The Blockchain can improve the profitability of online ads and this Turkish startup is kicking it off
This year, internet ads are expected to overtake TV ads as the largest advertising segment, and the total spend on entertainment and media will increase from $43.5 billion in 2014 to almost $66 billion in 2018.
Besides classic online advertising tools through Google and other channels, the emergence of the Blockchain technology is expected to elevate advertising within websites to a new level to contribute to increasing the profits from online ads.
Online ads 101
Through ‘Ad networks’, advertisers (the ones who pay money in order to get their ads shown on a mobile app or a website) buy digital ads across a slew of publishers (entities who receive money for showing ads on their website) sites and apps. They earn money by taking a cut of the ad revenue. An ad network and buyer negotiates the terms of an ad buy by taking into account such things as audience targets, impressions (the number of times an ad is served), average cost per impression (CPM), and the cost per click (CPC). The ad network then executes the targeting, optimization, and reporting on the campaign. The traditional ad networks (described as the ‘middlemen’) include Google AdSense, which is a free program run by Google, that allows website or blog owners to generate revenue by displaying targeted Google ads on their websites. Advertisers pay Google for advertising with Google AdSense. Publishers can generate revenue based on the number of times audiences click on the ads.
As the Blockchain is disrupting the way most industries function, it is also having an accelerating impact on how online advertising works. The decentralized ledger that Blockchain brings offers a scientific solution to the problematic stats that publishers and advertisers have to go through. It is a fact that with online advertising, it’s almost impossible to know if the stats are accurate. This is due to the numerous bots and fake ‘clickers’ who are paid to increase the reach of a specific ad, but without having a real reach or impact. The third annual Bot Baseline Report published by the Association of National Advertisers revealed that the global economic losses due to bot fraud were estimated at $6.5 billion in 2017. Because the Blockchain is transparent and encrypted, companies can easily determine whether viewers are real members of the target audience or not. This would save millions in ad spending each year.
Analysts estimated that removing the fees of the middlemen (ad networks) will almost multiply publishers’ CPM by five, increasing it from $1 to $5 for example. This is what the Blockchain could bring to the table, as advertisers will be able to pay publishers directly without cutting fees for the middlemen. Blockchain will also allow advertisers to reach their specific target audience, as they would precisely know who their audience is. The Blockchain will be able to replace ad networks’ role. That means smarter spending only on customers who are most likely to buy the product.
The region is on the same wave
Joint Ventures is a new Turkish design platform that focuses on creating a Blockchain-based content economy by increasing user engagements.
The startup was founded in Istanbul in 2017 by five partners: Ahmet Arslan, Cevdet Suer, Gulseren Arslan, Zeki Kavrazli, and Latif Cakiroglu, who all come from the adtech industry, and understand its challenges. Ahmet Arslan explained to Wamda that they met with many publishers and saw how much money they lost to middlemen. This led them to kick off a solution through the blockchain network to solve some of these problems.
The startup provides a commenting solution to publishers through jointcomments.com. In the commenting interface, it will show native ads [a form of paid ads frequently adopted by content marketers that matches the form and function of the platform upon which it appears]. Using this product, publishers will be able to monetize their commenting ad units without paying commissions to middlemen, explained Arslan. He explained that in the current online advertising industry, publishers are losing almost 60 percent of the ad revenue share to Google and Facebook for example. Google’s ad revenue share will be no less than 32 percent in 2019. Those big players are using people’s data to target ads without giving them anything back.
Instead, commenters and publishers will be rewarded with JOINT tokens. Commenters will be rewarded based on their contributions (comment count - comment likes - comment replies - read amounts etcetera). They can use their rewards to subscribe to paid content across JOINT network for instance. Publishers will decide their payouts and those of commenters. Advertisers will be also using JOINT tokens to advertise.
JOINT network will be using people’s data to show them ads depending on their preferences. For instance, it will be able to show ‘fashion ads’ to a Wamda commenter who’s interested about fashion. In return, that regular Wamda commenter will get 10 Joint rewards, which he earned because his comments are bringing to the Wamda platform more engagement, meaning more interested advertisers.
“We are not changing all the advertising industry, but we are changing the advertising inside the commenting areas,” he said. All transactions and rewards will be visible by all participants of the JOINT network via the Blockchain, he added.
“The current commenting interfaces are old fashioned which is impacting the user experience negatively. Habits have changed, and publishers want more comment to prove how interactive is their website for example, which will bring more ads,” he said.
Disqus, a worldwide blog comment hosting service for websites and online communities that use a networked platform, which is a direct competitor to Joint Ventures, is optimizing ads through comments, but without using the Blockchain. “Disqus runs on 280,000 websites, which means they know who is reading what, so they are able to show very well targeted ads in any website. However, they are not rewarding commenters and they are charging a lot of commissions which is not transparent,” Arslan said.
According to him, most publishers still do not realize how much they are losing to middlemen. Convincing them about the value blockchain brings takes a little time, but showing them real data, makes things easier. The startup has no clients yet, but is almost ready to announce its fırst publishers-partners from Turkey and Europe. “Turkey is a great country for building proof of concepts. We are able to talk to the largest publishers in the market, and able to get real feedback from them. Our products are location agnostic, and any publisher can install our commenting solution and create a new economy with their own audience,” he said.
ICO and coming steps
To monetize, Joint Ventures is organizing an ICO starting April 7, 2018 for 30 days, with a hard cap fixed to 12.500 Ethereum, equivalent to almost $8 million.
One ETH is fixed to 8,000 JOINT tokens. The startup has already launched a private sale with 500 ETH hard cap (with 25 percent bonus) to cover the exchange listing and marketing costs during the ICO.
After Joint Comments, the startup is planning to launch other products for publishers to create new revenue channels. “We are also expanding the team (right now we have 10 full-time people in the team) to catch up with the roadmap.”
Examples of companies using the Blockchain technology to optimize ad revenues are numerous.
Projects like Steem and Basic Attention Token seized the opportunity for value creation and they created their own platform. But these platforms require a considerable change in the users habits as they force users to use their own platform. Joint on the other hand, does not require a change in the routines of either commenters, publishers, or advertisers, Arslan explained. Joint Comments can be added to any website with ease and will be applicable for entire online publisher community.
Kind Ads for instance aims is to give data back to its original owners by allowing people to choose who can use their personal data. The startup is building a blockchain-based ecosystem where users are paid in tokens in return for their data. They get to choose who can access and use their data and specify how much advertising they want to see. Users can even opt out of ads from certain advertisers. The ad network that rewards publishers fairly, and takes zero fees from advertisers, and users get to see less intrusive/annoying ads.
The German startup repay.me also plans to launch a Blockchain-powered marketplace which will share revenues from personal data with its community. The platform will offer users up to 100 percent cashback on their purchases. Retailers will be able to sell and advertise their products.
Besides online ads, some startups are trying to expand their reach and cater to classic ad clients. Comcast Advanced Advertising Group for instance, announced that a new platform, Blockchain Insights Platform, will be allowing marketers to make ad buys in broadcast and streaming TV using blockchain technology. The platform will allow marketers to anonymously match their data sets with programmers and others in the industry to target consumers on any device without giving up proprietary customer info. Participants in the technology already include Disney, NBCUniversal, Cox Communications, Mediaset Italia, and France's TF1 Group.
To sum it up, Blockchain is not just disrupting most sectors and is pushing the boundaries of innovation, it is also offering profit-making solutions which enhances its appeal and allows it to gain more followers.