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Blockchain To Prevent Ad Fraud

How the technology could help end the current scourge of the industry

19Sep

Fraud is becoming an increasingly serious problem for advertisers. According to a survey from MyersBizNet, click fraud is the top concern among brand marketers (78%) and media buyers (63%). And they are right to be concerned, as the evidence is overwhelming that the majority simply do not have enough visibility into how their advertising performs. Are You a Human, a company dedicated to identifying fraud, has found that 58% of internet traffic is driven by bots, while research from FraudLogix claims that around 50% of impressions served to Internet Explorer come from ‘non-human’ traffic, and 20.5% of impressions served to Google’s Chrome browser. This all means that advertisers are spending an estimated $7 billion this year on ads no people will ever see.

This is unsustainable and could end up destroying the entire industry if left unchecked. One solution being touted is blockchain, the technology that underpins cryptocurrencies like bitcoin. Don Tapscott, the author of the book ‘Blockchain Revolution’, defines blockchain as ‘an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.’ It consists of three main components: a distributed network, a shared ledger, and digital transactions. Its promise is that it provides a permanent, unalterable record of our data that is far more trustworthy and transparent than current systems.

The implications of blockchain are becoming increasingly clear across industries as disparate in nature as healthcare and music. The World Economic Forum has estimated that more than 25 countries are investing in blockchain technology, filing more than 2,500 patents and investing $1.3 billion. Essentially, any industry where information changes hands stands to benefit, particularly when it comes to preventing fraud, and this is one of the main applications in advertising. Blockchain has the potential to guarantee the validity of clicks between advertisers and web owners by telling marketers in real time where their ad has been placed and whether targeting is being delivered as has been paid for. It ensures that all parties are operating with the same information, providing transparency and a clear audit of interactions and metrics so that both client and ad tech providers are on the same page and focused on outcome-based ROI, rather than ROI-surrogate outputs.

An early player in this space is BitTeaser, a Danish ad network that blends advanced blockchain technology with a fresh market approach. Launched in January 2015, it displays all click-throughs in the Blockchain in real time, far quicker than Google AdWords reports, which can be delayed by in excess of 18 hours. According to a profile in Forbes, ‘BitTeaser is powered by a digital token that trades on OpenLedger's platform under the ticker symbol ‘BTSR’. The power and flexibility of the network’s infrastructure allows users to earn tokens by blogging, selling ads, pointing traffic to a designated website via social media or SEO. And, if they want to be an active community member they can opt for that too.’

Blockchain essentially removes the middleman, handing control of where the ad is placed back to the organization. This enables them to blacklist against fraud on an iterative basis, thereby restoring trust and transparency at a time when it is most needed. However, many are hesitant to call blockchain a panacea to all advertising’s woes. The hype around its potential is tremendous, with some calling it the most important technological advancement since the internet, but we are still some way from the technology actually having any significant real world benefits outside the financial services. Even those working in blockchain seem dubious. Adam Ludwin, CEO of blockchain company Chain, for one, has argued that, ‘Blockchain is a database for money. I don’t understand why people talk about it in terms of health records and home deeds and voting systems.’ Ad fraud researcher Augustine Fou too doubts that it will end up being a boon to ad tech because too many people benefit from the supply chain’s opacity.

Google and Facebook are among the few able to really invest the resources necessary for research in the field, but it is doubtful they would be willing to do so as it would mean opening themselves up to a degree of client scrutiny that would likely have an impact on their bottom line, at least until they have to. Manny Puentes, founder and CEO of Rebel AI, an ad tech firm that has a patent-pending product that uses blockchain to fight domain spoofing, adds that the computing power queried to pull off this verification and encryption is immense, which is why transaction validations take at least 10 seconds and sometimes take over a minute. This is likely to delay adoption greatly, and as Blockchain relies on multiple ‘nodes’ and players without whom the technology doesn’t work, it could be dead in the water before it has begun.

At the moment, this is all much of a muchness, as solutions are still largely in the theoretical phase. Most blockchain projects are years from being realized, if they even happen. Dave Morgan, CEO of Simulmedia, whose investor Union Square Ventures recently announced a major blockchain investment, claims that ‘It’s really about five years away, if not more,’ and this is one of the earlier realistic estimates, even from blockchain zealots.

Ultimately, Blockchain has the potential to establish transparency and trust by implementing a central and secure way to record, review, and execute every deal, proving a better ecosystem for both publishers and consumers. While it will not solve everything, it will tackle ad fraud head-on, potentially saving the industry billions in lost revenues.

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