I have worked in advertising, or more specifically, media trading for almost 25 years. I have been both a buyer and seller of media, both in traditional media inventory and digital inventory. Having seen the value chain at play from both sides of spectrum, there still remain deeply embedded cost inefficiencies where advertising budgets leak out of our murky, unregulated and over-centralised media trading system. As more industry figureheads are speaking out on these issues, it's time to tackle things head on – and I believe Blockchain has the answer...
The transparency issue
Advertising offers brands an incredibly powerful tool to build share of voice and enrichen the relationship they have with their audiences. Today's media supply chain, however, does not work in favour of the very advertiser who's ultimately funding it. On face value, the current advertising market is laden with opaque trading practices, hidden costs, rebates and lack of consistent governing regulation. Advertising spend is swallowed by intermediaries throughout all stages of the transaction life cycle – that is to say, whilst the original spend from the advertiser goes through the system, it passes many hands, each taking their share along the way. At the same time, within the current media trading framework, advertisers have little sight of where their money ends up. The result of which, most worryingly, being that advertisers are all too often spending their money in the wrong places, and without even knowing it themselves. Can we really let this continue, and if we do what will it mean for the future of our industry?
The chickens are coming home to roost
These issues have fast become too great to ignore – and the analysis, research and reports in the media are testament to just that. Studies by Guardian Media and K2 Intelligence – an industry leading investigative consulting firm in the US – have revealed the significant value of spend leaking out of the media buying and selling ecosystem. The research highlights the discrepancies between advertisers' spending and the return on investment they ultimately see.
Indeed, to understand how your money is being used in today's advertising ecosystem requires a lot of time, effort and technical knowledge, which most advertisers don't usually have at their disposal. In theory, the agency model should therefore offer the ideal solution and provide additional, trusted resource. In practice, of course, this has not been the case, with advertisers having been duped by the system and losing out heavily as a result. Where advertisers have previously been asleep at the wheel, voices from within the media industry – which are fast growing louder and stronger – are waking them up to the lack of visibility, control and – most of all – value the current system affords them.
The time for change has come
Change is needed in how advertising inventory is traded. The Drum reported recently the proactive measures taken by Procter & Gamble (P&G) to review its agency contracts, as part of their wholesale push for greater transparency*. Whilst P&G and others primarily targeted programmatic ad contracts, the move still represents a clear acknowledgement and damning testimony to the antiquated, opaque practices within the ad trading ecosystem.
Whilst marketers are right in seeking the truth, transparency and returns they deserve, it's important to distinguish that the agencies themselves are not the enemy – rather it's about addressing the underlying infrastructure and culture within the entire marketplace, and building a framework from the bottom up, as the first major step in completing the journey towards a more transparent ecosystem for ad trading. Indeed there are endemic issues that have developed and perpetuated throughout the industry for decades, though it'll become even more worrying should we not address it, and continue doing business as usual. The issue can be reversed only when all players agree to acknowledge it, and see clearly from where the opportunity to change it can come. This is where, I believe, the Blockchain offers the best solution...
Blockchain holds the key for retaining long term value
Two major factors inhibiting continued growth in the traditional and digital media ecosystem remain trust in pricing and delivery. Blockchain technology has the capability to put this trust back in the system. Migrating onto the Blockchain will give advertisers full visibility on all transactions being processed, meaning full oversight and visibility on where their money is going. Ultimately, delivering a more democratic trading environment, which gives back to advertisers control of their budgets.
This is the future many believe industry needs, and one which our team is set on delivering via our independent Blockchain platform, Fenestra. Our platform will enable advertisers to book, bill and pay for advertising from media owners via a much more open and transparent transactional platform, creating the potential for large increases in returns on investment for advertisers, and higher revenues for media owners. Distributed ledger technology will enable Fenestra to offer a decentralised, immutable platform unable to be manipulated by any intermediary. The consequent audit trail created by Fenestra's independent platform will, in turn, give advertisers greater control and detailed oversight of their own media supply chain.
Where the "ad-tech" industry has become so advanced that current transactions run at much higher speed than any Blockchain can handle today, there has been a lot of discussion about the suitability of Blockchain technology for the industry, compared with any other potential solution. I answer this question with another question... Does this mean any Blockchain initiative has to be scrapped entirely?
Technology development is rarely linear, and just because Blockchain is still relatively nascent, it shouldn't mean it ought not to be considered. Affecting change is about taking steps, one at a time, and the vast potential the Blockchain can realise presents a major first link in the chain. It's also why Fenestra will first target the traditional media market (print, radio, TV, cinema, outdoor), where transaction volumes are lower than in digital markets, thus making the platform best suited to the current computational capacity of Blockchain technologies.
Of course, I am not suggesting that Blockchain can solve everything all at once for the entire industry, though name me one technology that has... What the Blockchain – and Fenestra – can do is solve a real problem today, and deliver a better tomorrow for what still remains a large proportion of the marketplace.
Realising a better future for everybody
The shift to Blockchain can equip brands and their agency partners with an opportunity to collaborate with confidence for the first time in a while. Now more than ever we are seeing increasing demands for openness and transparency, and I truly believe that Fenestra can make this a reality. I don't, however, think the solution can be found within the industry itself. This is why Fenestra is an independent transactional platform – not born out of an existing organisation with the bias and incentive to protect its own legacy business – rather, that by its design it's built to serve first the needs of industry, to help solve the trust issue between all players in the supply chain. I believe we will have a healthier, happier industry as a result...
Ashley Mackenzie is Co-Founder and CEO of Fenestra, an independent Blockchain advertising platform designed to bring greater trust, security and transparency to the global advertising and media market. The views expressed are those of the author and not necessarily the views of Fenestra, its management, its subsidiaries, its affiliates or its other professionals.