Digital advertising was worth close to $230 billion in 2017 with predictions for substantial growth over the coming years. However, online ads have developed a problem that increasingly threatens the ability of the industry to continue doing business. The problem is privacy.
Reports recently emerged that in the US, the state of New Mexico has launched a lawsuit against Google, Twitter, and developers of mobile apps marketed to children.
The basis of the action is that the companies have violated laws that prevent the collection of personal data for those under the age of 13.
The Attorney General for New Mexico said this concern arises because these apps can track precisely where children live and attend school. The apps collect personal data using tracking cookies so that targeted ads can be served up to users.
This isn’t an isolated incident. The Cambridge Analytica scandal forced Mark Zuckerberg to testify to US Congress over Facebook’s privacy-related misdemeanors. Nevertheless, the company is still going out of its way to ensure it can harvest our data to sell on to advertisers.
The tech giant reportedly pulled its own Onavo Protect VPN service from the Apple App Store because it violated Apple’s updated terms of service. The App Store now requires explicit user consent for tracking movements on the iPhone or iPad.
Lack of Trust
These kinds of incidents have created a trust issue among users of digital media. One survey from the UK showed that 78% of users said they would avoid using smartphone apps if they don’t believe the company is going to protect their privacy. A further survey in the US showed that 75% of users were concerned about having tracking cookies placed on their computers without their consent.
Legislators have now started to intervene. The European General Data Protection Regulation (GDPR) was introduced in May 2018, requiring explicit user consent for data processing including the use of tracking cookies used by digital advertisers. There is talk that the US will soon follow.
However, legislation by itself may not be sufficient to restore user faith in the integrity of online platforms and smartphone apps. Especially since consent is generally provided based on acceptance of dull, lengthy lists of terms and conditions.
Blockchain technology could now provide the solution for weary users who just want some control over their personal data. Blockchain-based platforms offer the opportunity for users to become active consumers of digital adverts through the provision of rewards based on time and attention given to ads. This is the premise of Zinc, a new digital advertising platform designed to overhaul the current ad ecosystem for the benefit of all participants.
Users will download the Zinc app to their smartphone. Each time they view an advert on an app or website that uses the Zinc protocol, they will be credited with ZINC tokens. They can then redeem these tokens for unlocking prizes or premium features in apps. They can also use the tokens to buy ad-free experiences in other apps.
Blockchain-based ad platforms don’t only enhance the user experience. They remove the headache of user consent for app developers and publishers of digital adverts.
Whereas the implementation of the GDPR requires user consent for the use of third-party tracking cookies, Zinc will manage user consent through its own app, by asking users to consent to the use of the protocol itself so that they can receive their rewards. Because users are rewarded for ad viewing, publisher and developers stand to enhance the ad revenues generated through their creations.
Solving Fraud Problems for Advertisers
A blockchain solution also benefits the companies deploying digital ads to promote their goods and services. The digital ad industry suffers from a fraud problem that is set to cost advertisers $19 billion this year alone. Fraud occurs when unscrupulous publishers or ad platforms try to elevate their ad revenues through fake clicks.
In some parts of the world, people are employed in “click farms” to sit all day mindlessly clicking on ads to make it seem as if a campaign is successfully pulling in consumers. In other cases, bots and other software generate fake clicks or views on advertisements in the background of a user’s computer. Either way, it is the advertiser who loses out, as their ad campaign doesn’t generate its full return on investment.
Blockchain-based digital advertising platforms offer a fraud-free solution to advertisers. Using a decentralized consensus protocol, each click or view on a digital advert is verified as authentic. It is then logged securely and permanently on the blockchain, providing digital advertisers with full transparency of the return on their advertising spend.
In a further advantage, advertisers also gain a clean set of user data from the blockchain, which they can use to better target and personalize ads to their audiences. In doing so, they are also assured that their users have consented to the use of their data, and are fully engaged because they are being rewarded for their time and attention.
Social media and smartphone apps form a big part of modern life, but they rely on digital advertising to remain free to users. Therefore, it’s vital that the digital ad industry is able to survive if we are to continue enjoying a broad range of free online media.
At the same time, privacy is one of our most basic human rights. It seems that blockchain could provide the perfect solution to balance these two competing interests, creating value for all parties in the digital advertising ecosystem.