While the advertising industry seems to warm up to the applicability of blockchain technology, misuse and misunderstanding remain. Sam Kim, CEO of Lucidity, discusses some of these misunderstandings and offers readers information on how to identify them
It's too slow. Do not scale for the programmatic. It's just conceptual. It's all hype.
The misconceptions about blockchain technology and its specific use cases in digital advertising abound. Some of these notions are based on unfounded assertions of companies that fear they have something to lose from the advent of the blockchain.
Others rely simply on obsolete information.
Almost all this is not of great help, harmful at worst. We have to cut the noise, rumors and false information to be able to paint an updated and accurate image of where the blockchain in advertising is going.
Do not make decisions based on obsolete information
Blockchain innovation is happening at a staggering pace. So it is understandable why online opinions, panels and industry presentations can not always keep up with the latest.
Basing decisions on the blockchain on information 2+ years ago is somewhat like predicting weather based on weather data 1,000 years ago.
The climate has changed radically. And so the blockchain industry ..
What was the main concern – that blockchain is simply too slow to have anything to do with programmatic advertising – simply is no longer the case.
The Need for Speed
The main Ethereum chain is a public utility that provides two key features for the development of blockchain-based applications.
- First, it provides a decentralized network on which smart contracts can operate.
- Second, it provides a tokenised ecosystem to manage incentives and sanctions.
It was not designed to directly support applications. And so, initially, he suffered from serious scalability problems.
This could be why some members of the advertising technology community erased blockchain years ago, especially for programmatic advertising.
For blockchain to work as an advertising solution, obviously it must be able to keep up. Fortunately, there are recent innovations that let you do it.
Welcome to Blockchain technology "Layer 2"
In a public root blockchain, there is always a tradeoff on how decentralized the system is and how scalable it is. Ethereum elected to be the most decentralized system in the world. Now, Layer 2 solutions make it one of the most scalable systems.
Layer 2 programming solutions work "on top" of existing blockchains and promise huge improvements in scalability, interoperability and functionality.
Today, there are many Layer 2 solutions that support the scale required in digital advertising.
One of the ways blockchain can scale is via sidechains. Sidechains are separate private blockchains built on a root root chain. Creating a sidechain allows developers to distribute the burden of verifying transactions. Instead of having to wait for the root blockchain to check each transaction individually, the sidechains let you check multitudes of transactions simultaneously.
This allows the blockchain to scale without limits while maintaining the root chain decentralization. Which means that it is able to handle the amount of transactions (millions per second) to keep up with the rapid speed of programmatic advertising.
One-way marketing could use Layer 2 technology to ensure that everyone in the ecosystem has access to the same data. Checking blockchain metrics would allow marketers to determine if their ads were actually delivered as directed, how well their ads were posted, exactly how much of their budget went to the media and more.
The first to test will be the first to succeed
Like many changes we've seen in advertising, advertisers and platforms that learn, test, provide input and build the new world together will benefit. Those who pull back and wait behind the scenes (the heading that comes to mind) will have a lot of earnings calls to enumerate the reasons they were left behind.
Do not be fooled by purely conceptual blockchain projects. Talking on a panel is one thing. Building a product is another. Companies that allow you to test, kick the tires, advise and build together at the end will shape the future of advertising where the customer's voice is in the DNA of the product.
Advertising is at the top of the list of industries that can be positively influenced by the blockchain. We invite early education, tests, debates and collaboration across the industry.