• by Philip Rosenstein , Staff Writer, September 11, 2017

There are still numerous questions to be answered about the true disruptive power of blockchain technology in digital advertising — but the scale is tipping in favor of those who see a bright future for the emergent technology.

As detailed in a report by Ryo Takahashi for McKinsey& Company (and explained in a MediaPost Research Brief ) there are three aspects of blockchain technology that could very well have a major impact on digital advertising: “1) Transactions are verified and approved by consensus among participants in the network; 2) The full chronology of events (for example, transactions) that take place are tracked, allowing anyone to trace or audit prior transactions; 3) The technology operates on a distributed, rather than centralized, platform, with each participant having access to exactly the same ledger records.”

Takahashi found found strong use cases for “tracking demand for creative content,” allowing for more dynamic pricing. “Prices for creative content could fluctuate according to supply and demand.  Moreover, artists could control prices and have the ability to set prices themselves without having to go through a complex web of intermediaries.”

Across the board, advertisers, independent content creators and publishers will benefit from increasing transparency in transactions. Financial institutions have already caught on.  The New York Interactive Advertising Exchange will create speculative markets for trading digital advertising units, with the price of digital ad spots  available for all to see, helping maximize publisher return and advertiser ROI.

With the injection of blockchain, ad exchanges will provide more accurate pricing, and likely improve fill rates as platforms will be able to track supply and demand more effectively.

Still, blockchain is not a “one-stop solution for ad fraud,” Amit Joshi, director of product and data science at Forensiq, told RTBlog. “Blockchain will not fully solve the ad fraud problems that affect the industry, but potentially provide additional transparency that can help solve the issues”  -- for example, showing  "what intermediaries are involved in ‘laundering’ it through the industry.”

The McKinsey report also notes risks and challenges in adoption. “Despite the benefits offered by blockchain, several challenges remain for the technology. More ubiquitous use of blockchain technology will require solutions to off-chain’s issues, especially around business, technology, and legal challenges.”