IBM and Unilever are the latest companies investing in blockchain-based digital advertising solutions. They join a blockchain ad tech ecosystem that has already been well established even before these major enterprise players came in.
The question is: Can IBM and Unilever use the blockchain to do for ad tech what the startups already in this market cannot?
The Ad Tech Industry's Data Transparency Problem
Through a partnership, IBM and Unilever aim to help address a deep-seated and well-known issue within the ad tech industry.
The root of the problem is the lack of transparency within digital advertising . The programmatic advertising platforms that connect advertisers (with ads to run) to publishers (whose websites visitors might want to see those ads on) operate behind tightly closed doors. They collect vast amounts of data about users , usually without their consent or even knowledge. They use that data to make decisions about where to serve specific ads, but the advertisers who pay them typically have no way of knowing where, when or exactly why a particular ad was served to a particular user. It's all a secret.
This secrecy gives rise to widespread fraud , among other problems, within the digital advertising industry. Efforts to control the risk of fraud and other challenges have swelled the ranks of middlemen within the ad tech ecosystem. The middlemen consume an outsized portion of revenue, with as much as 70 percent of the money advertisers spend to place ads ending up in the pockets of these middlemen. That loss comes at the expense of content publishers, who would otherwise enjoy higher revenue for the ads that they let advertisers publish on their sites.
IBM and Unilever Partner to Disrupt Ad Tech
Earlier this month, Unilever announced a partnership with IBM iX, a business consultancy service run by IBM, to design a solution to the ad tech industry's data transparency woes and the problems that arise from them.
Although the companies have revealed little about the technical specifics of the new platform, its core feature is that it is based on a blockchain.
"With blockchain [technology], you'll be able to see everyone in the process and exactly the function they perform," Babs Rangaiah, executive partner for global marketing at IBM iX, told Fast Company in reference to the platform.
In testing, the blockchain-based ad tech solution has helped to identify discrepancies within ad placement data, the companies said.
This is not the first time that IBM and Unilever have collaborated on a blockchain technology project. Along with other companies, they partnered last summer to pursue a blockchain-based solution for tracking contaminated food.
Newcomers to a Crowded Market
IBM and Unilever are by no means the first companies to recognize the data transparency problem in ad tech or to envision that blockchains could be a solution.
MAD Network and XCHNG have been working on similar solutions for some time. Both companies are building platforms that use digital tokens and blockchain-based data management to restore transparency to ad tech, while also aiming to provide fairer revenue to stakeholders.
In interviews, representatives of both of these startups said that they welcome the new ad tech platform from IBM and Unilever, and expect it to complement the solutions they are building.
"We're thrilled to see major brands and agencies taking blockchain technology seriously," Adam Helfgott, CEO and founder of MAD Network, told Distributed.com. "We are fans of Babs and the team at IBM and are excited to help as they start to look at how blockchains can improve targeting and address consumer privacy."
MAD Network is also using blockchain technology to address the current challenges facing ad tech, with solutions that allow consumer privacy and corporate profitability to coexist, Helfgott said.
Breaux Walker, SVP of Blockchain at Kochava, the company behind XCHNG, said that XCHNG "is in no way competitive to IBM's blockchain technology, which is based on its Hyperledger protocol and a general purpose platform for all industries. XCHNG is a custom-built blockchain, not affiliated with an existing blockchain protocol, that is custom-built from the ground up for the advertising industry."
In fact, Walker sees a partnership opportunity in the IBM and Unilever news.
Kochava, which specializes in digital advertising measurement software, "could be an invaluable media spend measurement partner to the IBM-Unilever venture," he said. "IBM's analytics tools and blockchain technology are helping Unilever tackle certain aspects of fraud by increasing the transparency of their supply chain. Increasing transparency is a positive but, beyond that, you have to be able to measure the customer's journey in great detail."
Outside the blockchain space, too, advertising companies are pursuing new models of data sharing with the goal of restoring transparency to the industry.
So far, IBM and Unilever have not mentioned that a digital token will be part of their blockchain-based advertising platform. That would be one differentiator between their project and startups like MAD Network and XCHNG.
However, in the absence of more details about how the IBM-Unilever platform actually works, it is hard to assess to what extent their solution will truly compete with or complement existing solutions in this market.
What is clear, however, is that large enterprises are now taking a keen interest in ad tech's data transparency problem, and they see the blockchain as the solution. Their thinking in this respect may not be entirely novel, but their ability to place big names and big budgets behind blockchain-based ad tech solutions provides further assurance that blockchain technology is poised to become an important source of disruption in the digital advertising industry.
Whether enterprises or startups will drive that innovation remains to be seen.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.