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The global online advertising market is worth approximately $160 billion each year and is on track to surpass television as the largest ad delivery system by 2020. Those statistics are the reason that online advertising has been such a lucrative and hotly contested space over the last several years. The competition has not only resulted in a number of technological innovations but has also produced some clear winners and losers, which has concentrated market control into the hands of only a few.
The two clear winners in the online advertising space have been Google and Facebook, who have seen the majority of ad revenue growth in the industry in recent years. That consolidation of power has accelerated platform-specific developments in advertising automation tools, such as Google's own attribution tool and Facebook-specific platforms from 3rd party developers like Boosterberg which have been a boon to advertisers. Unfortunately, it has also exposed the two leading online advertising giants to manipulation campaigns and attacks.
Propaganda at Scale
The unprecedented reach available to advertisers on Google and Facebook's ad platforms has made them an attractive target for fraud and other less-than-scrupulous activity. Most notably, Facebook landed in hot water after it was revealed that the platform was used in a major disinformation campaign designed to sway the 2016 U.S. Presidential election. The Google advertising system was also abused in a similar way.
The reason that both companies were vulnerable to this kind of misuse has to do with identity management and transparency, or a lack thereof. Both companies have an opaque methodology for divining the individuals involved in advertising purchases, and in some cases made no effort to do so at all. It all boils down to a system that is ripe for the kinds of abuse that we have already seen, and are likely to continue to see in the future. There's an effort underway to try and change that, though.
The Market Responds
On February 12th, the chief marketing and communications officer of consumer products giant Unilever gave a speech at the IAB Annual Leadership Meeting regarding the state of online advertising, and the challenges facing the market. In the speech, Weed made a big splash with a threat to pull his company's advertising dollars away from platforms he called "toxic" and that "do not make a positive contribution to society".
As one of the world's largest advertisers, Unilever has the power to have a major influence on how the online advertising industry does business, and Weed's speech was a shot across the bow for both Google and Facebook. He didn't stop there, though. Weed also announced that his company will be teaming up with IBM iX to co-develop a blockchain-based solution to managing the advertising supply chain and to create a trust-based and transparent solution to this pressing problem. If realized, this could revolutionize the way companies approach online advertising, especially those that live and die based on their online footprint (like for example, a ruby on rails development company).
The Power of the Blockchain
The system that is under development promises to tackle not only the issues of buyer verification but also to create a way for all involved parties to visualize every part of the advertising process. In practice, this means that every party to a digital advertising transaction would be logged into the blockchain ledger, including identity, financial stake data, and location. The transparency created by the system will make it far easier for advertisers and the ad platforms themselves to know how efficient their campaigns are as well as assuring that brand managers know exactly who is involved in the process at every stage.
The efficiency and additional trust that the system aims to provide aren't even just theoretical, as IBM and Unilever have already used historical advertising data to put their solution to the test. In those trials, the new system uncovered issues with payment amounts to the involved parties, as well as problems with viewership and click verification. When put into production, all of these insights will become available in real-time.
A Market at A Crossroads
So far, the results of the IBM and Unilever partnership seem promising. Only time will tell, however, if their solution will truly change the online advertising landscape. The stakes couldn't be higher, though. Already, analysts see losses from advertising fraud climbing year after year, and major advertisers continue to flee online platforms to protect their brands. With more and more dollars shifting to the digital space, there's clearly a reckoning coming for the industry. With any luck, Unilever and IBM will be able to leverage their blockchain system to restore some much-needed trust into one of today's biggest industries and solve what is fast becoming an intractable problem.
