Over the past few weeks, led by the meteoric rise in the price of Bitcoin, the cryptocurrency world has made its way into the mainstream. If you want to put a comparison to this movement, think somewhere along 1994-95 of the dot com craze. Regardless of if you believe these price increases are a fraud, a bubble, or a systematic shift in how our economy operates, there’s one thing that’s for certain, cryptocurrencies are not going away any time soon.
The underlying technology to these currencies is the blockchain and its ability to facilitate the transfer of almost anything of value, without a middleman. By doing so, the parties involved will be privy to a more profitable, secure, and transparent interaction. Industries such as banking, healthcare, retail, communication and more are all ripe for disruption. In the advertising space, blockchain technology is likely to gain traction with regards to ad-serving.
Those who work or have worked in programmatic, know that data exchange is a messy process. Every time data changes hands, there’s a loss of value. As a result, publishers end up seeing their share of revenue decrease, and advertisers don’t get the full value of their ad spend. Additionally, transparency is generally not a word associated with ad serving. Blockchain technology will allow an advertiser to understand the exact impact and performance of their ad dollars.
A few crypto projects to keep an eye out for with regards to advertising, are the Basic Attention Token (BAT) and the MAD Network Token. Each attempts to improve ad serving in their own unique way. The BAT is designed to reward publishers and users for the attention that they give to advertising. It’s almost like as a user, you’re getting paid to look at ads. In return, users are able to use those tokens to reward publishers for premium content or additional services. To learn more about BAT, click here.
The MAD Network Token is a bit different. The process uses smart contracts to specify how ads should be executed and relies on the tokens (paid for in US dollars) to track ad spending throughout the supply chain. All third parties that are involved in the ad exchange are transparent to both buyers and sellers in this process, and the value received is supposed to greatly increase margins on both sides of the aisle. While this isn’t necessarily an advertisement for MAD, the token comes available next week, and as a marketing push, they’re currently reserving spots for 50 free tokens – who doesn’t like free money? Check it out here.
We’ve also seen an interesting rise in popularity of Cryptokitties over the past few weeks. What are Cryptokitties? Well, they’re digital cats that have gained perceived value based on how rare they are. Some are even selling for over six figures! The application was designed as a way to educate individuals on cryptocurrency through a game, a process we know to be called gamification. These Cryptokitties, aside from slowing down ethereum transaction speeds, are a foray into what digital ownership may look like in the future. While the name may sound funny, the underlying idea to these digital cats, is nothing but.
It’s still very early days in the cryptocurrency world. The implications that this technology could have long term are very exciting. While no one really knows how this is going to play out (Could you have predicted Facebook in 1994??) there will likely be some massive disruption occurring in the next 5 to 10 years.
For advertisers, it’s important to keep a watchful eye on this space, as disruption seems to happen quicker than usual in our world. Don’t get Bitcoin mixed up with the technology that it runs on, and don’t be so quick to call it a bubble. There are changes coming, and the companies that can successfully deploy a first mover advantage, may be in for some massive gains.
Digital Marketing used to be simple. An advertiser struck a deal with a publisher and that was basically the extent of it. However, as technology progressed, publishers realized they were leaving money on the table and advertisers realized they wanted better metrics and higher targeting capabilities. Bring in the third parties or “middlemen”.
Ad exchanges, DMPs, cross-device matching, various analytical trackers, and a host of partners vying for a piece of a marketers budget have led to an industry filled with fraud and a lack of transparency. That’s not to say that they don’t work. If done right, these “middlemen” can serve immense value and bring incredible returns for brands. Even so, users and publishers are still paying a price.
According to Business Intelligence, one study found that “up to 79% of mobile data transferred during visits to popular publishers was the result of ads”. If you base that on a 2GB carrier plan, it means that you are “paying up to $23 a month to download ads, trackers, scripts and other related data”. On a desktop, this translates to slower page load times. If you think about it, this makes some sense. Download Ghostery and take a look at how many tags show up on a popular publishing site like ESPN or Buzzfeed. Each one of those is using data.
We all have that one friend who can talk for hours about how the blockchain is going to disrupt every industry, solve world hunger, eliminate climate change and facilitate peace in the middle east. That may have been a little bit of an exaggeration, but seriously, only a little bit. I’ve done some research on these ‘cryptocurrencies’ and it is true; the possibilities do seem endless.
I won’t pretend to be any sort of expert, so if you’re looking for one of those, a quick google search will help you out. What I do know is that there are two major crypotcurrency platforms, Bitcoin and Ethereum.
Bitcoin is used primarily for electronic payments. Ethereum has the ability to facilitate a number of other transactions; smart contracts, government elections, supply chain auditing, file storage, protection of IP, land title registration, and stock trading are just a few examples of its potential. (Click here for a more detailed explanation of Ethereum and how the platform works)
Digital Advertising is another.
Basic Attention Token
Mr. Eich’s goal is to eliminate all of the ‘middlemen’.
The first step is Brave. A “privacy-focused internet browser that anonymously measures user attention in order to properly reward publishers”. Brave is currently available for anyone to download and I suggest trying it out. It is indeed fast and if you’re one of those individuals that actually reads through privacy agreements, this is definitely for you.
The next step is the Basic Attention Token (BAT). Essentially, it’s a form of currency that powers this ad exchange. The token is based on the Ethereum blockchain using smart contracts that are capable of enforcing performance. The goal is to facilitate a decentralized ad exchange.
Here’s where it gets interesting. If you think about user attention as a commodity, then publishers are paying for your attention with interesting content. In return, advertisers want to capitalize on the attention you’re giving the publisher, so they pay them to host their ads there. Ever since publishers loaded their pages with dozens of trackers to measure this commodity, their revenue has decreased and so has the user experience.
Using this token, Advertisers will opt into the Brave exchange. Brave will determine how to best target an individual based on user behavior. From there, a publisher will get paid in BAT depending on how much user attention was given to their site during the time of a viewable ad. Additionally, the user will get a percentage of those BAT tokens for opting into the exchange. You are getting paid to view ads. The end goal is for the user to then be able to use those tokens to unlock premium content or donate back to certain publishers. If you’ve gotten this far, you may just want to listen to the creator himself describe how it works.
This model is a long way off, and there’s still a lot of questions that need to be answered. What will constitute a viewable ad? What other metrics will be rewarded? What type of model are they using for targeting? How are they linking site activity outside of the Brave browser? and various others.
But, it’s an interesting take on the digital marketing industry and investors are taking notice. Just yesterday, the BAT token had it’s ICO (Initial Coin Offering) and raised $35 million in under 30 seconds, resulting in one of the most successful crowdfunding campaigns to date. From here, we’ll have to keep an eye on advertisers that opt into the exchange, and their resulting performance.
If anything, this will be a very interesting trend to watch. Will Brendan Eich be able to place his name once again among internet lore? or is this just a long-winded try to disrupt a very powerful industry? Only time will tell.