As internet users, we are exposed to an ever-increasing number and density of advertisements every day. Out of preservation for our sanity, each of us has developed a type of natural defense, termed “ad blindness.”
Basically, we disregard most ads that creep into our line of sight. Or we actively block them. In 2017, publishers in the UK estimated ad blocking software cost them nearly £3 billion annually. At the same time, the internet advertising industry is posting record numbers, with revenues in 2017 eclipsing the prior year by 21.4 percent for a total of $88 billion.
Above: Source: IAB
How can this be when people are paying less attention to ads? Well, it’s partly because revenues is a misleading metric. They may be rising, but up to 85 percent of internet advertising profits are ending up in the coffers of ad-sellers like Google and Facebook, and most of the growth is in social media and mobile instead of traditional banner ads. Other forms of advertising, such as desktop display ads, experienced declining revenues. The modern internet ad system is set up as a one-way channel whereby most of the profits go to the biggest companies, which set high prices to advertise on the most popular platforms, leaving the rest to fight for scraps.
As tolerance for ads declines, publishers migrate to platforms that provide greater and more direct engagement with users but also take a larger slice of ad profits. Accordingly, publishers are forced to optimize — for mobile and other trends — on the whims of these tech overlords, or risk even lower returns. They’re constantly jumping through hoops but have little to show for it. By far the greatest impetus for these shifting trends is the ad blocker, which may continue to disrupt the natural order of the industry — that is, until blockchain innovations finally begin to appear.
PageFair reported last year that 11 percent of the global population of internet users is blocking ads.
Above: Source: PageFair
Forcing publishers into a “my way or the highway” is only an effective strategy for the likes of Google or Facebook until a better option emerges. These behemoths understand that their vise grip on internet advertising will be short-lived unless they can satisfy ad viewers, publishers, and themselves alike. Currently, the balance they’ve struck isn’t working very well.
Blockchain technology can provide a solution, though. Instead of focusing on those users who are blocking ads, blockchain solutions can target those who are willing to continue viewing ads by providing better incentives for them. The Blockchain MarTech Landscape shows there are many projects looking to tackle the issue of ad blindness and increase engagement from users. But they problem they’re working on is a complicated one and robust technology hasn’t yet emerged in this sector.
So far, there are a handful of ideas floating around, most of which employ decentralized concepts to provide publishers and ad viewers with a better deal.
Blockchain’s personalized ad playground
Basic Attention Token is a known name in the young industry due to its Brave internet browser, which essentially acts like any other browser but features a more sophisticated advertising model. The browser’s 3.1 million+ monthly active users can choose to block ads entirely, filter some of them, or view them all and get paid in BAT tokens for letting the browser measure their “attention.” This mysterious metric seeks to replace clicks, views, and other questionable KPIs with a more accurate quantifier.
Blockchain platforms like AdEx and Kind Ads have recognized that the ability to block ads isn’t going away. Instead of letting the traditional advertising industry develop solutions that continue to leverage their control over the status quo, they decided that blockchain could be the path towards a healthier compromise between stakeholders in the industry. When internet users are operating on the distributed ledger, they’re exposed to more granular tracking, ensuring the data they choose to sell to advertisers is much more valuable.
AdEx has built a system that filters visible ads based on custom user profiles. Users can delve deep into AdEx’s preferences to tell the system what’s most relevant before viewing appropriately directed ads from then on, wherever they choose to browse. Advertisers prefer a system like this because they can more accurately focus their targeting efforts and avoid paying fees and commissions. The idea also minimizes ad fraud.
AdEx equips advertisers with real-time reporting and auditing tools that instantly reveal fraudulent traffic while tracking exactly how their ad budgets are being allocated.
Kind Ads, which recently announced a partnership with CoinMarketCap, is browser-agnostic, unlike BAT. The Kind Ads platform works with all browsers because making users download a new browser or migrate from popular browsers such as Chrome, Firefox, and Safari is an arduous task.
The Kind Ads protocol is aimed to save publishers and advertisers revenues while keeping the users’ best interest in mind by minimizing the amount of intrusive ads.
In the current advertising system, platforms like Facebook and Google gobble up most of the revenue. Decentralized ad networks will prompt direct interaction between publishers and advertisers to eliminate the very costly middleman. At the same time, users will choose which ads they want to see and across which mediums, and at the same time can monetize their own data.
Projects like Kind Ads, BAT, and AdEx pave the way towards a more sustainable and rational way of internet advertising and facilitate growth for advertisers and publishers. More importantly, they put the user in a position of control.
Hurdles left to overcome
Despite their popularity, modern ad networks are ineffective for what they’re meant to accomplish. By combining blockchain’s inherent advantages, ad networks can resolve many of the pain points the industry is facing. Employing new blockchain-based ad networks offers a transparent, visible ecosystem that redistributes returns while allowing users to escape if they like.
However, users will need to get accustomed to the idea that ads are no longer something to revile. If they are paid for their attention or time, that will certainly help. Publishers that connect ads to content in a meaningful way (e.g. gating) can also create the correct incentives. Still, consumers will need to uninstall ad blockers and then demonstrate a willingness to use new platforms. Without these key changes, the status quo will drag on.
Publishers and advertisers will also need to see real results from new solutions, or they’ll continue depending on older methods. Though ad blockers and ad blindness are still prevalent, there’s a glimmer of hope for marketers on the horizon.
Jeremy Epstein is CEO of Never Stop Marketing and author of The CMO Primer for the Blockchain World. He currently works with startups in the blockchain and decentralization space, including OpenBazaar, Zcash, ARK, Gladius, Peer Mountain and DAOstack.