Perform a quick Google news search for “digital advertising” and it’s quickly apparent that transparency — or a perceived lack thereof — is an issue that runs rampant in the industry. In other words, how does the math calculating impressions, clicks and other key metrics add up behind the screen? Perform the same search engine query for “blockchain,” the basis of cryptocurrencies such as Bitcoin, and it’s equally obvious that transparency is among the biggest boons for the decentralized and mutually-verifiable digital ledger.

The upshot? It’s only natural that blockchain emerges as a disruptive force for digital advertising. In fact, this strategic synergy, albeit a bit complicated at times, is already underway. This shared chapter was recently chronicled by my colleagues, Richard Eisert and Truan Savage, in the latest edition of Trends in Marketing Communications Law, Davis & Gilbert’s annual publication surveying the law affecting marketers and their agencies.

My colleagues will tell you that it’s not just transparency that serves as the linchpin between the two. Blockchain’s additional benefits, including security and accountability, also hold great potential for shoring up gaps within the digital advertising industry, where marketers and publishers alike have been struggling to combat bot fraud and a host of other issues. However, these same benefits also pose a variety of technical, practical and legal barriers.

But before digging further into the growing relationship between blockchain and digital advertising — specifically the challenges that need to be thwarted — let’s settle in on how we define blockchain, as such a young, growing vertical is apt to spark anything from slight disagreement to mass confusion. Blockchain is a decentralized and mutually-verifiable digital ledger. Think of it as a digital spreadsheet where entries are verified by consensus. The transactions are encrypted and cannot be erased or altered once entered, and because they are confirmed via consensus, the need for an independent middleman is removed. In theory, this is how we arrive at the conclusion that blockchain breeds transparency, security and trust among all, from bit players to coin miners and major investors.

While start-ups and fleet-footed enterprises jumped on the blockchain train from the get-go — for example, to crowdsource a verified whitelist of non-verified publishers, in one case — formal steps to leverage the platform for the good of digital advertising began in 2017. That’s when the Interactive Advertising Bureau (IAB) assembled a working group to “improve efficiency and value realization in digital advertising.”

Admittedly, this is an optimistic picture of how digital advertising can emerge as a disruptive force with an assist from blockchain. The truth is that there are several hoops and hurdles that must be traversed to achieve a happy ending. This includes addressing technological concerns; for example, how transparency and mutual verification come at the cost of transaction speed, which will pose a problem for real-time bidding. Then there are myriad legal concerns. Remember the refreshing idea about having real transparency into transaction data? Well, data privacy laws may have something to say about that. And then there are all the ownership and right-to-use questions to wrangle.

In short, blockchain is a willing and able solution for thwarting many of the obstacles hounding digital advertising, and even further disrupting traditional advertising and other verticals. But the longer you look, the more it’s clear that it’s not a magic bullet.

The Way I See It

  • Blockchain technology has the potential to build transparency and trust among stakeholders in the digital advertising industry, but we need a little more time to tell for sure.
  • Legal considerations related to data privacy and intellectual property need to be reconciled before blockchain-based ad platforms proliferate.
  • Moving forward, media contracts will need to allocate liability differently for ownership, infringement and data, among other issues, to address the use of blockchain in the media ecosystem.
  • Some start-ups and agile-acting enterprises have already been able to reap some limited benefits in leveraging blockchain technology. These trailblazers may prove critical in solving some of the remaining, more unwieldly challenges.