By Lara O'Reilly
Blockchain technology has made inroads in industries from
logistics to health care. Now, it's gaining traction with
marketers, who see it as a potential answer to the pitfalls of
online advertising.
Anheuser-Busch InBev, AT&T Inc., Kellogg Co., Bayer AG and
Nestle SA are among advertisers that are starting to use the
nascent technology to figure out whether their ads are viewed by
real people, not computer-generated bots, and how much of their
spending is siphoned off by middlemen.
Blockchain is a secure digital database that can house a ledger
of transactions, distributed across multiple computers. It allows
business partners to keep a record of their transactions, stored as
"blocks" and updated in real-time, based on an agreement among the
parties. Blocks can't be altered.
The technology, or at least the hype around it, is booming. Now
the secure, transparent nature of the technology has drawn interest
in the advertising world, where dealings between marketers, their
ad agencies and tech venders often aren't transparent, leading to
distrust and fears among advertisers that they are wasting
money.
Marketing-intelligence firm Warc estimated that of every dollar
spent world-wide last year on "programmatic" ads -- a term used for
ads bought using automated software -- just 40 cents on average
made it to the publisher selling the ad space. Advertisers end up
paying a "tech tax" to the intricate chain of venders between a
marketer and the website that runs an ad.
Marketers sometimes can manually audit digital ad campaigns, but
proponents of blockchain say the technology offers a faster, more
reliable way to track spending and reconcile discrepancies with
suppliers.
The technology can also help track whether ads are running on
websites with real traffic and on portions of them visible to
ordinary users. That type of campaign information can be included
in stored "blocks" along with pricing information.
"The objective here is not about savings, it's more about
transparency to make sure we are reaching consumers in the most
relevant way," said Lucas Herscovici, a global marketing vice
president at Anheuser-Busch, one of the world's biggest
advertisers. A-B has tested a solution from mobile ad-tech firm
Kiip that records ad campaign data to the blockchain.
"I believe in the next two to three years, most of the
programmatic media will move to being blockchain-based because
advertisers will want transparency and this will provide it," Mr.
Herscovici said.
Blockchain has its drawbacks. It's an extra cost and it depends
on a number of players agreeing to sign up to a common agreement.
Big online ad campaigns that target audiences across hundreds or
more websites can cross dozens of different ad-tech middlemen, many
of whom might not be keen on signing up to a blockchain
consortium.
Alphabet Inc.'s Google, the biggest player in the online
advertising ecosystem, hasn't announced participation in any of the
advertising blockchain projects currently under way.
Sridhar Ramaswamy, Google's senior vice president of ads and
commerce, said at a conference in March that the company had a
small research team looking at blockchain but the core technology
"is not something super-scalable in terms of the sheer number of
transactions it can run."
Digital-advertising exchanges process millions of ad
transactions every second, but it can take several minutes for
transactions to be recognized in blockchain and hours for payments
to be settled, according to Isaac Lidsky, president of Underscore
CLT, a startup working on developing the technology for the digital
marketing sector.
Still, some industry experts think blockchain's benefits
outweigh these teething pains. When advertisers see how the
technology can be applied to solve familiar problems, "it'll take
the boogieman factor out of the blockchain and everyone will
instead focus on the quality-of-life improvement possible," said
Josh Herman, global integrated marketing leader at Kimberly-Clark
Corp., one of the members of a blockchain consortium at
International Business Machine Corp.'s digital marketing agency,
iX.
IBM announced its blockchain product in June in partnership with
advertising software provider Mediaocean. Major companies that have
signed up to use the technology to track their digital ad spending
include Pfizer Inc., Unilever PLC and Kellogg.
Elsewhere, confectionery giant Nestlé is beginning to test a
product from tech startup Amino. The product lets all advertising
venders get paid at the same time directly by the buyer, so long as
they meet their pre-arranged commitments. That's an improvement,
Amino says, on the traditional process where the advertiser pays
the agency, who pays the next vender in the chain, and so on,
leading to delays and discrepancies.
Sebastien Szczepaniak, head of e-business at Nestlé, says he
envisions putting a requirement in ad contracts stipulating that
partners must use a blockchain solution.
As with other new technology in the ad industry, blockchain will
get widespread adoption only when prominent advertisers start
demanding it as part of their campaigns.
"I still think that it's probably several years before there's
enough groundswell," says Jeff Rasp, director of U.S.
consumer-health digital strategy at Bayer, which has tested Amino's
"Lens" solution to track its ad spending. "But I feel so
passionately about it that I'm working to try to have those
conversations with other advertisers."
Write to Lara O'Reilly at lara.o'reilly@wsj.com
(END) Dow Jones Newswires
July 12, 2018 08:14 ET (12:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Nestle (PK) (USOTC:NSRGY)
Historical Stock Chart
From Apr 2024 to May 2024
Nestle (PK) (USOTC:NSRGY)
Historical Stock Chart
From May 2023 to May 2024