Commentary

Time To Meet Your Partners: Why Ad Tech Must Follow Fintech's Lead

In ad tech, whether you’re an advertiser or publisher, odds are you don’t know your partner. That fact hasn’t stopped ad tech’s stakeholders from transacting, but opaque fees, fraud, and viewability concerns have hurt stakeholder bottom lines and stymied their ability to maximize value by building meaningful relationships between buyers and sellers. It’s time to look for a new solution that brings buyers and sellers into partnership, without sacrificing the benefits of programmatic and RTB media buying technologies. That solution will come from Fintech, where blockchain has already had a big impact on the fees and friction that add enormous costs to a global system that moves trillions of dollars each day.

What is blockchain and why is it changing Fintech?

Blockchain is a distributed, immutable ledger that can record and deliver anything of value between strangers, from a unit of currency (Bitcoin), to a share of stock, to a complex financial instrument that delineates an ongoing relationship between the instrument holder and the relevant counterparties. Already, blockchain is changing financial record-keeping, but many have argued that in doing so, blockchain is supporting mass peer-to-peer collaboration that will disrupt existing organizational models, including how startups raise capital. But while that disruption may look like yet another crowd-funding play, it’s important to remember that blockchain’s real value proposition is as a kind of “trust machine” that allows buyers and sellers to transact with greater transparency and accountability.

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How will ad tech stakeholders benefit?

This year programmatic display spending is expected to reach $33 billion, according to eMarketer. Interestingly, 74 percent of those transactions will take place in private marketplaces that promise to ensure quality and brand safety, while reducing fraud and viewability issues. But in most private marketplaces, middlemen make sure that buyers and sellers never meet. What happens when you meet your partner?

First, it’s much easier to reduce fraud and viewability issues when you know your counterpart. From a technical perspective, blockchain makes it possible to audit complex advertising transactions and pinpoint where fraud and viewability issues occur. More broadly, a transparent window onto those problems means fewer dollars lost per transaction and, over time, fewer resources lost to combating fraud and viewability issues. More importantly, creating a robust framework for trust inside the ad tech marketplace fosters sustainable growth—something that benefits all stakeholders.

Second, as buyers and sellers meet, transactional costs drop. Reduced fees allow advertisers to dedicate a greater share of media spend to buying inventory. Moreover, newfound transparency around media fees enhances the ability of advertisers to reward vendors that add value and discard those that don’t. On the sell side, lower fees mean publishers can capture a greater share of the value they’re creating without raising the price on their customers. With that additional revenue, publishers can invest in audience development, building new advertising experiences, and creating more premium content.

Finally, new opportunities come from meeting new partners. Today’s marketplace is almost infinite, causing buyers and sellers to look for safety in private marketplaces. But in so doing, they’re not only placing their trust in middlemen, they’re cutting off the opportunity to meet new partners. In a transparent marketplace, publishers and advertisers can identify performance and follow that lead through the chain to their ultimate counterpart. Once those parties meet, they can use the data in the chain to create more meaningful and mutually valuable relationships that extend beyond a one-off transaction. That’s the real disruption here, because while combating fraud and reducing fees benefit buyers and sellers in the short run, there’s no telling what the future holds when advertisers and publishers collaborate in real partnership.

 
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