T he online advertising industry is massive. In 2008, advertisers spent around $48 billion promoting their brands. Fast-forward a decade and spending has ballooned over 450% a year, to a staggering $227 billion. Despite this growth, online advertisers, publishers and consumers are struggling in an ever-complicated ecosystem, and everyone’s getting a bad deal. We take a look at their challenges and explore how the new kid on the block — blockchain technology — may hold the answer.
Global ad spending by medium. Source: recode.net
A booming global advertising market
Getting the right adverts in front of the right eyes is big business. In 2020, it’s estimated that between $600-$720bn will be spent on advertising. But like all markets, there are winners and losers. In the last 10 years, radio, newspaper and magazine advertising spend has fallen. TV advertising spend rose 39%. Soaring above them all, the industry gold standard, is online advertising. Spending here has grown four-fold since 2008. A lot of this is down to mobile, which grew 25% in 2018 and now takes 60% of internet ad spending. Today’s market is a mobile one, dominated by social and video display ads like the ones you see on Facebook and YouTube.
What’s the problem?
With advertising spend growing at such a rate, you’d be forgiven for thinking that the industry is without flaw. But behind the big numbers, challenges are creeping up for everyone involved. Advertisers spend 75% of ad budgets on middle-men, like demand side platforms (DSP) and fraud prevention companies. It’s their job to help advertisers securely buy ad placements online in real time. But despite the help, advertisers often have poor knowledge of where their ad is shown and how. This means less control over ad quality, reach, context and brand experiences.
Publishers are also struggling. Despite a growing reliance on technology such as supply side platforms and data management platforms, they have limited tools to sell advertising space on their websites. Their revenue is also affected by increasing platform costs and a rise in ad-blocking.
Through all of this, consumers, the lynchpin of the advertising sphere, go unrewarded and undervalued for the part they play in the advertising industry. They often have no control over what they see, no way to provide feedback, and no way to profit from viewing ads.
Overall, the growth and increasing complexity of the digital advertising market has broken the relationship between advertisers, publishers and end-users. The systems that track and measure advertising is flawed and susceptible to fraud. Consumers, publishers and brands are lacking in trust and need a new strategy to collaborate. A strategy that’s transparent, incentivised and fair for all parties.
New kid on the block, blockchain, has recently exploded in popularity. In simple terms, a blockchain is a database that stores and records digital transactions between different parties. What sets it apart from a normal database is that it’s decentralised, so records aren’t stored in a single place. Instead, records are shared with every party in that blockchain (or database). This is important because digital assets and transactions an be manipulated and/or duplicated. Blockchain technology solves this problem without using a trusted intermediary.
Without the intermediaries, parties have a simpler, more transparent relationship with one another. In the example of digital advertising, campaign impressions are recorded on the blockchain, so campaigns are totally auditable. And because the data is secured by sophisticated tamper-proof cryptography, no single party can tamper with the records.
The technology can also put consumers in the driver’s seat. By giving them control over their data, they can opt to share information about their preferences and spending habits. This gives advertisers and publishers a chance to gather richer insights from consumers. And it gives consumers the chance to be rewarded in return.
The AdsDax mission
With these challenges in mind, our company, AdsDax, is on a mission to reinvent the digital advertising industry. We know the industry well. Today, our platform Adspruce books over 1 billion ad spaces a month for the largest brands in the world. But we want to do more. We want to create a blockchain that makes advertising safer, fairer and more rewarding for everyone.
To do it, we’re building a decentralised platform for advertising that can securely handle the massive amount of transactions required for digital advertising with all transactions stored on a blockchain to provide transparency for everybody in the ad supply chain.
To find out more about our project, take a look at our website and join our community.