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November 7, 2017

4 Reasons Why Blockchain is the Solution to the Ad Attribution Problem

Photo Credit: antanacoins via flickr

Nearly a century ago, the great pioneer in marketing, John Wanamaker, made his now-famous observation: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

And for the nearly 100 years that have followed, we still don’t have a great answer.

We call this problem attribution that, generally speaking, refers to a marketer’s ability to link consumer purchasing activity to paid advertising. If a marketer can’t establish that link, then there’s no way to know if the ads are working.

Even today, 70 percent of businesses struggle to act on attribution insights. It’s a problem that just won’t go away.

Enter Blockchain

Ever since blockchain became famous as the underlying system for cryptocurrencies like Bitcoin, people have been scrambling to find other problems the technology can solve.

That is because blockchain is incredibly flexible and surprisingly simple. In short, blockchain creates a decentralized, digital database that records any kind of transaction. Everyone with access to the blockchain can view the data, but no one single player owns it.

So can blockchain help solve the attribution problem?

The answer is a resounding yes. Here are four reasons why.

1. Blockchain Technology Levels the Playing Field

In Wanamaker’s time, his self-confessed cluelessness to his own advertising operations was largely due to the lack of any feasible way to track consumer behavior. Truly informative data was scarce or ignored.

Nowadays, the opposite is true. There’s plenty of available data, and the technology now exists to harness that data.

The problem is that most of that data and technology are monopolized by large publishers who wield a disproportionate amount of power in the advertising industry. Think Facebook and Google. Because they control the entire advertising supply chain, from the data to the ad delivery systems to the available inventory, they’re able to link consumer activity to purchases (aka attribution) effectively and at a massive scale.

Advertisers and smaller publishers are forced to work with these giants because they can offer a degree of attribution efficacy that no other solution can. But that often leaves them at the mercy of Facebook and Google’s self-serving rules — rules that currently no one can stop them from making.

This is always the problem with centralized, third party middlemen. Sure, they help you solve a problem. But how do you know you’re truly getting a fair deal?

Blockchain’s ability to decentralize the attribution process would take power away from the behemoths of Facebook and Google and put advertisers and smaller publishers back in charge of tracking their own attributions.

2. Blockchain Technology Doesn’t Require a Change in Behavior

If you’re in marketing, then you know that asking someone to alter their preferred behavior is an uphill battle. Products and technologies work when they are easily adopted and offer immediate value.

The advertising industry has become resistant to change in recent years because the onslaught of possible alternative solutions afflicts marketers with “paralysis by analysis.” There’s simply too much to sort through, causing many marketers to stick to the systems they’ve grown accustomed to using.

Blockchain-powered attribution allows marketers to effectively link their ads to subsequent consumer purchases without asking them to change who they work with. The technology can be made compatible with all programmatic exchanges, affiliate networks and general advertising platforms so marketers can continue to buy ads in whatever way they wish.

3. Blockchain Technology Is Auditable

Goldman Sachs recently labeled blockchain as the “new technology of trust.” It fits.

A blockchain provides an ideal location for recording all the user engagements taking place on advertisements served through the attribution system. By logging attributions on a blockchain, advertisers can trust that the publishers who deliver legitimate conversions are properly rewarded.

A shared record of attributions also makes it easier and less costly to resolve disputes, if any, over what user activities took place and which affiliates should be credited with them.

4. The Advertising Industry is Begging for Transparency

If you’re going to affix any buzzword to blockchain, it’s transparency. And the advertising industry is begging for transparency, pleading for some way to make sense of the numerous advertising systems that continue to operate behind closed doors.

Blockchain, by design, drags those systems into the light. Ad networks, affiliate networks, and other major marketing platforms are often known for the scale of their data and the quality of their inventory. That’s the advertising holy grail. But to use them, marketers have been forced to into ignorance about what’s going on behind the scenes.

A blockchain attribution solution corrects for that fatal flaw. With blockchain, marketers receive a quality impression without having to sacrifice on transparency. And transparency is and has always been the key to effectively determining ROI.

Blockchain and Attribution: It Fits

You’re bound to hear about blockchain over the next year. And each time you hear about it, you will likely hear how it’s the next “miracle drug” to solve some previously unsolvable problem.

In some cases, it may be true. And in other cases, it will turn out to be fool’s gold. Blockchain, like the Internet before it, is set to evolve in ways we can’t anticipate.

However, as it stands today, blockchain is already ready to provide a massive service to the ad industry — and one that would be easy to implement. It’s only a matter of time until it’s developed.


Sam Kim has been working with high growth companies for nearly 20 years in various industries ranging from gaming to advertising technology.  He was co-founder and COO of The Mobile Majority, now Gimbal, before co-founding KR8OS where he serves as CEO.