Why blockchain faces an uphill battle in fixing ad tech’s transparency problems

Most ad tech conferences these days feature at least one presentation on how blockchain will revolutionize programmatic buying, but blockchain must overcome a lot of hurdles before it can help ad tech with its transparency issues.

Blockchain, the technology that underpins cryptocurrency, is appealing to ad buyers and publishers who want to make programmatic buying more transparent. That’s because it is an open ledger of transactions that allows large amounts of information (i.e., blocks) to be added to it without compromising security. Since the information is encrypted, nobody can alter the blockchain, which is why it has been useful in finance for currency and data transfers.

But blockchain is too slow today to work in real-time bidding situations. And for it to work, every point along the ad supply chain would need to adopt it, which could take a while, given blockchain’s technical complexity.

“The reality is, the industry is still quite archaic,” said Elliot Hirsch, CEO of ad analytics firm AdYapper. “Agencies can’t even figure out how to pay for software that’s not based on a logically flawed CPM pricing model. If they can’t get something that simple figured out, I think we are a long way from using blockchain to cure the ad ecosystem’s ills.”

Blockchain works in a decentralized format where networks around the world verify transactions. The computing power needed to pull off this verification and encryption is immense, which is why transaction validations take at least 10 seconds and sometimes take over a minute, said Manny Puentes, founder and CEO of Rebel AI, an ad tech firm that has a patent-pending product that uses blockchain to fight domain spoofing. Each handoff must be validated, so if a campaign involves an SSP, exchange, DSP and retargeters, each middleman will compound the latency. Meanwhile, programmatic buying is supposed to occur within milliseconds.

“It sounds like the newest shiny object that is fun to talk about, but damn near impossible to implement,” said Wesley Farris, director of partnerships at programmatic platform Digilant.

To speed up this process, the computers involved with the encryption will need much greater computing power. Since computers are becoming more powerful every day, it is possible that blockchain could eventually be pulled into programmatic buying. However, blockchain is decentralized, so a single company can’t just invest in a supercomputer and expect blockchain to work faster. A speed boost would require thousands of people to upgrade their hardware, which isn’t economically feasible right now.

“You are only as fast as your slowest decryption task,” Puentes said. “The technology can be incredibly awesome, but if you can’t put $1 in and get $2 out, it won’t go anywhere.”

The Interactive Advertising Bureau Tech Lab is looking into how blockchain could be used to fight fraud, but it hasn’t yet adopted blockchain because of its speed problems, said Alanna Gombert, gm of the IAB Tech Lab. But Gombert expects blockchain’s speed to eventually improve, and it is possible the Tech Lab could partner with ad tech firms working on blockchain as it reworks its supply-chain protocol to provide more clarity around who touches a given ad impression.

Although blockchain has a long way to go before it can be used in real-time bidding, it can be useful to advertisers to authenticate the people they’re working with when they set up private marketplace deals, Puentes said. Even though PMPs are supposed to help mitigate against the grotesquerie found in open exchanges, PMPs are still prone to domain spoofing. But using blockchain to set these deals up could provide another layer of verification to weed out these shady practices, he said.

Blockchain has promise, but ad fraud researcher Augustine Fou doubts it will lead to a cleanup in ad tech because too many people benefit from the supply chain’s opacity.

“If people wanted transparency in the supply chain, there are many other easier ways to achieve transparency, like stop lying, stop cheating and stop ripping off your own clients by arbitraging a margin,” he said. “You don’t need to apply an unproven buzzword to fix transparency issues in digital advertising.”


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