Leveraging Blockchain Technology in Digital Advertising: Enhancing Transparenc​​y, Security, and Ad Fraud Prevention

November 5, 2023

For more than 20 years, companies have leaned on digital advertising to promote their products online. In fact, the digital advertising industry is currently worth more than $223 billion

This is a testament to the massive potential of digital ads to reach the billions of people who use the internet to read, browse, and shop. Nonetheless, digital ads have their fair share of flaws.

As a result, blockchain technology in digital advertising has entered the chat to help advertisers navigate these challenges for the better. This guide will explain the link between blockchain technology and digital advertising so you can make the most out of every campaign you run.

What is Blockchain Technology?

Blockchain is a shared database that features real-time information to countless peers across a network. Generally speaking, blockchain technology serves as a distributed ledger where multiple parties can access and verify transactions. 

Diagram of how blockchain technology works.
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Originally, blockchain technology was developed to build and sustain cryptocurrencies like Bitcoin. To understand the ins and outs of this‌ complicated technology, let’s peel back the curtain with a simple example to illustrate how a blockchain network works. 

Suppose you own Bitcoin and want to buy a pair of sneakers. Once you navigate to your favorite website and click the purchase button, blockchain technology will begin working to verify your purchase. 

In particular, a group of anonymous miners will process your transaction over the blockchain through a process called proof of work. Finally, the transaction will go through if you have sufficient funds to cover the purchase cost.

Side note: There could be significant tax implications if you purchase anything using crypto. For a comprehensive guide on handling cryptocurrency taxes, we recommend referring to reliable resources for more information.

The blockchain is the network where all of these processes take place. It’s a secure network that enables secure sharing. And blockchain is much different from traditional databases that are managed by a single entity.

But the best part? Blockchain technology isn't restricted to just crypto transactions or use in the financial services sector. And you’re probably wondering what this has to do with digital advertising. 

We’ll cover that in the next section. 

Blockchain Technology in Digital Advertising

The boom in native advertising isn’t without cause. The rise of digital platforms like the Internet and social media has created a global audience for advertisers. Nonetheless, this doesn’t come without its share of consequences. 

Advertisers face three critical problems when running digital campaigns:

  1. There are so many different players in the advertising space. First, there’s the advertising marketplace, publisher, and advertiser. Even ad exchanges act as liaisons between publishers and advertisers. These parties have their own interests, which complicates the digital advertising space. 
  2. Advertisers commonly use multiple ad marketplaces, meaning they often have difficulty attributing success to a specific platform. This scenario can make their jobs more difficult in optimizing campaigns across these different channels. 
  3. The rise of digital advertising has led to rampant ad fraud. Ad campaigns depend on authentic views and clicks for profit. Blurring the line between real and fake ad engagements can hamper a campaign’s success.

These three problems present a massive challenge for advertisers to overcome. Luckily, blockchain technology can help.

Now, let’s take a closer look at each of these problems and explain why there's a need for blockchain technology to spruce up industry standards.  

Too Many Parties Are Involved

Historically, print advertising was much simpler. All you had to do was hire an ad agency, and they'd create the content you wanted. From there, they’d pay for ad space in magazines, newspapers, TV, radio, billboards, etc. And then you’d pay the ad agency for their services.

Today, this process isn’t as cut and dry. It's messy with advertisers, online platforms, and millions of publishers looking to make the most bang for their buck. It’s complicated. And the whole process feels like you’re wading through mud (read: the opposite of transparent). 

The problem is that each party has its own interests. Everyone wants to make the most money. And that means taking money out of your pocket. You’re spending even more on platform fees, bidding costs, and other outlays that can severely decrease your return on investment (ROI).

Different Platforms Make It Difficult to Attribute Ad Success

Using multiple platforms to advertise your products and services is a fundamental way to increase reach and exposure. It’s also very challenging to determine which platforms are more successful and which need more refinement. 

Even though advertising platforms like Google, Microsoft, and Facebook have their own analytic dashboards, people take different journeys to interact with their favorite products and services. 

See for yourself — Google Analytics doesn’t have much insight into how people navigate to your ads other than listing the referral websites:

Snapshot of a Google Analytics’ referral sources report.
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Not everyone clicks on a display ad and buys a product immediately. Some take less direct pathways in purchasing, such as viewing and researching other products across social media platforms, before making up their mind. 

What makes attribution more confusing is that you must account for various streaming devices, such as smartphones, computers, and smart devices. Each device has its own buying journey. 

It becomes a major challenge to adapt your advertising strategy and improve your results without knowing exactly how your audience interacts with each platform you use. 

Ad Fraud is a Real Problem

The success of a digital advertising campaign depends on two metrics: views and clicks. As with anything online, advertisers can have their precious efforts ruined by bas actors and bots (read: ad fraud). 

Ad fraud contributes to $18 billion in lost revenue for global advertisers, which is expected to quadruple in the future.  

All advertisers face potential ad fraud in the form of:

  • Traffic hijacking takes clicks from your ads and sends them somewhere else.
  • Click farms and bots that assign views to your ads with no conversions.
  • Hidden ads that don’t showcase your products or services at all.

White publishers do their best to reduce these instances of fraud, but it remains a growing problem for advertisers. 

Why Blockchain Technology is the Answer

All of the problems we mentioned have a correlation — the lack of trust and transparency about the data you’re receiving from publishers and ad platforms. 

If you can’t trust your ad data, your campaign will inevitably misfire. Earlier, we explained what ‌blockchain is. Now, let’s dive into the blockchain solutions that help ‌mitigate these problems:

  • Open-source: Blockchain is a distributed network. That means that multiple parties have access to important data in the digital ledger. Using a blockchain network, you can receive authentic ad data you can trust without intermediaries. 
  • Transparent: All data across a blockchain network is visible to every participant — no more doubting the information you receive is fraudulent. 
  • Immutable: Blockchain data can't be altered. Again, this builds trust and stops fraudsters in their tracks. 
  • Automated: Algorithms relevant to your campaign can be carried out like blockchain transactions, making your campaign more efficient. 

Many companies have already switched to blockchain networks to improve the efficacy of their ad campaigns. For example, Toyota’s use of blockchain resulted in a 21% increase in ad performance for its key products. 

Blockchain technology is more than a financial apparatus. Its use cases are spiraling into many different industries, especially digital advertising, where it’s needed to combat fraud and inauthenticity. 

Blockchain Technology in Digital Advertising: A Sample Use Case

To help drive this point home, let’s look at an actionable example of blockchain in digital advertising.

With its decentralized nature and cryptographic security measures, blockchain is transforming the world of digital advertising as we know it. By cutting out intermediaries, it introduces a level of transparency and efficiency. 

This powerful technology also makes sure that ads reach real people, not bots, and significantly improves ad fraud prevention. And we all know that digital advertising and personal data go together like two peas in a pod.

This is especially true in the sensitive domain of student loans. Every click, every lead, and every opportunity to apply for a student loan can lead to a collection of valuable personal information. Unfortunately, where there's value, there's a risk of fraud.

A successful advertising campaign in the student loan sector requires more than just reaching the target audience. It requires building trust, showing integrity, and proving that, as an advertiser, you value the privacy of your customer’s data.

SoFi FAQs on customer data collection.
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That’s why innovative platforms such as SoFi can benefit from participating in this digital revolution. And thankfully, blockchain technology provides a robust framework for all of these aspects.

Blockchain offers greater transparency, prevents ad fraud, and can improve data security. 

However, it's important to note that despite the potential security measures offered by blockchain, setting up data backup and recovery strategies is also worthwhile. 

In particular, backup and recovery of data in the cloud can provide an additional layer of security, guaranteeing that your sensitive data is always accessible and protected, regardless of any problems or vulnerabilities.

The result? Happier customers. Less financial and reputational risk. And you’ll sleep better at night knowing your most sensitive data is safe and protected. 

Final Words

The intersection of blockchain technology in the marketing industry is clear.

Advertisers want more transparency in the campaigns they’re spending their money on. And there’s a sizable gray area due to oversaturation in the marketplace and bad actors trying to game the system.

Thankfully, the rise of blockchain technology helps to clear the muddy waters of online advertising and create a level playing field for everyone. 

So are you ready to jump on the bandwagon? How will you incorporate blockchain technology in your next advertising campaign?

Brandon Lee

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