Just three months into 2018 blockchain has emerged as one of the most over-used buzzwords in the digital industry and beyond. Terminology around the tech has reached saturation point and with SXSW, Advertising Week Europe and Cannes Lions on the horizon the hype isn’t going anywhere – here The Drum finds out how to separate the buzz from the BS.
As the open-source ledger driving bitcoin, blockchain started life in the financial industry and general recognition and understanding of the tech bubbled en masse along with the popularity of cryptocurrencies.
However, with the announcement that Unilever and IBM plan to use the tech to bring more transparency to the digital advertising supply chain, marketers’ interests have been piqued.
Unilever and IBM will experiment with blockchain’s ability to detail a distributed real-time ledger of transactions to help identify and stop crooked bot fraud.
However, blockchain’s application to digital marketing goes beyond this – it has the potential to make media buying and selling more streamlined by removing the need for intermediaries and improvising targeting by matching datasets more effectively for brands.
So far so good. But with analysts warning marketers that blockchain isn’t a silver bullet or a glitzy quick fix to issues around transparency, privacy or brand safety, how can they distinguish the gold from the pyrite?
Why the hype?
As the digital supply chain has matured so have the problems facing it. Grand gestures from the big boys of the industry like Unilever and Procter & Gamble have driven awareness around issues like the “murky at best, fraudulent at worst” digital ecosystem and brand safety.
In the UK alone, 95% of chief marketing officers have overhauled their digital marketing strategy in response to these pervasive issues. Ad fraud, in particular, is hurting advertisers where it counts with the criminal practice having cost spenders around $16.4bn in 2017.
It’s no wonder then that all corners of the industry are now looking for solutions. But, is blockchain the answer, and if it is why is it just coming to the fore now?
For Rob Beeler, founder of adtech training and research firm Beeler.Tech, urges marketers to be cautious of the “simple” technology before funneling cash into solutions.
“Like every new technology, people think it’s going to solve all [of the industry’s problems],” he muses. “One of the things I always hear is that ‘blockchain is going to solve fraud.’ Blockchain is not a mosquito repellent, you don’t just spray blockchain on stuff and then say ‘oh look all the fraud went away’.”
Brian O'Kelley, chief executive and co-founder of AppNexus, likens the hype around blockchain to the early days of the internet in the 1990s, and then the obsession with cloud computing in the late 2000s. He agrees that what is likely driving headlines and investments in the space is the growing importance of transparency in the digital supply chain.
He believes the “hype is real” in the sense that blockchain does have interesting benefits for advertisers, like a joint view of transactions and billing. In fact, O'Kelley has invested in and is a media buying test-client of blockchain startup Amino Payments, but in a few years O'Kelley says it will not be out of the ordinary for firms with blockchain-based solutions to be working with advertisers.
He says: “It’s another building block technology that we can use to improve trust and transparency and I think pretty quickly we’ll figure out where it makes sense and we’ll start using it in those places.
“While the hype will fall away, it won’t be surprising or special if you’re using blockchain tech for the appropriate tasks and people will stop using it the wrong way.”
For Elena Yegorova, chief technology officer at The London Media Exchange, notes that while blockchain does pose the media industry with some exciting use cases, it is not a panacea, and has its limitations with many use cases currently in market looking like round pegs trying to be jammed into square holes.
So what questions should marketers ask before experimenting?
The blockchain marketing landscape is forecast to grow by 400% over the next 12 months, but before being enticed by the bright lights of promising startups, advertisers should ask potential partners three questions.
1. Can you describe your business to me without using the word blockchain?
AppNexus’ O'Kelley says this is the advice he offers to clients: “Every time a company says the word ‘blockchain’, ignore it and ask what they actually do.”
Beeler agrees, saying he uses this example: “If someone told you they wanted to build a superhighway between New York ad LA that would get you there in two hours using asphalt you would ask them why they were leading with the asphalt part.”
“If companies are talking about solving an ad tech issue and ‘blockchain’ is in their first sentence, they are probably over-hyping the blockchain part and downgrading what they are actually trying to solve.”
For Shailin Dhar, director of research at Method Media Intelligence, a lack of clarity and misinformation in the marketplace are the two biggest challenges holding blockchain back.
“Going back to the basics is key and everyone would benefit from creating education cycles in their organizations to make sure their teams have a sufficient understanding of what the word blockchain means to them and the environment they operate in,” he argues.
2. Can you solve real problems I’m facing in my business today?
This is a sticking point for O’Kelley. Marketers he says, should only jump on blockchain-based solutions if startups can solve a real-world problem they are currently facing.
“They need to ask ‘which of my actual real business problems today can you solve?,” he says. “If they say ‘transparency’ ask how it works, how much you’ll pay for it, what kind of adoption it already has, does it work end-to-end is this a crazy idea or is it real today?”
These are the same questions digital players would ask about any other startup, says O'Kelley, the fact that it’s blockchain should be irrelevant; there is a need for the industry to experiment with all cutting-edge solutions.
For Yegorova, the first question any marketer entertaining a blockchain pitch should ask themselves is ‘why am I looking at blockchain to solve my problem?’
In her opinion, those reading (one of the many) academic papers currently purporting to detail the use of blockchain in the digital media industry should be wary of the use of such a buzz phrase.
“If you take a white paper, or specification, and you can substitute all ‘blockchain bits’ with ‘database’ and quite simple encryption methods,” she says. “Then there’s a high probability that either the business went for marketing magic causing unnecessary overcomplexity of its tech.”
Potential negative impact of such an approach by such purported blockchain companies include highly inflated operations costs, plus the potential throttling of any scale. “And if they put the word ‘efficiency’ on top - they are probably not sure what they are talking about,” she adds.
3. What blockchain technology are you built on and why did you select it?
Finally, Ian Kane who is cofounder of blockchain-based startup Ternio urges marketers to get into the nitty-gritty before making any decisions.
One problem he argues is that companies are choosing the wrong blockchain technology for their application, says Kane.
“For example, Ethereum is limited to 20 transactions per second. That may be ok for a small niche ad network, but can never be used at scale for programmatic advertising.”