Fraud has been a problem with digital advertising for a long time. Earlier this year, Business Insider estimated that digital ad fraud was costing advertisers $16 Billion per year, double the estimate from the previous year.
Various solutions have been proposed. Each of these represent earnest efforts to provide tools today to fight ad fraud. At the same time, each also seems inadequate to the enormity of the problem and the ingenuity of the criminals.
Into this fraught situation comes a new blockchain-based approach proposed by an open-source L.A.-based startup called MetaX. Blockchain is the distributed ledger system that has been disrupting the finance sector for the past few years – most famously via Bitcoin. MetaX wants to apply blockchain technology to clean up the digital ad supply chain, and they recently have signed up the DMA as a partner in that effort.
As MetaX CEO Ken Brook described it at the Advertising Research Foundation’s audience measurement conference in June, this approach will attempt to change the fundamental incentives that, in their view, lead to digital ad fraud. According to MetaX, the problem stems from the incentives of CPM-based ad buying. Buyers are incented to pay the lowest possible CPM for their ads, while sellers are incented to maximize impressions at the lowest possible cost. These misaligned incentives lead to mischief (poor viewability, bought traffic) and they invite fraudulent interlopers.
MetaX’s implementation roadmap envisions full deployment by early 2019. Will that day come soon enough? Will others come forth with better alternatives? Perhaps, but in the meantime it is great to see blockchain being applied to this festering problem in digital advertising.