- Blockchain technology for digital ad marketplaces could help solve transparency and fraud issues, but new players offering the ledger-based transaction system like NYIAX Inc. might meet resistance from marketers reluctant to move away from established digital ad exchanges and platforms like Google and Facebook, reported Bloomberg.
- Around one-fifth of digital ad spending this year, or $16 billion, will be lost to ad fraud, largely due to a lack of transparency in digital ad exchanges, according to Adloox estimates cited by Bloomberg. The NYIAX exchange and others like it use blockchain to remove the anonymity that helps drive fraud on other platforms.
- NYIAX's success, however, hinges on whether it can persuade marketers to leave what they're accustomed to behind in favor of a startup. Dave Morgan, CEO of the marketing company Simulmedia, told Bloomberg that the key here is not blockchain technology itself but ultimately how the technology is applied.
Marketers have long bemoaned a lack of alternatives to the Facebook-Google duopoly over digital advertising, and for good reason: Google alone will command 40.7% of U.S. digital ad revenues this year, doubling Facebook's share, according to forecasts from eMarketer. That leaves brands and agencies few alternatives, even as the digital ad space proves to be rife with transparency issues.
Blockchain has the potential to create a simpler, more secure environment that could theoretically bring clarity to a lot of digital advertising and eliminate bad actors. The challenges for the technology's adoption, as Bloomberg notes, are not insignificant, however: Startups need a winning pitch that might have to reach beyond the technology's security proposition, and marketers have to be willing to take a risk on a new type of ad exchange. The near-complete dominance of Facebook and Google over digital advertising means that mass adoption of blockchain by the industry could be slow — that is, unless either platform is working on its own solution, or plans to buy up blockchain startups that see early success.
At the same time, some of the largest advertisers in the world are significantly pulling back digital advertising budgets until problems in the online space are more clearly addressed. CPG giants like P&G and Unilever have decried the digital media supply chain and its lack of transparency, so there is an institutional push that could give blockchain the proving ground it needs. NYIAX already has 40 partners testing its uses, Bloomberg said.