If you haven’t heard of it yet then I suspect you soon will. Blockchain is the new darling of the tech world and everybody wants in. But apart from sounding like a rather unpleasant plumbing problem, what is it? Why should you care? How is it (probably) going to change the advertising and media industries over the next few years?
What is it?
Blockchain is one type of a new tech called distributed ledgers. These are synchronised databases spread across different places or institutions, like a Google Spreadsheet, but without a central admin or data store. Blockchain is the specific technology that sits behind the famous cryptocurrency, Bitcoin. Blockchain is just one type of distributed ledger. There are others but this is the one thing everybody is talking about.
Key difference
Shared databases are nothing new. The difference with a distributed ledger is that no single user necessarily has control of the database. They can be a truly democratic store of information simultaneously controlled by everyone and no one. This is why they are so exciting. By using very clever maths and cryptographic techniques these ledgers allow two organisations to each have their own version of a database and be absolutely certain that both versions are identical without having to check them against each other. These ledgers also allow the sharing of anonymised data effectively. I can set up a ledger with the correct permissions so that you could perform analytics on data and be 100% certain that the analytics are representative without ever having access to the raw data.
Blockchain is a popular implementation of the Distributed Ledger model. It uses an encryption technique known as hashing to ensure the rules are maintained and the data is consistent both at the current time and also since the creation of the blockchain. It can be used as a fully automated consensus engine, removing the need for there to be a trusted party (such as a lawyer, a bank or a government) in charge of the database and also removing the need for there to be trust between the users of that database. The fact that it is fully automated also allows it to be integrated into other automated systems (such as invoicing or releasing payments) thereby removing humans from transactional processes.
Why should you care?
Ginni Rometty from IBM has said that what the internet did for information, blockchain will do for transactions. She is right and, in much the same way as the adoption of the internet happened, it will be a revolution disguised as an evolution.
There will be no “big bang” moment when blockchain suddenly becomes the way that everything is done. We will see a gradual adoption of it and similar technologies until there becomes a point when imagining an industry, a company or a world without blockchain underpinning it becomes difficult to imagine.
That slow adoption time-scale should reassure you. There is no urgent rush to suddenly start using blockchain for everything. In fact, in most cases caution is probably the better part of valour to avoid a repeat of the dot com bubble.
What you do need to do is to start thinking about how you might adopt these new technologies to do things differently. How can you start to bring blockchain or other distributed ledgers into your business and how to avoid being left behind as the evolution gathers pace.
What will blockchain mean for advertising?
The early adopters of blockchain are those who are going to see the most disruption to their industries when the use of the technology becomes widespread: namely the banks and the large financial institutions. Because a blockchain can show the history of all transactions there are some interesting experiments happening in supply chain management and logistics where blockchain is being used to track the provenance of everything from diamonds to mangoes.
In the majority of these implementations, the driving motivation is the reduction in transactional costs by removing human actions from the process. Financial institutions are using blockchains to speed up the painfully manual back office clearing process that happens at the end of the trading day. Shipping companies are using the technology to automatically release payments when shipments arrive at their destination.
For media and marketing, at the moment, the adopters are still on the margin. Ever since the launch of Google Adwords, advertising has been moving increasingly towards programmatic systems of buying and selling advertising inventory. Nowadays, in some non-premium markets we have reached a critical point where the costs associated with certain transactions are making the utilisation of some inventory uneconomical. Blockchain driven ad exchange platforms will allow the automation of more transactions; reducing the costs and making them economical to sell.
Another area where blockchain will have an impact is ad fraud. By using these technologies, greater transparency on views and clicks can be achieved. Buyers could be provided with absolute proof that person X actually saw and interacted with advert Y. See the project adChain for an excellent example of exploratory work in this area.
In summary, while it is important for you and your companies to be aware of these technologies and the possibilities that they may bring, it is prudent not to panic or immediately start trying to inject blockchain into everything you do.
By head of APAC at Decoded Chris Monk
Want more on blockchain? Decoded is running a Blockchain Unlocked event.
Or see: How bitcoin is set to disrupt digital marketing (and why you should care)