When blockchain — and cryptocurrencies like bitcoin and ethereum that are powered by the distributed ledger technology — reached a feverish peak of hype in second half 2017, marketers couldn't help but get caught up in the excitement. The buzz is understandable, but has not always translated into concrete solutions this year, with marketers in many ways being slow to glom onto the trend.
Blockchain is touted as a potential holy grail for the industry, promising greater transparency, immutable data and the potential to cut out a crowd of ad tech intermediaries. Forecasts from the International Data Corporation published in January peg global spending on blockchain tech will hit $2.1 billion in 2018, more than doubling the estimated $945 million in investments last year. From the marketing world, high-spending firms like Unilever, AB InBev and Starbucks have all shown a clear interest in developing and implementing solutions.
However, multinational companies with enormous marketing budgets dabbling with blockchain does not necessarily signal that wide-scale adoption will be apparent in the immediate future.
"Advertising's only really been looking at this for a year-and-half, [it's] been a bit further behind," Richard Bush, president of NYIAX, a blockchain-based ad exchange, told Marketing Dive in a phone interview.
Perhaps more significantly, the ad industry operates under a particular set of circumstances that are possibly delaying the ability to tap into blockchain's full potential.
"We've been held back, in my understanding, mostly by two major factors: one, technological issues — the technology is not fast enough and not scalable enough for this industry," Tal Mor, CTO at Taptica and Tremor Video DSP, said. "The [other] major one is a lack of willingness from the supply end to play along."
A more level-headed approach to blockchain in marketing comes as the market value of related fields like cryptocurrencies have plummeted in recent months. Even those working to implement blockchain solutions nod to the fact that some marketers may have gotten ahead of themselves for what the technology could accomplish in its early stages.
"There's no magic bullet," Babs Rangaiah, executive partner of global marketing at IBM iX, told Marketing Dive in a phone interview. At IBM's digital marketing services division, Rangaiah has been working with major companies, including Unilever, on piloting blockchain solutions that speed up efficiency and increase transparency in the digital media supply chain. Though Rangaiah's been impressed by the speed of adoption for blockchain over the past year, he acknowledged there are ways to go with comprehensive education and implementation.
"One of the issues we are coming up against and that we will continue to that makes it a little bit slower is that not everything can be solved by blockchain alone," Rangaiah said.
"There's a number of things that we're trying to solve, and that sometimes requires changes in process in the invoicing and authorization side," he added. "It might require shifts in workload and ways of working. It requires some companies to give up data in that ecosystem that they currently don't share."
Taptica's Mor pointed to a lack of willingness by some in the digital media ecosystem to share information that would ostensibly be visible to all parties across the blockchain. Mor contrasted blockchain adoption to that of ads.txt, the IAB's solution for detecting fraud in the programmatic advertising space. Where ads.txt appeared to gain broad traction "overnight," according to Mor, blockchain has been met with more hesitance because it potentially exposes aspects of some marketers' business that they would prefer to keep private.
"There is no issue in terms of willingness to invest money into projects [like ads.txt] in the supply chain when it comes to giving more control to the advertisers rather than revealing … what's running within the supply chain," Mor said.
Some of that coolness might stem from misconceptions around what needs to actually be shared on a blockchain in order for it to function, others said.
"There was a fallacy in the beginning, because of ethereum and bitcoin, that blockchains were completely public and all of the records are known — that you had to mimic that public blockchain to store this information," Bush said. "That just isn't true."
Both public and private ledgers are possibilities, Bush explained, meaning marketers shouldn't equate how cryptocurrency markets are watched with how solutions could be applied to their business.
"[H]ybrid or consortium ledgers exist and are solving for B2B problems," he said in emailed comments. "The main point here is that in the B2B context purpose built blockchains are solving for the typical business concerns as outlined, [it's] just that the advertising business is a little way behind on asking and answering these questions."
Staying behind the scenes
Stemming from that, blockchain will have a fairly quiet role in terms of immediate impact on consumers. For the technology portion, it remains too slow and resource intensive to keep up with current offerings like the real-time bidding (RTB) exchanges used for much of digital marketing. Blockchain can process, at most, a few thousand transactions per second when pushed to its extremes, per Mor, while RTBs can handle more by an order of magnitude.
When it comes to addressing concerns around speed, experts emphasized that blockchain will play a largely complementary function to existing solutions as opposed to usurping them any time in the near future. Rather than handling the bulk of processing thousands of bids on an ad exchange, for example, blockchain can sample from larger batches to try and suss out issues like fraud, according to Mor.
"This is not the kind of thing that's going to happen overnight ... it's going to take a lot of different skill sets, a lot of persistence."
Partner of global marketing, IBM iX
"The reality is that there was never any definition that it had to replace real-time bidding with blockchain," Bush said. "You can secure and make transparent transactions and all of the trading that happens in real-time bidding on a blockchain and get a lot of the benefits without having to install it at an RTB level."
Even with improved agility within blockchain solutions, most pilots in the near term will be likely focused on digital media supply chain issues for marketers. There are a few exceptions: American Express, for example, announced plans in May for a blockchain test with Boxed that allows the online wholesale retailer to customize rewards for cardholders. But, to quote Bush, "in some cases things aren't that broken" — loyalty rewards, for example — while others very much are.
"Cleaning up the supply chain is a primary problem for the industry independent of blockchain — it's something that needs to get solved," Bush said. "Blockchain can help with that. It's not necessarily the panacea but it certainly does have a lot of characteristics to help."
The end result is that most blockchain marketing solutions, barring a few digital currency rewards programs, will not be directly apparent to the consumer for some time.
"This is not the kind of thing that's going to happen overnight," IBM iX's Rangaiah said. "It is the kind of thing that if you want to build an industry-wide solution, it's going to take a lot of different skill sets, a lot of persistence, a lot of determination and a lot of proof points."
An eventful year — and an exciting one ahead
If marketers were starting to find their feet with blockchain in 2018, then next year could be a game changer for a few reasons. Developments that have steadily poured out in the past nine months will likely continue to see traction: Unilever in February declared its early blockchain tests with IBM iX a success, and has since rolled out an additional blockchain pilot with the location-data technology company Blis. The company also endorsed a blockchain consortium between Mediaocean and IBM iX launched at Cannes Lions, which has additional support from the likes of Kellogg, Kimberly-Clark and Pfizer.
Brewing giant AB InBev at Cannes Lions debuted what it claims is the first blockchain-based mobile ad campaign. Starbucks has also said it's keeping a close eye on the technology as it looks to stay ahead on mobile payment innovation. The coffee chain in August partnered with Intercontinental Exchange on a bitcoin startup called Bakkt that will create a platform that lets customers buy, sell, store and spend digital currencies.
One of the larger digital advertising platforms could also introduce its own solution, which appears more and more likely, and might have a far more considerable impact.
"We'll see, in 2019, one of the big players get much more into and be much more public about what their solution looks like," NYIAX's Bush said."It's very obvious that there's something coming ... That will further validate the use of this technology inside the advertising space."
"Cleaning up the supply chain is a primary problem for the industry independent of blockchain — it's something that needs to get solved. Blockchain can help with that."
Mor nodded to Facebook's recent launch of a blockchain research team set up by David Marcus, who once led the social giant's Messenger app. Google has also forged ahead into the space to support its cloud services division, teaming with the startup Digital Asset, which helps develop blockchain-based apps, in July. IBM, for its part, plans to further scale its partnership with Mediaocean, with eight blue chip clients onboard and plans for more activity in October, according to Rangaiah.
The question remains if the rest of the ad world will be able to keep up.
"Blockchain's only as good as the consensus of the group and the accuracy of the data," Rangaiah said. "That requires some fundamental business shifts. That is probably the thing that will take longer for fully scalable industry solutions than the technology itself. The technology's advancing very quickly."
Correction: A representative for Tal Mor initially miscommunicated his preferred name. The story has been updated to more accurately reflect the source's commonly used name.