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Advertising Fraud Falls Flat When Faced With Transparency: How Can Blockchain Help?



The expansion of the digital realm has been fuelled by digital advertising, but increasing numbers of internet users are the reason this fuel exists. As the global audience has moved behind their computer screens, brands, companies, and services have followed, using digital aids to hone their engagement.

The problem is even though advertising online can be far more niche and focused, it can also be falsified and fraudulent. Those companies looking to advertise digitally are paying for certain levels of engagement, seeking numbers which they pay dearly for.

However, being online means that there is a multitude of ways in which these numbers can be falsified and fraudulently submitted. Ad farms, pixel stuffing, botnets, ad stacking are all tools of the advertising fraudsters who are looking to exploit a system lacking in transparency.

That is a keyword in the fight against advertising fraud – transparency. At first, brands and companies rushed to be online when it was apparent that is where the audience was, but as they have become savvier and assured in the space, their demands have become more calculated.

Hitting the numbers desired, and paid for, is one thing, but companies are also looking for proof and assurance that those numbers are being hit, and not fraudulently so. However, the standards of online advertising transparency are grossly inadequate as it stands.

Ad fraud is costing an estimated $3 million to $5 million per day from advertisers who are forced to believe and accept what the publishers are telling them is happening on their sites.

Because there is this desire for transparency in the online advertising ecosystem, one has to look at what blockchain technology can offer regarding addressing these issues. There are already overly-ambitious projects wanting to cut out the entire intermediatory ecosystem of the advertising space, but this is hardly plausible.

However, there is no doubt that at some level, blockchain and its transparency can help aid in reducing the high level of digital fraud taking place all the time in advertising.

Fighting a battle

The advertising revenue fraud that exists currently is of a large magnitude, but also something that is well documented. Google recently cracked down on a multi-million dollar ad fraud scheme that was utilising over 125 android apps.

Google uses several filters and machine learning models. It also collaborates with advertisers, agencies, publishers, ad tech companies, research institutions, law enforcement, and other third-party organisations to locate potential threats. However, even with all this effort, the crux of the matter is the lack of transparency.

It is the relationship between publishers and brand/companies that need to be addressed at the grassroots level, not the problems that come after this then need to be fixed, as is Google’s directive currently.

“A lack of standards and requirements around reporting has led to a speculated $120 billion of media spending under review due to trust and transparency issues,” explains Anda Gansca, CEO and co-founder of analytics platform Knotch.

The information that brands get back from publishers is often misconstrued or intentionally fraudulent, leaving the companies with no other choice but to accept the number provided by said publishers.

There are many problems associated with these relationships in online advertising, especially when one starts to take into consideration the agencies that play their role in between the parties too, but the issue of transparency is reaching a crescendo.

“Three main conditions contribute to a waste in advertising spend,” Daniel Trahtemberg, Founder and CEO of Zinc, a blockchain advertising protocol company, explains. “First is lack of a reliable and trusted settlement layer between all the businesses involved – advertisers, agencies, exchanges, networks, publishers, and so on – so there’s no single source of truth for any of the players to rely upon.”

“Second is a lack of user data control, privacy and accuracy. Also, third: fraudsters leverage the flaws mentioned above to turn a profit, exponentially increasing their impact.”

A blockchain catalyst?

As the system stands, brands and companies know they need to be online to get to their audience, and they can only do this by engaging with publishers who have the right market for them on their sites. All this leaves the power in the hands of the publishers and allows them to call the shots.

Fraud, and falsifying numbers when in the pound seats, is easy. Moreover, this is why transparency is the key to change this dynamic. “Dialogue and education are necessary, but we are also in desperate need of concrete steps that brands can take to take the reins of the content marketing funnel and make the internet a better place,” Gansca adds.

“There is an energy around transparency, around honesty and the true best interest of all parties this year that I have never felt before. Marketers are ready and excited to move toward a controlled balance between the digital buyer and seller,” said Gansca.

So, can blockchain be the answer for this required transparency? Many blockchain companies have taken wild swings at restructuring the whole advertising revenue space, but this honestly cannot work just on the back of blockchain alone.

“The digital advertising ecosystem is comprised of a bunch of technologically specialised businesses that have developed solutions over time. A lot of new companies operating in the digital advertising industry are aiming to “cut out the middleman”, which I think is completely opposed to the decentralised vision of a blockchain ecosystem,” Trahtemberg said concerning the overly-ambitious ICOs and startups aiming for this ecosystem.

“Any application that proposes a solution that is aiming to be the one stop shop for all advertising needs: from the buying of the ads to communicating with the user, including the user’s demand for free content. They’re essentially telling you they are aiming to be a bigger monopoly than Google and Facebook combined – as they will be the single supplier of everything to do with online advertising.”

This approach that blockchain can disrupt and recreate an existing system is far too overhyped, and most of the time, entirely false in the current climate. Trahtemberg explains the system itself does not need to change, but an additional layer of the blockchain, with its transparent nature, could assist greatly.

“I do not think that we need a new model of digital advertising – as all the related services are not going to be solved magically by using blockchain,” Trahtemberg said.

“Advertisers will continue to need support from agencies to manage their budgets, generate ad units and creatives; demand side platforms will continue to place bids on exchanges to get supply from supply side services that help publishers and app developers manage and optimize their inventory; networks to allow publishers to have a technological layer to monetize ads and manage their digital real estate; in other words: right now, every piece in the digital advertising industry puzzle has a function.”

“If one of those specific functions gets obsolete, it will just disappear or get consolidated… using Blockchain as an infrastructure layer will allow all these applications and services to run in a trusted, transparent and verifiable way.”

Overly hyped

It is easy to get overly excited about the potential of blockchain with its ability to aim at many different sectors – including online advertising. However, one should instead be looking at its core structures; decentralisation, transparency, and immutability, and seeing where these beneficial processes of blockchain can be used.

As Trahtemberg explains, there is already a structure for online advertising that works; it just needs a few kinks to be worked out. Moreover, as Gansca states, one of those kinks is the lack of transparency.

The usage of blockchain in the online advertising space has enormous potential, but that potential should not be taken out of context. The blockchain space is still very nascent and experimental, for an entire advertising market, of such magnitude, to be predicated on this technology would be catastrophic. However, to utilise the technology to ensure transparency could revolutionise the space with little disruption.

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