Online advertising is a huge industry, and it’s growing all the time. In fact, it’s thought that spending on online ads will equal that of offline ads by 2020.
In Europe, the digital advertising market has doubled in size in the last five years, a serious level of growth that looks set to continue into the future.
With stats like these, it’s easy to assume that everything is fine. And it is — for a small number of the parties involved. Big third party platforms like Facebook and Google do very well out of the current setup, while users, advertisers, and content creators tend to lose out.
This isn’t a bug, either, it’s a feature of the current model.
Blockchain and crypto show a lot of promise in many areas right now, and online advertising could well be one of them.
To understand how several crypto startups could change the face of online advertising, we first need to look at the current problems and why they’re so persistent.
A landscape that benefits the few
At the moment, the online advertising landscape is dominated by companies like Facebook and Google. They wield so much power because they have access to huge amounts of user data, data that tells them a lot about the people using their platform.
It tells them what their users like to do in their free time, their music and fashion tastes, their political views, and — most importantly — what kind of things they’re most likely to buy.
Armed with this information, these platforms can work with advertisers to help them target their ads towards people who will be likely to respond positively.
In theory, it sounds like the perfect model for everyone. Unfortunately, it isn’t quite so straightforward. It forces advertisers to work via a third party, depriving them of the opportunity to build relationships with potential customers.
The result of this is impersonal, poorly targeted ads, aimed at people who just aren’t interested a lot of the time. This is a real problem. People generally aren’t opposed to #advertising, but they hate being bombarded with intrusive, impersonal, and irrelevant spam.
Apart from annoying users and creating an environment where ads are viewed negatively, this model is also bad for content creators. These are the people who create the videos, posts, and other content that brings visitors to the platform and makes it a viable place to advertise.
Unfortunately, on these huge third party sites content publishers are often poorly rewarded. They’re unable to make deals with advertisers and forced to accept the rates of the host company.
So how can #blockchain change things? Well, the root of the problem is excessive centralization and over-reliance on third parties. Blockchain is perfectly adapted to challenging that by building decentralized systems without any need for a middleman of any kind.
Let’s take a look at some of the startups who are working on doing just that in the online advertising space.
The fight against middlemen
BAT is one company that’s aiming to change online advertising by moving to a different model. They’ve created their Basic Attention Token, which is used to reward content publishers who generate the most attention from users — a fairer system than the current one.
These BAT tokens can then be used to purchase advertising services within the platform. Advertisers get more accurate data about what users are interested in, and users themselves, along with being rewarded, also see fewer and better targeted ads.
It all takes place within BAT’s very own browser, called Brave. This is a novel and interesting idea, but many users are more than happy with their current browsers, so this could be off-putting for some.
Another company in the space is Kind Ads. Like BAT, they focus on making online advertising fairer and more pleasant for all parties. Unlike BAT, they work in any online browser.
With Kind Ads, users are able to opt in and out of advertisers, so they aren’t inundated with irrelevant and annoying ads. They’re able to sell their data in exchange for tokens, thus building stronger and more rewarding relationships with advertisers.
This allows ad companies to use more personal, direct forms of advertising like chatbots and push notifications, and shift away from the dreaded banner ads. The platform also ensures content publishers are rewarded more fairly for generating valuable traffic.
But most importantly, Kind Ads doesn’t need its own designated browser, and is compatible with all the major ones.
Kind Ads and BAT discussed on DecentralizedTV
One of the big problems in the online advertising space today is privacy, and the rights of users to protect their own data. That’s what AdEx are focusing on — restoring security and privacy to users of online platforms.
They want to use #Ethereum smart contracts to minimize advertising fraud and reintroduce consent to digital marketing. It’s decentralized, transparent, and a challenge to an advertising environment that can appear worryingly corrupt.
As online advertising becomes more significant and powerful, startups like these could be necessary in order to keep it safe and rewarding for everyone, not just a few big companies.