on the crypto
There is a paradox in the world of digital advertising: how many companies does it take to place an ad on a website? In fact, there can be up to 15 intermediaries participating in this lengthy process, which absorb around 30% of the ad spend. To fix this broken system, the next generation of adtech specialists are pinning their hopes on blockchain technology.
MadNetwork
Announced Thursday, MadNetwork, a second-tier blockchain running on Ethereum, came out of the closet by unveiling a testnet coming next month.
Adtech provider MadHive and advertising firm AdLedger had previously experimented with an entire data sharing and accounting system on Ethereum (learn more quotation in real time), but in the last couple of years they decided that a level 2 approach was needed to scale.
Blockchain is often used to automate manual or paper-based processes, but in the case of advertising, the problem is the automation system itself.
The first infrastructure behind web advertising - a hodgepodge of servers and accounting platforms - created a black box filled with commissions and inconsistencies.
"Black hole"
This is the right time for blockchain to solve the advertising problem, particularly as traditional television is moving into the world of digital devices, said Adam Helfgott, head of the MadNetwork project.
“An NBC or a Fox can't really afford to lose 30% of their ad revenue in this black hole,” Helfgott said. The AdLedger blockchain consortium, of which MadHive is a member, includes some large media players such as Viacom, Publicis Media, Hearst Television, IPG Mediabrands, Hershey and even IBM.
MadNetwork also aims to make the advertising supply chain transparent in the era of upcoming data privacy regulations, said Christiana Cacciapuoti, MadNetwork business strategy consultant and executive director of AdLedger.
"Just as a [blockchain-based] accounting system can track money transactions and drive business results, it can also monitor data transfer and take privacy aspects into account."
Contact point of truth
The new Ethereum Layer 2 solution uses the public mainnet as the "touchpoint of truth," said Helfgott, comparing it to the Baseline Protocol built by John Wolpert of ConsenSys and Paul Brody of EY.
Node distribution is handled by the provider Blockdaemon, a close partner of MadHive, Helfgott added. Regarding the roadmap, Cacciapuoti said: “We are aiming for September 1st for the public launch of our testnet, and for the fourth quarter for the mainnet“.
In the not too distant future, it's inevitable that most people will watch TV via IP-provided video, Helfgott said. Changing the infrastructure on which advertising is built today is a process that follows the natural evolution of the media, he added.
