United States: What's Next For The Advertising Industry? Blockchain

Last Updated: May 30 2017
Article by Douglas Wood, Keri Bruce, Kari S. Larsen and Michael E. Strauss

Industries are increasingly harnessing blockchain technology in new and innovative ways. Blockchain – a digital record, or ledger, of transactions – has the potential to revolutionize the way in which we conduct business across a variety of sectors, including the advertising industry. The application of Blockchain technology in the advertising industry is in its nascent stages. But as the technology is more frequently deployed for advertising industry uses, it will become necessary for industry stakeholders to understand Blockchain's advantages and, perhaps more importantly, appreciate its potential risks.

What is Blockchain?

Blockchain is a digital record, or ledger, of transactions. Each transaction is stored with other related transactions in a unit of data called a "block". These blocks are securely linked to one another in chronological order, forming the so-called "chain" of records that link back to the beginning of that particular ledger.

How does it work?

Blockchains are decentralized ledgers maintained by networks of personal computers. To participate in a Blockchain network, a user must operate a software client that will connect them to that Blockchain. The software client allows the user to record transactions, and also lends computing power to the network to help build new blocks of records.

Participants build new blocks of records by investing computer time to solve complex mathematical problems—a form of math called "cryptography". Only after these math equations are solved, then double-verified by a consensus of participants in the given network, can the block (i.e., the new record of a transaction) be added to the existing chain (i.e., the ledger of all transactions associated with the subject asset).

Though a simplification, the foregoing illustrates how a network of strangers can collectively maintain an accurate and transparent ledger of secure online records for any type of transaction, arguably eliminating the need for a "trusted" third party to act as the middleman.

Why should the advertising industry care?

Distributed ledgers like Blockchain solve important problems in Internet commerce:

  • Transparency: Blockchain could make tracing the whereabouts of a digital asset more like performing a real property title search. Like the grantor-grantee index in land records, the Blockchain records every transaction involving a particular digital asset. For advertising, the technology can be deployed to monitor ad placements and conduct real-time audits of ad delivery.
  • Marketing: Blockchain has the ability to help advertisers engage consumers in new and exciting ways. One widely-reported use of Blockchain as a marketing tool involved a fashion label that enabled customers to authenticate a rare selection of handbags, and to learn the story behind each bag—who owned it, modelled it, and where it originated.
  • Consumer Data: Maintaining transaction data in a decentralized manner may offer security and anonymity benefits not currently available to brands and their agencies.

More to come

The increasing digital nature of the advertising industry has complicated the way the industry conducts business. From transparency to efficiency, engagement to big data, stakeholders are searching for ways to wrangle the ad business's moving parts. Blockchain can be a reliable and trustworthy system for helping the industry do just that.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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