Has Facebook’s data breach caused ad executives to find alternative avenues to reach their intended masses? Christian Ferri, president and CEO of Geer, believes blockchain technology has an answer. Ferri believes blockchain technology will allow consumers and users to submit their data, be more transparent with brands and ad executives, and allow users the choice to opt-in and out of ads. This could be one of the most practical ways blockchain could reach the masses.
The concept of using blockchain for non-financial transactions is a difficult one, largely because it takes a decentralized network of thousands of people running powerful software to create and maintain the blockchain. Running that software comes at a cost. Whatever the blockchain application, how do companies that don’t also offer an ICO (whether it’s in the food industry or healthcare or social media) strategize to grow their platforms from an enterprise perspective?
It’s also a rough time for ad tech startups. Venture capital money going into ad tech startups is falling sharply, helping push a wave of consolidation. Financing reached a high of $2.92 billion in 2015, but this year, it’s on pace to be less than half that, according to CB Insights. And the number of independent ad tech companies has fallen 21% since 2013, to 185 as of the second quarter of 2018, according to LUMA Partners, which analyzes digital media and marketing.
The next steps
Some fear that the contraction could also mean a slowdown in innovation. Advertising has long been an attractive area for startups. During the last 10 years, the ease of forming companies and the availability of cheap venture capital led to a flood of ad tech startups, pushing boundaries on where and how ads were delivered. They introduced technologies like the automation of ad buying, and header bidding, in which many ad exchanges bid on publishers’ space simultaneously, according to the New York Times.
“From a blockchain network we’ll see a change in a couple of ways,” Ferri points out. “One is the speed. Right now we’re at like 1,000 transactions per second.” Compared to the 24,000 per second that Visa is capable of handling, this is considered infantile.
In terms of blockchain innovation, however, it’s an exciting time for many pioneers. “Sidechains are like a 2.0. There’s even some 3.0 solutions. It’s all still in beta. You’re going to see bidding for digital transactions, and the costs are going to go down. You’re going to see a better price. A second thing that is equally or more important [with blockchain] is the transparency,” says Ferri.
“If an advertiser says they’re going to hit 20,000 impressions, they’re going to hit it, and you can see it. Right now we have click through rate, or cost per impression. Are those organic searches? Or are those paid? Can we separate the two for instance? 50/50 or 70/30? You’ll get a better, more accurate report, and also in turn create more trust from the ad industry.”
A sidechain is a separate blockchain that is attached to its parent blockchain using a two-way peg. The two-way peg enables interchangeability of assets at a predetermined rate between the parent blockchain and the sidechain. The original blockchain is usually referred to as the main chain and all additional blockchains are referred to as sidechains.
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