• by Frank Sinton , May 8, 2018

Digital advertising is clearly under fire. From consumer-privacy concerns to lingering brand-safety issues and the continued battle against fraud, there is ample worry for the ad industry.

One potential solution being discussed regards blockchain technology and its abilities to secure consumer data and ad transparency.

While blockchain can’t solve all of ad tech’s problems, the fundamentals of a decentralized system for verifying ad transactions are sound. By providing a shared ledger for transactions, greater transparency in the advertising supply chain is very possible.

Further, blockchain can also remove privacy concerns by ensuring that third parties never truly “possess” data. These are positive changes from the current environment, where bad actors are too easily added to transactions, and consumer data is too loosely traded around without consent.

One large hurdle for blockchain’s implementation within ad tech, however, is with regard to performance.

The technology simply isn’t up to speed, compared to the industry’s standards, and a switch now would comparatively slow digital advertising to a standstill. Current benchmarks for completed display transactions -- not just requests -- are 20,000 to 30,000 per second.

For video, that number is a bit more manageable, at between 1,000 and 2,000 per second.

Compare that to current blockchain speeds. Bitcoin handles between three and four transactions per second, and Ethereum averages 20 per second. Blockchain is slowed because all nodes in a chain must come to a consensus to process a transaction.

Operating at these speeds would grind digital ad transactions to a halt. At best, assuming Ethereum’s current averages, that’s one-thousandth of current speeds if the industry just shifted to a blockchain system overnight. It’s not scalable.

But there could be a potential fix that will change both blockchain and the ability to apply it to industries that demand greater transaction speeds. 

EOS is developing the ability to become a decentralized system to support industrial-scale transactions. Using a delegated proof-of-stake (DPOS) consensus mechanism, EOS would be able to process millions of transactions per second, all within the constructs (and added security) of blockchain.

The DPOS setup requires cooperative blocks and two-thirds consensus for approvals. By not requiring all parts of the chain to approve each and every transaction, speeds automatically improve. Forks created by malicious actors are not included in the chain — unless approved by the two-thirds majority.

Rather than running continual approvals of the full chain, which is a time-consuming endeavor, the DPOS process creates somewhat of a pre-approval process, drastically decreasing the time needed for each individual transaction.

Even if the proposed “millions” of potential transactions per second aren’t reached by this system, it could very well introduce itself as a capable ad tech alternative. A blockchain mechanism that allowed for even the current benchmark of transactions on both the display and video sides would be a vast improvement, since it would create no change in today’s speeds, all while creating a more secure and transparent environment.

As the heat rises for digital advertising to fix its house, it should be rooting for blockchain Once DPOS-type solutions show they can work at scale (and there doesn’t appear to be a reason why that can’t happen), that’s when blockchain for advertising becomes a tangible reality for the entire industry.