The buzz around blockchain as antidote to digital media’s ills is fading

After the fervor of the past year, the buzz around blockchain’s use in advertising is subsiding, leading to issues for businesses built entirely around the ledger-based technology.

While there’s been plenty of buzz around how advertisers could potentially use blockchain to resolve the fraud and hidden fees embedded in programmatic trading, there’s been a dearth of actual use cases. Advertisers have questioned whether they should spend their money on it — and if the tech even works as promised for this particular type of use case.

For all the hype, there are few businesses that have been able to turn blockchain in advertising into a money spinner as quickly as they hoped. If the industry really wanted to write bid level data to a shared location, it could’ve done that without a blockchain (and quicker). In fact, existing, non-blockchain databases could be a better fit for that in many ways as it’s cheaper, faster and easier to implement. Advertising is, in reality, a difficult use case for blockchain because of how dynamic programmatic advertising is, making blockchain a better solution for fairly static instances like health records. The real value of the blockchain seems to be its ability to support a system that enforces shared incentives among its participants as evidenced by the spread of blockchain consortiums of ad buyers, publishers and vendors in recent months.

“People blindly put their faith in the idea that this thing called ‘blockchain’ would magically solve “transparency” problems,” said Alan Wolk, an analyst at TV[R]EV who has recently worked with non-profit consortium AdLedger that’s building and implementing blockchain standards for digital advertising. “So when magical things didn’t instantly happen and understanding blockchain proved to be far more complicated than understanding ‘storytelling,’ then disillusionment set in,” he said.

It’s left businesses that were quick to jump on the blockchain bandwagon in trouble.

Nine months ago, Truth, the self-styled “first blockchain-enabled global media agency, was on stage at Advertising Week Europe running what it said was the first programmatic campaign on the technology. Since then, there have been no other high-profile campaigns, and the CEO, Mary-Keane Dawson, left two months ago.

Further signs of trouble at Truth came after it ventured into a form of fundraising called an Initial Coin Offering, which is a way for blockchain businesses to gain funding using cryptocurrencies.

According to public announcements, the agency wanted to raise between $5 million and $50 million from the venture to fund the “Truth Data Cloud,” a blockchain-based marketplace where people are rewarded for sharing their own private internet browsing data. Despite marketing the opportunity for two months, the company failed to reach the minimum investment level of $5 million. Truth’s owner — the holding group RYVL — thought it could make that money between July and November but was forced to push that period as far back as early 2019, per a financial update.

It’s a tricky scenario for blockchain businesses as it means asking investors to believe in technology that has limited use cases and which may never see adoption even if it does what it was meant to do. ICO funding dropped to a 17-month low in September, according to data compiled by Autonomous Research. Given the generally unfavorable market view of ICOs today, it’s little wonder that Truth’s value in the market has dimmed. The share price of RYVL has plummeted 77 percent since the announcement of Truth’s ICO. RYVL didn’t respond to a request for comment.

Other blockchain businesses face similar struggles.

Papyrus wants to be a decentralized ecosystem for advertisers, publishers, developers and users on the Ethereum blockchain but has recently reassessed its options. In August, the business revealed it would move away from being one focused on solving transparency in programmatic trading to a broader, foundational blockchain that can theoretically be used for anything including programmatic.

The shift came as Papyrus, like Truth, pursued its own ICO.

Papyrus executed a small ICO, raising around $1 million last year and so run on their own crypto-currency. It hired ad tech veteran Abeed Janmohamed to lead a much larger ICO process in search of more cash flow. But just months after his arrival, Janmohamed admitted the move would not go through in a blog post and said the company would instead pursue a Private Token Sale, which is similar to an ICO but gives institutional investors access to the tokens first. Janmohamed left shortly after the announcement. He has since been lined up as either an adviser or the chief revenue officer for a company called Fiducia, which is now being used to deliver the advertising part of Papyrus’ blockchain play.

“We’ll take a phased approach. We’ll start with closed-loop tests, and we’re talking to a few demand partners now,” Janmohamed told Digiday. “Then we’ll move from that to a private marketplace and then from there into Open RTB. I suspect it will take the first half of 2019 to run the pilots with a view to create learnings, iterate the platform and launch a fully tried and tested solution at the end of the year.”

Ternio is another business that had high aspirations for blockchain advertising only to realize it needed a fallback plan. It’s gone from solely building a blockchain for the programmatic space to looking at more broader use cases alongside programmatic. It’s even looking to develop its own prepaid cryptocard to be used wherever Visa is accepted. It’s a jump for a business that started out as a demand-side platform in Atlanta working with local agencies.

Ternio did not respond to a request for comment.

Agencies, however, remain hopeful the blockchain will come to good eventually. That’s because those businesses feel like the rapid growth in ad tech has pushed them further away from publishers. Finding ways to connect more directly with publishers through technologies like blockchain helps agencies take back control over the areas where they can create the greatest value.

“I wouldn’t say those companies trying to create blockchain applications for advertising are suffering, but they are having to deal with the fact that the technology hasn’t delivered on the hype around it,” said Nicolas Rieul, chief strategy and marketing officer at S4M, one of the members of the Adschain consortium.“We’re mindful that we need to take our time here, so we’re not trying to create a blockchain solution for the whole programmatic ecosystem. We’ll focus on fraud for now, but eventually the use cases could be beyond the programmatic ads and instead look at areas like data provenance.”

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