Digital advertising is ripe for blockchain disruption

The word “disrupter” has a negative connotation: troublemaker, nuisance, agitator. As students, we learned to be obedient or faced the consequences. But outside academia or corporate environment, being disruptive is a trait that can unleash positive change, especially in the areas of innovation and technology.

The blockchain stands tall as a game-changer perhaps not seen since the rise of the internet, and it’s beginning to impact digital advertising, a $223 billion global industry. In this case, the status quo is not something to be embraced because it’s rife with ad-bot scams and hacks that create fake traffic and clicks.

Say you’re a marketer, and you spend $1 million on video ads. You may think that your video got 500,000 views when only half those views involved real people.

A lot of money being wasted

Artificial impressions aren’t trivial, either: They do more financial damage each year than the cost of an aircraft carrier, and diverts money to hackers. Exactly how much ad spend is wasted? Try $51 million per day or $19 billion by 2018, according to Juniper Research. And fraudulent advertising schemes are spreading like a virus to mobile, social and apps.

Blockchain applications can take many forms. But generally, the technology involves decentralized processing, verification and immutable storage of data. Once information is recorded, it cannot be undone. The blockchain can capture transactions or database entries in their original state, thereby preserving the authenticity of data for future observers such as platform users, auditors, regulators, clients and other stakeholders.

Fraudsters hate it.

“Innovation in ad tech has been centered mostly around automation of the buying process via programmatic and real-time bidding technologies,” says Marcia Hales, co-founder of Knowledge.io, a blockchain-supported platform for advertisers and marketers. “Most data providers in the ad tech space are using different algorithms on a relatively similar set of data, often with conflicting data points across providers.”

Decentralized validation

The blockchain is like taking a photo of an object but the image can never be altered or photo-shopped. The decentralized validation is key to preventing any single party or hackers from manipulating records. These characteristics are useful in preventing ad fraud because armies of bots like to distort identities, obfuscate data and inflate views or clicks.

A few startups are leveraging the blockchain to prevent fraud in advertising. However, ad bots these days are sophisticated, making them difficult to detect. Bots are often deployed thousands at a time, and they’re designed to mimic human behavior so that impressions, clicks and interactions don’t raise suspicions. The bots’ movements result in fees paid to hackers.

What’s one way to protect all that ad dollars? Platforms such as Knowledge.io lets advertisers identify and reward advertising and IT experts with tokens so they can identify ad bots and safeguard systems. According to the founders, it’s all about leveraging and rewarding experts who can stop fraud in its tracks. In exchange, experts can earn, trade or spend tokens in a marketplace.

Preventing fake impressions

There are technical methods as well. The platform uses machine learning and device information such as IP addresses, algorithmic analysis of gameplay interactions and proprietary techniques that capture signals about users and interactions. Ultimately, it’s all about identifying and interpreting these signals so administrators can prevent bots from registering fake impressions and conversions.

“The underlying blockchain … takes into account a set of increasingly complex algorithms that are used to combat fraud by bots and farms. These transactions are not rewarded for their fraudulent meta-mining activity,” explains Hales. “The ads.txt standard from the Interactive Advertising Bureau (IAB) are used as a way of whitelisting accredited publishers, as part of this algorithm.”

There are other signals that could raise suspicions. For example, ads with complex messages that are intended for expert audiences may be shown to beginners. Or a bot may artificially inflate impressions during an expected downtime when a small number of users use the platform. These activities can be flagged as potentially fraudulent.

Automation isn’t good if the process is broken. In online advertising, there’s clearly room for innovation that can distinguish between a bot and a real person. The blockchain may seem like a simple technology, but the immutable storage of data is a major headache for web outlaws.

Culled from forbes.com