IBM Is Betting on Blockchain to Provide Transparency in Media Buying

Salon Media Group is working with IBM and AdLedger, a nonprofit focused on blockchain standards for digital advertising, on a proof-of-concept blockchain project for ad campaign reconciliation on Salon properties. The goal: to bring more transparency to Salon Media’s ad inventory through IBM’s blockchain platform.

Through a shared ledger, Salon is hoping to record contractual conditions, like recording impression data and how much Salon will be paid, in a shared system of record that IBM said is immutable and fully auditable.

IBM said it will also help establish governance around consensus models and rules by which participants can write, access and validate data.

“This proof of concept will not only help publishers like us regain more control over our inventory, but will also illuminate where inefficiencies exist within the long and complex supply chain,” said Ryan Nathanson, chief operating officer of Salon Media Group, in a statement. “The shared ledger on the blockchain will act as a single source of truth, creating indisputable transparency for both the brand itself and the publisher, which will aid in greater accuracy during reconciliation as well as make advertiser spend much more efficient.”

IBM is trying to position itself as a viable blockchain solution for brands and, now, publishers. For about a month, consumer goods company Unilever has been using IBM’s blockchain platform to make buys with part of its U.S. ad spend, as well as to validate agreed-upon figures and clear discrepancies. IBM said the results are promising so far.

Unilever spent $818 million on digital advertising in the US in 2016, but dropped its spend by 17 percent in the first half of 2017, in part because of concerns about transparency and lack of measurement tools.

IBM believes blockchain can solve quality, security and transparency issues because validated transactions are instantly committed to all ledgers in the network. This helps parties understand where money is going and who received what, said Babs Rangaiah, executive partner in global marketing at IBM’s digital agency iX.

Per Rangaiah, the Unilever project will continue for another 12 to 15 months, although it could wrap up earlier. Rangaiah, who worked at Unilever from 2002 to 2016, said the parties will also look at automating the parts of the system that are manual, like insertion order, invoicing and payments.

In addition, he said the next great possibility for blockchain is all parties using first party data for targeting and identifying individual users on specific devices so advertisers know if they’ve reached their target audience.

“Because the data is encrypted, we can target using first-party data of the various members of the ecosystem,” Rangaiah added. “Members have a ‘key’ that allows them to see only the data they are allowed to see, but the data itself can be used for targeting across devices, sites [and more].”

At the same time, Rangaiah noted that blockchain is still in very early stages, and technology still needs to advance—akin to advertisers’ desire to run video ads at the dawn of the Internet, before broadband was available enough to make this possible.

“Obviously at some point, the technology aligns with consumer behavior and products,” he said. “I believe a lot will come together for blockchain.”

He said that because of blockchain’s ability to provide enhanced visibility, the goal is open trust—but, though “the potential is there to solve a lot of issues,” it won’t necessarily solve a problem like fraud on its own. “What blockchain is about is getting to a single source of truth,” Rangaiah said.

He explained that “any transaction between two parties” involves a party with something of value, and a party exchanging money or something equal in value for that thing. “And, historically, there has always been a third party measurement source, not necessarily because Unilever wouldn’t trust NBC—more that one part of selling something is you want someone to tell you the value, and you don’t want them grading their own homework,” he added.

However, while IBM is vocal about blockchain’s potential, advertisers are coy. Unilever did not respond to a request for comment about its use of blockchain. Neither did P&G, whose CMO has been notably vocal about transparency.

In addition to IBM, the AdLedger consortium includes founding members GroupM, IAB, iSpot.tv, Mad Network, Publicis Media and Tegna. They seek to further trust and transparency within digital media and establish rules and standards for blockchain in advertising.