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Industry Index
December 20, 2017
Blockchain Reaction

By: Ayla Quinn

As the MadTech Industry embarks into 2018, Forbes defined the 5 Essential Blockchain Predictions That Will Define 2018Industry Index continuted the converstaion at a 2017 Roundtable, "Blockchain Revolution: Understanding Blockchain's impact and application for MadTech," where we set out to find the roadmap between blockchain buzzword and widespread blockchain adoption. 

 

 

The room, packed… texplanations, out of the way. The opening salvo was delivered by Lou Severine, CEO of NYIAX: “If your your platform doesn’t have an immutable ledger - you’re not going to last in this ecosystem.”

Why? Our Roundtable participants: Lou Severine - CEO of NYIAX, Dave Strauss - Director of Revenue Operations at Hearst Digital Media, Manny Puentes - CEO of Rebel AI, Ivan Guzenko - CEO of SmartyAds, Kyle Csik - Managing Partner at GroupM, Bob Walczak Strategic Advisor and Consultant, Tom Bollich - CTO of MadHive, Ed Zabar - CEO of Verif-y, Andre De Castro - CEO of Blockchain of Thingsframed this with a little more depth and candor.

 

 

Why Blockchain?
Dave Strauss, Director of Revenue Operations at Hearst Digital Media, stated that there are a number of problems in adTech regarding transparency. “We want to solve fraud, we want to solve spoofing… get some transparency into the ecosystem and [gain] an understanding of how much money is being taken out in the middle.”

Simply, many are seeing an opportunity to use blockchain to create an open market. “We have to strive to take programmatic and use it to facilitate media trading without human intervention – and you want to be able to trade media with security,”  Manny Puentes, CEO of Rebel AI, added.

What often is labeled as the results of fraud, (i.e., “bad actors”) are actually the results of human error. Considering that, if projections prove accurate, digital will capture 50% ($129b) of all ad spends, unmitigated human error (i.e., “fat fingers”) will be responsible for an increasing number of errors. Error does not equal fraud in these instances. More robots = fewer errors. Though, there is plenty of actual fraud.

Ads.txt is billed as a fix, but many see it as a temporary, and incomplete, solution. Ivan Guzenko, CEO of SmartyAds, stated, “…People think that ads.txt will help them, but ads.txt is introducing different types of fraud.”

“That’s why you have to hold your exchanges accountable,” Kyle Csik, Managing Partner at GroupM, interjected. If there is any fraudulent activity happening — the exchange has to be shut off, immediately.”

A Group Effort
Meeting these challenges may be possible, but there needs to be an industry-wide initiative. Severine offered, “If we don’t work together as a group – and if we don’t collaborate as a group – our industry is going to go down hard, because fraud will take over. Black boxes will take over. We need transparency, we need collaboration, and we need adoption.”

Without an industry-wide shift to blockchain technology, Strauss explained that, “If you have one point of failure, you are more or less a system that won’t work — and there are a lot of players involved.”

Where does this group effort start?

“I think a part of this is building out that ecosystem, determining who will be the verifiers and what are the peer-to-peer transactions happening between two trusted counter-parties,” Bob Walczak, Strategic Advisor and Consultant added, “That to me is what’s not built out in the ecosystem right now. There are no market leaders, and not enough scale to determine what’s going to work yet.”

 

 

A Practical Education
Google “blockchain” and you’ll get videos, infographics, long-winded, dry explanations… even clever, “explain blockchain to your grandma” blog posts. Yes, there’s a glut of general explanations, but far less MadTech-focused practical information.

Guzenko stated, “Education is the one main barriers to blockchain adoption, because people don’t understand how blockchain works – and they should, because otherwise it will [only] be a big promise.”

In short, buzzwords are one thing, action something entirely different.

 

 

Csik addressed the force that NYIAX interjects into the space. “Your company terrifies me,” Csik said (to Severine.) Severine laughed and rejoined, remarking, “And why is that?” Csik continued, “[NYIAX] introduces a tectonic shift of how we purchase media because of the ability to create speculation marketing.”

Closing the Gap
Puentes offered a clear position, stating, “Blockchain is going to revolutionize and change the way we trade media today, period. And, if it’s not today, it’s going to be tomorrow. If you’re not ready for it, you’re going to be hurting.”

But are we ready for it… industry-wide?

Tom Bollich, CTO at MadHive, addressed the need for speed. “There are a lot of speed weaknesses… The next six months [of early-adopters working on the tech] will increase [speed] by a magnitude or greater.” Within a year, he predicts, blockchain adoption will usher in an era where perhaps transactional speed will no longer be a negative factor.

Puentes added, “In a year, I think we will have the foundation to give people their public and private key – let’s start there.” Then the public and private key tech companies can start encrypting transactions.

Linking the Chains
“I think that the public/private space is a huge issue just because it’s so technical in nature these days,” Ed Zabar, CEO of Verif-y said. “If that is all solved and there is an electronic way to transact public feeds and private keys that is seamless and UI friendly, that will take this whole thing to a higher level of implementation.”

“There are three sets of chains: public, consortium, and private,” Bollich explained (read up on that here). He continued, “You do have the ability to move the data between the chains. I can take all the hashes within the last ten minutes from a private chain, and write that hash to a public blockchain. That private blockchain is immutable now. So, even though I can’t see it, I know for a fact that if I have to audit it, I can.”

Tomorrowland
There are still a number of questions without answers. Is blockchain technology just another new tool, temporarily dulling the pain of an existing problem, rather than a cure? Is blockchain overkill for accountability? And, as moderator Jonathon Shaevitz, President of Industry Index, posed, could blockchain be a threat to the current ecosystem?

Severine elaborated, “If you look at some of the large brands that are out there today, every conference that we have been at this year, the brands are talking about transparency, fraud… and where are the dollars going?”

Csik presented the agency perspective, “The agency enforces on exchanges what the exchanges enforce with publishers.”

 

 

This is the next face of the internet,” Bollich firmly stated. “TCP/IP was the first, then the WWW [HTTP], which is almost what every company runs on now, and blockchain is the next. This is true cloud computing.”

Puentes agreed, “Why is there a transparency problem? There is no accounting in HTTP.”

Walczak made the point that the industry also has to look at startups that are building their companies with blockchain at the forefront. “I don’t think those companies that are already existing, those large players right now will augment their business.”  

“The decentralized model is also that application towards transparency — which is knowing your counter-party. That’s the one thing that [MadTech] lacks: even in a fully transparent model, most companies still don’t know their counter-parties… that peer to peer nature. That’s the shift companies all have to evolve to.”

He added, “I agree that this is going to be the next internet. But, how do you make that shift?”

To build, or to buy, the tech… that’s the question.

 

 

Industry Index
January 31, 2018
Conquering Ad Fraud with Blockchain Technology

Blockchain has been positioned as the ultimate solution to the many faces of fraud in MarTech and AdTech. Within the industry, a bright promise of a decentralized future has led to a spurt of blockchain initiatives.

For many years marketers have been left to deal with the pressing issues of bot-traffic mixed with spoofed domains… This has resulted in a huge headache for everyone involved.

Click fraud statistics cannot be ignored:

  • Marketers lost $7.2 billion to digital ad fraud in 2016 – WhiteOps
  • Click fraud is currently growing at 50% per year – The Australian

 

Bot- vs. Human-Traffic Fraud:

The two major groups of fraud in the industry.

  • Bot-Traffic Fraud: Includes all non-human traffic types, designed to create fake impressions and fake leads.
  • Human-Traffic Fraud: More complicated issue dealing with real users who generate fraudulent impressions.

This is where blockchain can step in, as it’s intended to deal with both types of fraudulent activity. The main principle behind this decentralized system and blockchain is to minimize and eliminate the core problem. Through an open access ledger, there are no intermediaries, i.e., no leeway for fraudsters. The ledger is intended to track the journey of an ad impression. Blockchain implies complete transparency, providing a way to share data.

So, is the fraud dilemma is solved?

In short, not quite. The buzz around blockchain has created a completely new issue – educational gap fraud.


Educational Gap Fraud?

The hype around blockchain, along with a general lack of knowledge, has raised education gap fraud. PR teams tend to use the term “blockchain” without a second thought; as result this has led to industry-wide confusion. Marketers are interested in blockchain, yet they don’t see the scope of possible applications, or the potential return. The overarching conclusion is that the industry doesn’t know how blockchain works.

The IAB Tech Lab presents an Ethereum blockchain-powered initiative in the form of an ads.txt utility – a major step forward. There’s no doubt that blockchain will play a role in bringing AdTech to a new level of transparency. Yet, questions persist:

  • Why does the industry need to make the ecosystem even more sophisticated with blockchain?
  • Who is going to pay for these new transactions? There are already approaches where no one needs to pay for transactions.

While blockchain is positioned to solve for bot-traffic and human-traffic fraud, educational gap fraud will be conquered only with increased education in the industry.

 

Now What?

There are already solutions being implemented to combat these issues. There have been a rise in ICO startups and companies offering ready to use blockchain solutions. Companies should strive to grow business with experiments that should be inexpensive — no struggle with endless code lines.

The IAB has already created a Working Group: Blockchain for Advertising to develop educational guidelines for the potential uses of blockchain. Currently, the group is working on setting priorities, establishing best practices and core standards.

 

The Bottom Line

Question everything “blockchain.” SmartyAds starts by asking our clients who believe they need a blockchain solution: Why do they think they need blockchain? In the end, it’s less about the tech and more about a problem that needs to be solved. Although decentralization is a great idea, there are few cases when it’s truly needed where it can be applied correctly and for the good of the task — not for the good of early dream-sellers’ successes.

When it comes to dealing with fraud — blockchain is the best tech. However, unless there is industry-wide education in which all parties get involved within a working blockchain system, the full benefits of the tech will not be achieved. Nevertheless, the perks of implementing blockchain in a diverse digital advertising age are visible and beneficial.

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Ivan Guzenko is the CEO and founder of SmartyAds, which joined the AdTech revolution 12 years ago. Being half-tech and half-business minded — Guzenko is passionate about looking for the next big thing in the industry. Guzenko is a strong believer in AI, cognitive learning, and 360 automation approach that will connect the dots between the buyer and the seller — with no middlemen. Guzenko entered the blockchain industry at 2013 and is an active member in the blockchain community. Guzenko introduced and launched the first blockchain-based future trending exchange prototype, 2 years ago at AdTech Israel and beta-launched the product in 2017 for the APAC.

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Disclaimer: Guest blogs express the thoughts and opinions of authors from across the MadTech Industry; content does not necessarily reflect the opinions or viewpoints of Industry Index, our officers, or employees.

Industry Index
January 16, 2018
The Building Blocks of Blockchain in AdTech

 

Anyone who’s had to sift through AdTech’s avalanche of acronyms knows that this ecosystem is messy. From SSPs, DSPs, DMPs, to verification providers and more, each step in the transaction between advertiser and publisher adds complication, increases data loss, and raises the potential for fraud.

That’s why blockchain has earned such interest from the industry. By promising to simplify the supply chain and provide more transparency into each transaction, blockchain appears poised to solve the pressing problems that both advertisers and publishers face. While the technology holds plenty of promise, these are the early days.

Still, there are steps we can take to begin laying a foundation for the future.

 

Establishing an Immutable Identity

One of the major shifts that will come with blockchain technology is the concept of an immutable identity. This will apply to both consumers and to businesses as they become more comfortable with using the concept of a blockchain ‘wallet’ to manage and store transactions.

The ‘wallet’ concept in blockchain is rooted in asymmetric cryptography, which allows for both authentication and encryption of information. A user on any given blockchain has both a private and (mathematically-related) public key. While the private key is held secret, the key has the ability to digitally sign any transaction (just like one would sign a physical document) and authorize a transaction – sending Bitcoin to another user, for example.

Miners in a blockchain network attempt to authenticate transactions using these related public keys, verifying they truly are the authorized user – again, say, sending Bitcoin. Once an identity is confirmed, the transaction is added to the public ledger, and the cryptocurrency changes hands.

 

Why It Matters to AdTech

By establishing immutable identities with unique private keys and mathematically-related public keys, transactions can be authenticated through real math, not probability. In advertising, this matters because we can finally use this type of technology to bring real security to each media transaction.

For example, if publishers are given a private and public key, we can root-out domain spoofing once and for all. On a larger scale, when all companies in the ecosystem have immutable identities within the same framework or common blockchain, we may also use this technology to solve the accounting and payment discrepancies which, today, take up excessive operational time.

 

True Supply Path Optimization

While the IAB’s ads.txt initiative attempts to streamline the supply chain by having publishers publicly declare their partners, a text file cannot fully capture the complex programmatic ecosystem. Providing a universal identity, however, will likely also lead to a more efficient supply chain – while still allowing for an open market.  

For example, here’s a video of a single page load on a publisher's site — with each node representing an HTTP transaction.

 

 

In any given page load, a publisher’s ad server will call many SSPs which call different DSPs which call different SSPs all in an effort to find the most value for a single ad placement. While the ad chains are complex, giving each platform and player a distinct, traceable identity will bring transparency to the complexity – without collapsing an open market. No matter the complexity within each, transactions will be validated and verified through real authentication technology.

This allows publishers to maintain privacy regarding their partners (including maintaining maximum revenue), while simultaneously enabling buyers certainty that they are buying legitimate, authenticated inventory.  

 

The Starting Point

While the industry and the IAB still need to establish standards and currencies around blockchain, we can start by establishing public and private keys for each business entity in the advertising supply chain – advertisers, agencies, publishers and partners alike. This will establish a first step toward security, and will enable distributed ledgers and blockchain wallets to be built around this initial identity concept.

A sender of a certified letter doesn’t care how many post offices it stopped at along the way, as long as it ended up in the hands of the intended recipient; advertising transactions should function in the same way. Blockchain provides our industry the opportunity to do this for the first time, and will bring with it a new technological maturity to media trading.

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Manny Puentes is an experienced executive leader in the digital advertising and software industries. Puentes is the founder of Boulder-based startup Rebel AI. Rebel AI secures digital advertising and protects publisher identity and brand spend using machine learning, blockchain, and real-time encryption technologies. With more than 20 years’ experience in digital advertising, Puentes has led engineering and product teams to build enterprise-scaled platforms for digital media trading by leveraging specialties in real-time bidding, data pipeline architecture, natural language processing, and machine learning.

 

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