Digital Advertising Industry – an Overview
The concept of digital advertising has been put into practice with first banner ads (see more at theatlantic.com) published on the Web by AT&T in 1994 – over a quarter of a century ago (!). Over the next few years, an emerging industry has become the primary means for businesses to deliver advertisements and messages to audiences digitally through email, social networks, search engines, display ads, websites, and affiliate programs.
Today digital advertising has drastically changed and matured into a truly effective and massive business strategy for promoting products and services across web and mobile audiences, with the market revenue amounting to $311MM globally and $104MM in the U.S. in 2019, as per Statista.
Thanks to a great number of market participants (advertisers, publishers, networks, agencies, mediation platforms, exchanges, data providers, solution providers, affiliates), the digital advertising industry will grow to over $460MM US dollars in revenue by 2022, as forecasted by Statista.
Today, digital ads exist in different forms including but not limited to: banner, video, search, social, mobile, cross-device, classifieds, virtual reality, augmented reality.
Because of the industry growth, the supporting middleware market has grown too – digital ads are much better served with help of various software and tools, such as traffic tracking and attribution, mobile & web analytics, fraud detection, creative managers, optimizers, to list a few.
Why Digital Advertising Needs a Change
It is about the supply chain which is inefficient despite the rapid growth, the scope of reach and the numerous actors transacting business within its digital advertising ecosystem.
The first reason is that the supply chain involves countless middleware and intermediaries that over inflate the ad tax burden on advertisers. The Interactive Advertising Bureau reports that almost half of every dollar an advertiser spends is typically lost in the supply chain due to the inefficiency with secondary actors.
The second reason is that the digital advertising industry still uses the Insertion Order (IO), an old-fashioned, paper-based contract framework, to regulate decision making and agreements between businesses. The IO does not provide an efficient mechanism to verify contractual commitments automatically and unbiasedly, and it ultimately leads to high risks of fraud and the absence of transparency in the supply chain.
The third reason lies in the advertising technology itself. There is no reliable and widely accepted technology system of running ad campaigns at scale while protecting the actual identity of each user targeted. The industry is highly dependent on the digital duopoly of Facebook and Google, taking up to 70% of the U.S. ad market share, and this results in depriving publishers and advertisers of their rights.
Blockchain introduces an open and unified framework to manage the supply chain efficiently and removes the pains of the existing digital advertising ecosystem. A blockchain-based digital advertising economy enables:
- An efficient system of records and transactions
- Direct supply chain with the immediate upstream and downstream flows of ad campaigns and traffic between advertisers, publishers and audiences
- Smart contract IOs to manage contractual commitments between businesses
- Matching and activation of audiences while keeping user data private and safe
- Ad spend efficiency and security
- Tokenizing digital ads