Why Digital Advertising is Undergoing a Paradigm Shift

In the past two decades, the advertising industry has shifted from broad, dispersed advertising strategies to a more laser-focused data-driven approach where conversion and ROI are critical. 

Currently, the advertising market is projected to grow at a compound annual growth rate (CAGR) of 6.4 percent over the next decade, rising to an incredible $1.036 billion by 2028. However, the global internet advertising market is expected to grow even faster, with a CAGR of 12.6 percent expected until at least 2028. 

Much of this projected growth can be attributed to fundamental changes in the way that ads are purchased, targeted and interacted with. New technologies like blockchain and machine learning, and the intersection of data analytics enable more companies than ever before to effectively advertise their products.

New Solutions to Old Problems

As advertisers seek to determine the ROI of their campaigns, they must contend with the industry’s most significant pain point, ad fraud. The most common form is fake ad traffic. Botnets can distort the number of visitors to a website when directed to repeatedly load webpages to generate ad impressions. 

Purchased sites and fake traffic further distort the accuracy of ad impressions. Cybersecurity researchers assert that global fraud is predicted to cost an unprecedented $23bn this year and could reach $30bn including indirect economic and social costs.

This is made possible through fragmentation. Ads can be spread across multiple platforms and countries and administered by a multitude of advertisers, ad agencies, and networks. In one ad transaction, advertisers may deal with as many as 20 or more players, each with their own priorities. 

According to a recent poll, around 37 percent of advertisers would pay a premium to ensure that the traffic their ad generates is genuine, rather than being faked using a botnet or other dubious methods.

In response, advertisers, publishers, and platforms are utilizing the blockchain’s distributed ledger technology to create a secure, immutable means to trace, track and verify the parties involved, and the advertisements. This makes auditing and identifying fraud a simple task. 

Most advertisers rely on huge corporate entities like Google, Facebook, and Media.net to deliver targeted ads, due to their reputation, spending power, and access to big data.

Blockchain technology can provide an opportunity to change the way people are exposed to new products, services, and events on the internet. 

One company, 2key, has created a blockchain protocol which fuses together smart contracts and HTTP links to allow decentralized multi-step referral tracking. In essence, they are improving the way people participate in value chains by “reinventing the link.”

Instead of advertisers paying ad providers directly, 2key allows anybody to create decentralized referral campaigns, where everybody who contributes meaningfully to a successful conversion shares part of a reward pot. 

We can expect to see more advertising strategies that reward participants for interacting with advertisements. An early innovator is Brave, a browser that rewards both publishers and viewers for watching advertisements.

Next Level Accessibility

When most people think of advertising, they tend to think of big brands with big spending power. A contributing factor is the number of intermediaries involved in buying and setting up traditional or digital ads.

With approximately 50 percent of the cost wasted on mediation or otherwise lost, the barrier to entry is increased, making it more difficult for smaller players to effectively market their products.  

Blockchain technology can be used to connect advertising buyers and sellers without needing to utilize expensive middlemen. XCHNG has created a platform that uses blockchain-based smart-contracts to improve efficiency while allowing buyers to interact directly with advertising agencies to cut costs.

These contracts can reduce the number of intermediaries involved in launching an advertising campaign. This enables better ROI for advertisers, and a greater variety of ads seems by consumers as the barrier to entry for advertising is reduced.

The Future of Advertising

A new breed of Adtech companies is shaking up the traditional advertising space, including television, print, and outdoor advertising. Digital out of Home advertising has existed for less than two decades.

Until now it has been cost-prohibitive to all but big companies and difficult to administer, requiring booking well in advance and offering little flexibility. 

HYGH, a Swiss-based startup, has created a platform that connects owners of commercial spaces with advertisers. HYGH's app turns any display into highly flexible ad space.

Store owners, retailers, and restaurants can earn a passive income through the use of digital screens displaying ads in their commercial spaces. It enables anyone to run an advertising campaign, regardless of budget, by using a trusted validator system to ensure that content is safe.

Although HYGH appears to be the first project allowing small businesses to participate in DOOH, it is competing with a range of established players that do not use the technology. Arguably the most prominent of these is JCDecaux—a company that specializes in outdoor advertising on big screens.

JCDecaux is known as one of the first traditional companies to offer live update outdoor big screen advertising, while also taking a data-driven approach to advertising with its advanced audience targeting solution.

Several corporate juggernauts have already begun to experiment with blockchain within Adtech industries. Just last month, Amazon announced its plans to store advertising data on a blockchain.

IBM and Unilever recently partnered on a new blockchain-based pilot aimed at tackling ad fraud. With significant corporate backing, it might only be a matter of time before most adverts are delivered via blockchain technology, ushering in a paradigm shift in the advertising industry.