'It's crazy': Ad industry execs are getting into screaming matches over whether blockchain will actually have any effect on the industry
- The digital ad community is divided into two camps: those who believe blockchain will revolutionize the industry and those who see the tech as overhyped and barely having an effect.
- Still, IBM and Mediaocean, a firm that supplies billing software to top ad agencies, have agreed to a deal to build a blockchain-contract system that launches this fall. Kellogg, Kimberly-Clark, and Unilever have signed on.
- At the same time there are major blockchain doubters: "People are trying to use it to solve problems its not suitable for," one insider said.
- And there's a school of thought that some ad constituencies are deliberately dragging their feet, hoping blockchain doesn't shine a light on their opaque business practices.
For some, blockchain is the advertising messiah, a savior that will fix all the digital ad world's messes.
For others, blockchain is, at worst, the latest version of ad tech snake oil, or, at best, the equivalent of using the Hubble telescope to look across the street.
Indeed, as the hype over blockchain technology's potential for the ad business reaches a crescendo (including more than half a dozen panels on the docket at Cannes), most insiders appear to fall into two camps: Some have an almost religious belief in blockchain's power to revolutionize everything, while others see it has having next to no application in adland.
There are other theories doing the rounds, including that it's become popular to bash blockchain because some would like it to go away. As the theory goes, some fear that blockchain's technology could expose loads of inefficiencies and opaqueness in digital advertising, which ad tech companies and ad agencies thrive on.
Another reason for foot dragging? Blockchain will take away marketers' excuses for not paying their agencies and media partners faster, a longstanding, bitter complaint in the business.
Hype or not, startups are launching, and brands are jumping on board the blockchain, even as doubters take their shots.
What's 'blockchain' again? And how can it help the ad business?
There are lots of great explainers that go into great detail on what blockchain is and how it works.
In a nutshell, the idea is that blockchain, as a digital database, could serve as an immutable ledger - digital records nobody can change. There are public blockchains (like the one where bitcoins are mined), private ones, and ones involving consortiums.
There are numerous theoretical ways that blockchain technology could help improve advertising, such as:
- Making contracts faster and smarter.
- Making payments faster.
- Unifying measurement so that every single ad campaign isn't tracked by five different data sources with five different sets of numbers, which is not uncommon.
- Exposing what all the different ad tech middlemen get paid in programmatic ad deals.
- Perhaps, eventually, blockchain could augment or replace a lot of digital advertising infrastructure. Ads could be bought or sold using blockchain technology automatically. Again, theoretically.
IBM and Mediaocean are announcing a big deal in Cannes that includes major advertisers
IBM has been a huge proponent of blockchain. This year it began running limited tests with Unilever designed at bringing more transparency to its ad buys.
Now, IBM is looking to taking things up several notches. It's announcing a deal with Mediaocean, which supplies the invoicing software and other tools to the majority of major ad agencies along with ad tech companies and publishers.
Starting this fall, Kellogg, Kimberly-Clark, and Unilever will start testing having their ad invoicing funneled through this private blockchain network. The hope is that they'll get much greater insight into where their ad budgets are going.
If that goes well, the plan is to expand this initiative beyond billing toward measurement and other digital ad pain points.
"With programmatic advertising, there are multiple players in the middle, and multiple data sources, and it's hard to know who is even in the middle," said Babs Rangaiah, executive partner, global marketing, IBM iX, and a former Unilever marketing executive. "It became more and more of a headache. This could potentially solve the issues."
There are lots of other blockchain startups peddling solutions
IBM is not alone. The startup Amino Payments is working with brands such as AT&T, T-Mobile, Bayer, and Nestlé on using blockchain technology to facilitate payments. Similarly, a venture called NYIAX has just raised $5.6 million in additional funding to build "the world's first guaranteed advertising contract marketplace."
And a few weeks ago, the ad tech firm Mediamath and the venture firm MathCapital announced investment in Underscore CLT. "Digital marketing remains plagued by fundamental challenges," wrote Mediamath CEO Joe Zawadzki as part of the announcement.
Underscore CLT president Isaac Lidsky sees blockchain making digital ad buying more efficient, and even saving advertisers money by helping eliminate processing fees and transfers.
"I live in the camp that it is going to totally revolutionize our business," Lidsky said. "But it's going to take some time."
Boy are there lots of blockchain naysayers
Marc Guldimann, CEO of the ad tech firm Parsec, is on a quest to call BS on blockchain and advertising. He's not against the technology per se; he just believes that it has very few worthwhile applications to the business beyond settling up payments. Moreover, he thinks lots of startups are peddling vaporware.
"Blockchain is really just a dumb, slow database," he said. "People are trying to use it to solve problems it's not suitable for. There all these qualities people ascribe to it."
One thing that irks Guldimann is this narrative that blockchain will clean up the murky ad tech supply chain by exposing who's adding value and who isn't, because he believes that people can put whatever information into blockchain tech, accurate or not.
"It doesn't make it more true if you write it to the blockchain," he said. "It's crazy. People have created entire companies around this. People are spending a lot of time with an absolute f---ing misunderstanding of what blockchain is."
Guldimann has even produced a Blockchain Decoder document for Cannes.
Guldimann is not alone. "Blockchain is not going to fix any problems," said one ad tech CEO.
A major argument against blockchain in the ad business is that programmatic involves billions of transactions. If you look at how slow and expensive it is to mine bitcoins, how can this help advertising?
Mike Laven, CEO of the payment company Currencycloud, works outside the ad industry. So he's got no horse in the race. As he explained it, "new business models revolutionize industries, not technology."
And blockchain is "not optimized for high transaction systems," he told Business Insider. "If there's a business model where people make money from not being transparent, it won't change."
Ed Montes, president of solutions and chief revenue officer at the ad tech firm DataXu, said he could see blockchain helping clean up the often murky digital ad supply chain and exposing hidden fees. And it might help control the flow of data.
But is that a big enough business to motivate a market? "I think that the challenge is creating a model where you can make significant money," he said. "Who pays for this? What's the business model?"
That's not stopping companies from co-opting the blockchain concept. One ad tech executive said he was growing so frustrated with blockchain startups getting meetings with top marketers that he thought about changing the name of one of his products to include the word "blockchain." "It's f---ing catnip for brands," he said.
Some ad companies may not want things to change
One ad industry veteran put it this way: Marketers may see a value in using blockchain. But do they really want tech that enables near instantaneous payments when they get away with not paying agencies and vendors for months?
And what about procurement officers, whose whole job (and maybe bonuses) depends on being able to extract better terms from partners? Does this make them less relevant?
Do ad tech companies that collect fees for opaque algorithms and mysterious black boxes want things to change Probably not.
"There have been a lot of ways for folks to hide in our supply chain," said Alanna Gombert, Global CRO at MetaX, a startup that's urging consumers to purchase digital tokens to evaluate whether sites should carry ads.
Plus, this industry is also known for moving slowly, despite its digital reputation. "It took us three years to get viewability right," said one publishing executive.
So unless the industry gets aligned, it will be hard to change.
It's becoming popular to pound on blockchain
"In any revolution there is resistance," Gombert said. When asked about people who say that blockchain has no real application in digital ads, she added: "They don't know what they're talking about; they don't know how it works."
Will Luttrell, CEO of Amino Payments, said he's almost gotten in fights with people on industry panels about blockchain's promise, or lack thereof.
"Its easy to pooh-pooh things when there is lot of garbage out there," he said. "And too many startups take the approach of, 'All you need to implement is change every single thing you do.' That's not going to work."
Carolina Abenante, founder of NYIAX, said her company is garnering serious interest from brands, though she couldn't say which just yet. When people cast doubt on blockchain's potential, she tells them: "Blockchain has been used by Nasdaq since 2015. Why are we the only industry not doing this?"
Still, some people think the blockchain discussion has been too focused on tactics and incremental change to existing systems. Former Washington Post executive Jarrod Dicker, now the CEO at the blockchain firm Po.et, said blockchain could provide the ad industry with an opportunity to fully reimagine how it operates.
He likened it to how The Washington Post in recent years started building and licensing its own ad tech, something that a newspaper firm would never have contemplated in the past.
"The conversations shouldn't be, 'How to do something we do today better?' It should be, 'How do change the way we think about things?'"