Why Are Advertisers Still Acting Dumb About Smart Contracts?

It’s been nearly five years since I first wrote about the implications of the blockchain for Madison Avenue, and while the concept has permeated the ad industry and spawned a wide range of potentially transformational offshoots – everything from the tokenization of human attention to cryptocurrency and NFT (non-fungible token) rewards and incentives models – I’m surprised that the most obvious killer application still has not gained any real traction: the smart contract.

In an industry where buyers and sellers – not to mention all the in-betweens – still have fundamental trust and transparency problems demonstrating proof of delivery, much less performance, the idea of smart contracts enabled by an un-hackable distributed ledger seems like a no-brainer to me.

I mean, the Association of National Advertisers (ANA) just last week announced its umpteenth probe analyzing the way most modern day media is bought and sold. You know, programmatic, which ANA CEO Bob Liodice asserted still is  "riddled with material issues, including a lack of transparency, fractured accountability, and mind-numbing complexity."

Ironically, many of those criticisms could have been attributed to the pre-programmatic days of buying and selling media, even in the quaint era of pre-digital print, out-of-home and broadcast media, which was also still is riddled with material issues, including a lack of transparency, fractured accountability, and mind-numbing complexity. Even if examples of explicit fraud are rare, there still is an incredible amount of time and energy – including a heck of a lot of manual keystrokes – involved from one end to another end of a typical media buy.

According to a study also released last week by Basis Technologies (formerly Centro), the average ad exec spends about six hours weekly –15% of a standard work week – manually processing repetitive, low-level tasks associated with media buys.

While automation can clearly alleviate much of that workflow and many of those steps, I suspect they persist because of the underlying trust issues.

That’s why I was keen on reconnecting with Matt Wasserlauf, a serial digital advertising entrepreneur, who built and sold one of the first video ad servers (Broadband Enterprises), but has spent the past few years engineering a smarter way to process media buys – from end-to-end, and with zero angst related to proof of delivery or performance. That’s because all the parameters of the buy – who is selling what to whom, what they need to prove it was delivered and what it accomplished, and even transferring the payment automatically when it closes – via a smart contract enabled by the blockchain.

Given his roots in video ad-serving, Wasserlauf has focused his new company Blockboard on video, especially connected TV, OTT and premium online video inventory, mainly because its smart contracts are built on the core of a video ad server. But think of it as a video ad server on steroids, where all of the elements entered into the contract – who gets served the ad, what data is necessary to fulfill the delivery and/or outcome of the ad being served, and how much gets paid off at the end of the campaign – all in a transparent ledger visible to all sides of the agreement. So, you know, no shenanigans. Just simple, end-to-end processing.

Wasserlauf and his team took me through a demo recently and I recommend anyone interested in how this process can make things not just more secure, but actually less mind-numbing, do the same, because it’s actually pretty simple.

The key to its success is a simple key. A piece of computer code (see image above) granting access to all parties participating in the smart contract – the buy and the sell sides – as well as any intermediaries necessary to prove delivery of contract elements along the way.

The contract itself, is just a partition on the blockchain and it remains their in perpetuity, even after the contract closes so there is always an indelible historic record in case anything ever comes up in the future about it.

If there’s any downside to the process Wasserlauf and his team showed me, it’s that the contract requires mining a bit of cryptocurrency – Ethereum’s Ether – in order to enable it. To be fair, it’s a small amount of Ether at this time, but if Blockboard’s processing grows it could raise energy-consumption issues for the ad industry, which also has a corresponding concern about becoming net carbon neutral. Something a recent report from Dentsu and Microsoft has coined as “decarbonized advertising.”

But everything ad people do to process their media buys – including those six hours of weekly low-level, repetitive tasks – consume energy, so the question comes down to what is the explicit trade-off.

And unlike some of the early concepts for applying blockchain to programmatic media buys, Blockboard’s isn’t actually using it for every single step of the process, just to create, distribute and prove delivery when the contract is closed.

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