unique to each project but still backed up by Ethereum. Most of these new tokens are used to support individual projects, through initial coin offerings (or ICOs), an excellent alternative to venture capital. (In this scenario, your startup creates its own coin and sells them to generate capital, then the tokens themselves gain value as your company prospers).
Applications built on the Ethereum network are referred to as DApps (decentralized applications) and the more they’re used the more transactions take place on the network, which then drives up the value of Ether tokens (ETH). DApps will soon be everywhere; a Web 3.0 if you will.
DApps are being developed for all kinds of uses: investing, distributed processing, business development, identity management and verification, blogging, art, crowdfunding, and now, digital marketing/advertising.
Problem: Digital Advertising Fraud
One of the biggest problems we digital marketers face is the constant discrepancy between what we’re paying for and what we get. Advertising platforms, networks and re-sellers have basically zero accountability when it comes to guaranteeing ad placements because of the prevalence of bot traffic and other forms of impression and click manipulation. The problem is so bad that ad fraud has doubled within the last year alone, now estimated at $16 billion in wasted budget.
Solution: Blockchain-Based Digital Advertising
Obviously this is a huge problem for advertisers both large and small (but not a problem for the publishers). As you can see, if the problem continues, it will only get worse. But the future might not be that bleak thanks to some innovative DApps.
First up is adChain, a decentralized application built on the Ethereum network which seeks to reduce ad fraud by building a whitelist of approved domains on which to advertise. To get on the whitelist, users vote on the legitimacy of each website and when it reaches a consensus the site is added to the registry.
This is similar to a Taboola or an Outbrain, where you place advertisements algorithmically on websites which opt-in to these platforms for a share of the revenue. The difference is that with Taboola or Outbrain it is extremely hard to get them to adhere to a whitelist (but you can use a blacklist). These networks also won’t give you granular data about where your ads were shown and what pages they were shown on. The data you do get back almost always has discrepancies with your analytics platform, and you have to justify continuing to spend money on an ad platform using data the platform gives you. You just have to trust them for impression data.
adChain seeks to solve this by providing 100% transparency in reporting through all stages of a campaign. The data itself makes adChain an attractive option because you can measure and optimize these placements, something which is nearly impossible to do with today’s alternatives. All data remains on the blockchain and can be accessed in perpetuity. In the future, they seek to ad creative registration and malware detection.
To get on the registry, an applicant needs to supply their domain name and a deposit in the form of adToken (an Ethereum-based cryptocurrency). The domain is held there for a period of time, during which people can challenge its legitimacy. To challenge an entry, a user must place a deposit of adToken as well. If no challenges are raised, it then is added to the whitelist.
While I think this is a great stab at a major problem, I don’t think it will be the best solution in the long run, because it relies on humans to identify fraudulent sites to create the registry. How are people supposed to decide which sites are fraudulent and which are not? Their opinion? IMHO, the problem is not at the domain level, but rather the lack of accountability of ad platforms embedded into those domains. Furthermore, voters who challenge or accept an entry have no incentive to do so. Maybe instead of just getting your adToken deposit back, they pay you adTokens for successful challenges. I do think the blockchain can help us solve ad fraud, but it needs to be more automated and algorithmic in the long run. For more information about adChain, see their whitepaper.
Publishers are only paid when ads are viewed, anonymously through the Brave browser. Users who choose to receive ads can be rewarded with BAT (their token). All users on the network maintain full anonymity, creating an ideal balance between privacy for the user and targeting/tracking for the advertiser. In the future, users could even pay BAT to the publisher to avoid advertising completely and support the site directly, just like Google Contribute.
This project is so large and detailed it requires another post dedicated solely to it. For now, enjoy their explainer video:
Basic Attention is the best solution so far to tackling the ad fraud problem, but the main limitations I see in the Basic Attention project is that it relies on its own browser. Driving adoption of a completely new internet browser is a very tough sell, but if they can manage to get the same functionality into a Chrome or Firefox extension it’ll stand a much better chance. I’m sure they realize this too and I’d be surprised if it isn’t on their product roadmap.
If it does catch on, demand for such accountability in advertising could likely drive major advertising platforms (Google/Facebook/Taboola/Outbrain) to straight-up acquire Basic Attention, or develop their own blockchain-based solution for their existing ad networks. If it proves successful, it would only be a matter of time until blockchain-based ad placements become standard practice.
Problem: Fake News
As we’ve seen over the past year, fake news is becoming more prevalent as publishers compete fiercely for eyeballs. Zuckerberg publicly declared it is a problem and vows to tackle it so less appears on Facebook. Fake news gets all the likes, all the shares, but has real consequences for people involved and makes journalism as a whole much less credible. People used to trust the news, but not anymore.
Solution: Blockchain-Based News Validation
I think my new favorite phrase is about to be “There’s a DApp for that.”
Pramanika bills itself as a validation service for news. The process is quite simple: a publisher submits a story to the Pramanika network and the writer/source is stripped out to remove bias. Independent validators from established organizations with publicly available credentials can agree, disagree, and leave comments about the stories.
The beauty of Pramanika is that it removes any biases or preconceived notions about the the writer or source. For example if someone said to you “I read this story the other day on Fox News…” you’d already have an opinion without even knowing what the story is about. The limitations of Pramanika are similar to adChain: it relies on humans for validation which is always subject to opinion. In addition, the validation turn around time is probably not sufficient for real-time content marketing or simply keeping up with the pace of breaking news people are used to. Fake news detection needs to happen fast. Now if only this technology could be applied directly to social media, like Twitter, to validate stories in real-time against a list of credible websites (maybe those on the adChain registry?).
From one of the co-founders of Wikipedia (Jimmy Wales) comes a new way to support independent journalists through a cryptocurrency reward system and a new focus on editorial standards through “evidence based journalism.” Essentially, this site will provide a zero-advertising platform where people can write about the issues that matter to them, and readers can subscribe with a monthly payment of bitcoin (although I’m sure they’ll accept ETH after the flippening).
To start, Wikitribune will hire about 10 hand-picked journalists who write stories which are validated and checked by volunteers (similar to Wikipedia editors). The idea is that fake news won’t make it through both layers of elite journalists and scrupulous fact-checkers. The lack of advertisements should further dissuade fake news since they won’t be fighting for ad impressions, but real donations from readers which will reflect the quality of the content itself.
Check it out here:
This is a great idea, except it is only limited to 10 journalists! If you picked 10 reputable writers, you can pretty much guarantee that they won’t produce fake news if they want to keep their reputations. What would be even better is if this idea spread outside of the Wikitribune domain and into any content site. Imagine a reverse ad-network, if you will, where content lives on your site, but can be submitted to the validation network. Then, after proper fact checking, you (the site owner) could get paid in crypto for producing great, TRUE, content.
Problem: How About Productivity and Processing?
Let’s not forget about the tools we use every day to collaborate. DropBox and Google Docs were game changers, but if you think about it, you don’t really own your data. The companies do. Thus, if they get hacked or experience downtime, so do you. Most of what we think of as cloud storage isn’t really in the cloud at all, they’re just on a centralized server outside of your field of view, but on a server nonetheless. Remember the great S3 crash of 2017 because of a simple typo? Yea, that was a productive day.
Privacy issues are also an ongoing concern because in this format, the companies you pay to store your data can actually consume the data if they want to. One example from recent memory was when Evernote modified their terms and conditions so they could do this, but then reverted due to the huge backlash. If I were a startup with innovative ideas I wanted to protect, I certainly wouldn’t store them on the servers of another startup.
On top of the problem of centralization and lack of privacy, the price of cloud storage goes uncontested since there are few alternatives and competitors.
Solution: Distributed, Encrypted, Blockchain-Based Storage
For truly private storage owned solely by you, Sia seeks to set up their own blockchain to keep your documents safe and sound. Because blockchains are distributed across many different servers, no one computer can access your documents; each can only access a small piece of it. Only you (the owner) can access the files in full, since you hold the encryption keys. Their token, Siacoin, is used to run the network (and is a good alt coin to hang on to) which you can buy only as much as you need.
As it turns out, decentralizing your data is not only more secure, it’s also freakin’ cheap! Take this example from the Sia storage calculator for storing 10 terabytes:
I’m extremely optimistic about Sia. As we see more and more data created every day, decentralized storage makes a lot of sense for both privacy and economics. You can use it right now by visiting their site, buying Siacoin, and exchanging it for storage space. Plus, it’s a great way to leverage unused processing power if you opt-into the network as a hoster.
Another Solution: Buy and Sell Unused Processing Power
That old computer in your extra bedroom collecting dust? It could be earning you money. The Golem Project seeks to make good use of unused processing power by essentially paying you to use it. Developed specifically to overcome the huge CPU needs of 3D rendering, Golem distributes processing across a huge decentralized network to cut computing down to a fraction of time of what a single machine could accomplish. Think of this as a DDoS attack, except it’s all well and good.
The Golem Supercomputer can do much more than 3D rendering though. Maybe your startup is a data provider, serving up huge data exports to customers or video renderings or artificial intelligence. The system runs on their own token, Golemcoin (also an Ethereum-based token) which you can earn if you link up your machines to the network. Going on vacation? Leave your computer on an let it make you money.
Instead of waiting for those Ahrefs exports or Screaming Frog crawls, or Deep Crawl exports, they could be done in seconds. Imagine the power of an SEMrush running on virtually unlimited processing power! Or how about that chat-bot you made to help out your customers during afterhours getting smarter and smarter because the capacity for machine learning behind it is uncapped. The only limit to the potential of the Golem network is your own imagination.
There’s a ton of awesome projects launching right now on the Ehtereum network or their own blockchains. Digital marketing is only one example of an entire industry about to experience a seismic shift with very little downside. Welcome to the Web 3.0 homies! Please leave thoughts/feedback below.