Hope or hype? 5 blockchain shortcomings AdTech must address

Blockchain is making such rapid inroads across industries its impact is being compared to that of the internet.

In general terms, the ledger technology allows for secure online transactions of all varieties without need for middlemen of any kind, quickly and transparently tracking the movement of assets while reducing the risk of fraud.

Many expect AdTech to be among segments to benefit, since blockchain could make a dent into ad fraud, reduce burdensome manual tasks and cut into the piece of the pie taken by middlemen and attribution complications. But others believe serious complexities will need to be overcome first. Among immediate needs cited by analysts:

1. It must find a way to pick up the pace. The strongest real-time ad marketplaces handle some 5 million transactions per second, and today's blockchain solutions can handle less than a third of that. Real-time bidding needs to ramp up; however, "Blockchain is decentralized, so a single company can’t just invest in a supercomputer and expect blockchain to work faster,” notes Ross Benes on Digiday.com. “A speed boost would require thousands of people to upgrade their hardware, which isn’t economically feasible right now."

2. It needs standards. Because of blockchain's swift advent into AdTech, there's little industry-wide consensus as to what constitutes quality. That’s particularly true of private and consortium blockchains, and it causes confusion in judging viewability, target demographics, brand safety and a multitude of other factors.

3. It may not solve transparency issues. Blockchain is being proposed as a means of listing authorized inventory brokers and resellers to effectively rout out fraudulent players. But many are skeptical that the process will be that easy. “There are many other easier ways to achieve transparency, like stop lying, stop cheating and stop ripping off your own clients by arbitraging a margin,” ad fraud researcher Augustine Fou recently told Digiday. “You don’t need to apply an unproven buzzword to fix transparency issues in digital advertising.”

4. Weaker versions may be ineffective. If a blockchain functions just like a more traditional distributed ledger, it’s unlikely to act differently to solve any significant problems and the hype about the technology will dissipate. “In a market riddled with tech jargon, the talk of blockchains, encryption and tokens is not likely to go down well with people who are already disenchanted with things as they are,” advises Vishveshwar Jatain on Adpushup.com.

5. It needs industry-wide coordination. A central authority or entity (perhaps a trade group) is needed to provide an overview to interested parties and encourage more widespread participation. “For it to work, every point along the ad supply chain would need to adopt it, which could take awhile given blockchain’s technical complexity,” notes Benes.

Before blockchain can really impact AdTech, the industry must be realistic about addressing its shortcomings, caution Bill Wise and Boris Mouzykantskii on AdExchanger.

"We need to be honest about what’s really working, what’s possible and what ought to be done,” they conclude. “Only by tackling problems with both eyes open can we create blockchain-era ad solutions that live up to the vision of what marketing technology could be.”