Online advertising businesses have proven its ability to generate substantial profits in the last few years, especially through famous ad providers like Google Adsense. With the emergence of blockchain technology, the advertising market can reach a whole new level if managed properly. If you want to find out how beneficial the blockchain can be for the advertising market, this article will guide you through it all.
- 1 How the digital advertising market works
- 2 Traditional Advertising Networks
- 3 The Future of Advertising
- 4 Top 3 projects to follow
- 5 Market Potential
- 6 Conclusion
Blockchain technology has opened up new business use cases not only in terms of financial transactions and security but also in health care and copyrights, among others. The advertising market, as big and successful as it is, is permanently open to new innovations and business opportunities. As the distributed ledger technology, along with artificial intelligence, seem the dominant tech innovations in the last two years, blockchain-based solutions for advertisements don’t seem as unrealistic as one would think. Before taking a look at how the blockchain can be integrated in the advertising business as well as the benefits that it can offer, let us first explain how this business works.
How the digital advertising market works
The digital advertising market is a point of interaction among many actors between publishers, advertisers, and middlemen alike. Let’s take a look at each actor in regards to their role within the market.
A publisher is simply the entity who receives money for showing ads on their website. The publisher advertises the actual product or service and drives the user to the advertiser page to make a purchase or read more details about the product. Typically, the publisher can be an affiliate or a reseller, or just a website promoting a business. Its main profit comes from publishing the advertisement itself. The ones who sign up in Google Adsense are called publishers and they get money from publishing ads.
An advertiser is the one who pays money in order to get his or her ads shown on a mobile app or a website. An advertiser controls the actual product or service that is being advertised as they are the one who commands the product advertising process. The advertiser is also known as a retailer or a merchant. The advertiser makes money by ROI, that is to say through selling the advertised product. Advertisers usually use Google Adwords in order to get their product or service advertised.
Ad networks make it possible for advertisers to buy digital ads across a slew of publisher sites and apps. At the most basic level, ad networks pool inventory of unsold ads from publishers and sell it to advertisers. They earn money by taking a cut of the ad revenue, sometimes marking up inventory before selling it. Ads are delivered to a publisher’s site by an ad network code on the publisher’s site that calls the ad. Unlike AdSense where advertisers and agencies manage bidding, targeting, and optimization themselves, many ad networks manage campaigns on behalf of agencies and advertisers. In these cases, an ad network and buyer negotiates the terms of an ad buy by taking into account such things as audience targets, impressions (the number of times an ad is served), and average cost per impression (CPM). The ad network then executes the targeting, optimization, and reporting on the campaign.
There are various metrics for calculating how much revenue you can collect from advertising. Here are the most common metrics for measuring the success of your display advertising. Most of these are also applicable, with some variation, to other forms of advertising such as paid search, social media ads, print, and email.
- Impressions: It is the number of times your ad is displayed. This number by itself does not hold much value, but it is a metric used to calculate other metrics and KPIs. Keep in mind that an impression does not mean that someone actually saw the ad, it simply means that the ad was shown on a web page or app.
- CTR (Click through rate): It is the number of clicks generated per impression on a banner ad. This number is expressed as a percentage. CTR = (click/impressions)*100%
- CPC: Cost per clicks is the cost that you pay for each click. Generally, display advertising is sold by CPM. You can easily convert the cost to cost per click in order to compare it against other channels such as paid search. Cost per click is the effective amount you paid to get a click. It is calculated by dividing the cost with number of clicks. CPC = Cost/Clicks. Sometimes this number is also referred as eCPC (effective cost per click).
- Visits – As stated above, not every click turns into a person landing on your destination (generally your website). Visits measure the clicks that did end up on your site (For a better understanding of visits, please see Page Views, Visitors, Visits and Hits Demystified).
- Reach –This is the number of unique people (generally identified by cookies) that were reached by your ad. This number is always lower than the impressions because your ad is generally shown to the same person (cookie) multiple times.
- Cost – The total cost of running the ad campaigns. This is calculated differently by various tools and organizations. Some use the actual media cost while others use a full load number that includes the agency costs, creative costs, etc. Whichever number you use, be consistent in your approach. If you are going to do comparisons with CPC models such as a paid search then I suggest using the actual media cost. Most of the publicly available benchmarks are based on actual media costs, and are expressed in CPM.
Traditional Advertising Networks
After taking a look at the different actors and entities involved in the advertising industry, we focused on the big advertising networks currently available as they play a major role in facilitating not only in providing ads for publishers, but they spare you from calculating how much income you have generated from the ads as well. Let’s find out more about the big players in advertising networks.
Google AdSense is a program run by Google. It is a free and simple program that allows website or blog owners to generate revenue by displaying targeted Google ads on their websites. Advertisers are individuals or organizations who pay Google for advertising with Google AdSense. The publishers are bloggers or website owners, and Google allows them to show various ads on behalf of the advertisers. Based on the content of the sites and the audience, Google AdSense automatically sends targeted text, images, videos, and other rich media based advertisements onto these websites. Publishers can generate revenue based on the number of times audiences click on the ads. If any entrepreneur has its website or blog, it provides an excellent opportunity for them to generate revenue using Google AdSense.
Amazon Associates (formerly the Audible Affiliates program) is a way to monetize your personal blog or website, by adding links or banners to Audible offerings like trial and paid memberships or specific audible titles. When visitors to your website click the links you create and sign up for a membership or purchase titles you advertise, you earn advertising revenue from Amazon. Amazon Associates, one of the first online affiliate marketing programs, has an 18+ year track record for developing solutions to help publishers monetize their websites by advertising millions of products from Amazon.com and its subsidiaries like Audible. The Associates program allows you to refer your site visitors directly to Amazon.com, where they can conveniently and securely purchase the Audible products and memberships that you advertise on your site. For each eligible Audible purchase or membership signup that you refer, you will earn a fixed advertising fee (bounty).
Youtube Partner Program
The YouTube Partner Program (YPP) lets creators monetize their content on YouTube. Creators can earn money from the advertisements served on their videos and from the YouTube Red subscribers watching their content. You can apply to join the YouTube Partner Program from your account in the Creator Studio. When it comes to social media, a loyal audience is arguably more important than a large one. Most often, this is achieved by having an active presence on social networking sites, but the same level of detail should be applied to the media you’re sharing as well. YouTube does a great job of helping small businesses and large brands create meaningful relationships with customers through the use of video. Consistently creating compelling content can be a challenge, however. The company’s Partner Program, which recently opened to all content creators, provides members with access to programs and resources that help to ensure success on YouTube. As a Partner, you’re also given the option to display ads on your videos and monetize your content. These ads include skippable and non-skippable pre-roll ads, display ads, and overlay in-video ads, which appear while users are watching your video. If you choose to monetize your content, you’ll be eligible to earn money and receive payments. In order to do so, you must monetize at least one of your videos and associate AdSense, Google’s ad serving application, with your YouTube account. You’ll also need to reach your local AdSense payment threshold, which varies depending on which currency you use.
The Future of Advertising
Although these advertising networks offer great services and facilitate advertising services for publishers, the future of the advertising industry lies elsewhere. With the emergence of blockchain technology, the distributed ledger can elevate advertising within websites and mobile apps to a new level, and with all the advantages that comes along with it, as we will find out in the next section.
How the blockchain can remove the middleman
The blockchain is already changing the way global industries perform transactions and share data. This paradigm shift provides mutual benefits for digital markets – advertising being one of the fastest growing industries. Here are some benefits that could come from integrating the distributed ledger technology in the advertising industry:
Establishing Trust with Ad Buys
The thing with online advertising is that it’s almost impossible to know if the stats are accurate. When we count clicks to our site or our followers on Instagram, are we counting true customers—i.e. Real people? Or are we counting bots and hired “clickers” who artificially pump up ad stats so their distributors can charge higher rates? In truth, it is incredibly hard to tell. Research shows bots cost companies more than $7 billion in damages in 2016 alone. But the blockchain is about to change all of that. Because the chain is transparent and encrypted, companies can easily determine if the people viewing their ads are members of their target audience or not, saving millions in ad spending each year. One company, AdChain, uses its own native token to establish a trusted ad space where users benefit from campaign auditing, and they cryptographically secure impression tracking. In layman’s terms: companies can make sure they get the advertising they pay for.
One Forrester analyst estimated that publishers removing middlemen could increase their CPM from $1 to $5. The blockchain may do even better. It could eventually shake up the market so much that companies can pay their targeted audience directly to view their ads — skipping the ad buy process altogether. Using “micro-currencies,” companies will live for actual audience “attention” and not just imprints. They’ll be able to prove they’ve gotten that attention before the currency is exchanged. The Brave browser, for instance, uses its “Basic Attention Token” (BAT) to allow advertisers to pay based on “mental effort” by the person viewing the ad. That means smarter spending, and better connections, with potential customers.
Targeting Audiences Better
In the past, advertisers gained information about customers through various disparate sources — one might tell the age and sex, another their salary, or the kind of car they drive or where they like to dine. But by using the blockchain, advertisers will now have the ability to build a customer profile directly from the customer — gaining all the information the customer is willing to share in one swoop. This allows for an even greater ability to market to the customers’ needs, and to spend advertising on only those customers who are most likely to buy your product.
There’s nothing like spending thousands of dollars on a watch or handbag only to find out that the product is counterfeit. The blockchain’s digital ledger system allows for tamper-proof transparency in regards to every product’s move through the supply chain. What that means is that buyers can easily check where a product has come from, who has handled it, whether it’s legit or not, and whether they are purchasing from an online auction or a brick-and-mortar storefront. This puts tremendous power into the hands of the customer, thereby enhancing the customer experience (CX). Some companies, such as the Babyghost fashion line, have even used the blockchain to tell a “story” about their product, including who modeled it on the runway. In that sense, the blockchain does more than create trust, it builds a brand.
Top 3 projects to follow
Brave is a fast, open source, privacy-focused browser that blocks third-party ads and trackers, and builds a ledger system that measures user attention to reward publishers accordingly. Brave will introduce BAT (Basic Attention Token), a token for a decentralized ad exchange. It compensates the browser user for attention while protecting privacy. BAT connects advertisers, publishers, and users, and it is denominated by relevant user attention, while removing social and economic costs associated with existing ad networks; fraud, privacy violations, and malvertising. BAT is a payment system that rewards and protects the user while giving better conversions to advertisers and a higher yield to publishers. BAT and associated technologies are viewed as the future of web standards, as it solves the important problem of monetizing publisher content while protecting user privacy.
- Users: Strong privacy and security when viewing advertisements, improve relevance and performance, and a share of the tokens.
- Publishers: Improved revenue, better reporting, and less fraud.
- Advertisers: Less expensive customer attention, less fraud, and better attribution.
LBRY Content Publisher
LBRY is the first digital marketplace to be controlled by the market’s participants rather than a corporation or other third party. It is the most open, fair, and efficient marketplace for digital goods ever created, with an incentive design encouraging it to become the most competetive. At the highest level, LBRY does something extraordinarily simple. LBRY creates an association between a unique name and a piece of digital content such as a movie, book, or game. This is similar to the domain name system that you are most likely using to access this very post. While creating a protocol that we ourselves cannot control sounds chaotic, it is actually about establishing trust. Every other publishing system requires one to trust an intermediary that can unilaterally change the rules. What happens when you build your business on YouTube or Amazon and they change the fees? Or what if Apple drops your content because the Premier of China thought your comedy went too far? Only LBRY consists of a known, promised set of rules that no one can unilaterally change. LBRY provides this by doing something unique: leaving the users in control rather than demanding that control for itself.
- Coupled payment and access: If desired, the person who publishes to lbry://wonderfullife can charge a fee to users that view the content.
- Decentralized and distributed: Content published to LBRY is not specific to one computer or network, making LBRY robust against failure and disruption.
- Community controlled: No party other than the publisher (including us) can unilaterally remove or block content on the LBRY network.
Adshares is a decentralized market for programmatic advertising. This is where advertisers, publishers, and users profit directly by cooperating with each other, omitting any and all intermediaries that would generate additional costs. Adshares provides better transparency, less fraud, and reduced costs for all market participants. The Adshares Network runs on the ESC blockchain, and uses Adshares Tokens for ad payments. Fees collected from processing payments are distributed among token holders.
- Decentralized market: The Adshares Network is based on an entirely different market model where every advertiser creates an account on the blockchain and associates it with their domain. An advertiser can use Adshares API to display the inventory which he or she wishes to advertise.
- Disintermediation: Adshares can accommodate trusted authority needs by introducing in-network services. To further illustrate this, there can be a service which classifies advertisements. Digitally signed classifications from popular providers can be included alongside inventory. Publishers can then enact a policy of only displaying advertisements that are checked by the providers whom they trust.
- Reduced fraud: By following the principle of “display first, collect payment later,” the Adshares Network substantially reduces surface attacks by fraudsters. Accounts used to send and receive payments for ads on the blockchain will be linked to domains. This repository of cryptographic keys can be leveraged to authenticate events generated during ad requests and delivery.
The market is growing faster than ever: Global digital advertising spending is expected to reach 335 billion dollars in 2020.
100% profit with no middlemen fees via blockchain-based advertising solutions: An IAB study from 2015 revealed that less than half (45%) of programmatic revenues in the US reached publishers. This makes blockchain-based advertising even more likely to be welcomed by the public as the fees collected by middlemen are getting higher and higher.
Less useless content, more efficient advertising: By using the blockchain, advertisers will now have the ability to build a customer profile directly from the customer — gaining all the information the customer is willing to share in one swoop. This allows for an even greater ability to market to the customers’ needs, and to spend advertising on only those customers who are most likely to buy your product.
Address customers needs accurately: In June, the cable network Comcast announced it will launch a “Blockchain Insights Platform” in 2018, which will allow it to improve “addressable” targeting for TV advertising, and make ads more personalized to each viewer.
Whether these opportunities for the blockchain blow up remains to be seen. After all, there are many companies who stand to lose in this new blockchain marketing paradigm—and they’re giants (think Google and Facebook). Still, if we believe that digital transformation is all about the customer’s experience then blockchain’s entrance into the marketing world will not be short lived. It will mean fewer unwieldy pop-ups when browsing and closer connections with the companies we want to support. And it will empower customers themselves to choose which marketers they wish to hear from — all while getting paid for it! Yes, the concept of the blockchain has the power to disrupt our world on many fronts, but marketing is definitely one of the most exciting fields out there right now, and while it might seem overwhelming to those companies still learning how to use mobile apps to schedule their Facebook ads, at least for now, it seems that it is here to stay.