Advertisers and brands are increasingly losing patience with ad agencies and other players over the lack of transparency in the digital advertising space. Digital ad revenue for the first half of 2017 came in at a record $40 billion, up from $31 billion for the previous year, and it was estimated to have reached $85 billion by the end of 2017.

The fight for transparency intensified in 2017 after The Times of London published a report about how the ads of big brands were appearing alongside racist videos on the giant video platform YouTube. Several brands paused their spending on YouTube advertising temporarily, until YouTube reassured them that it had taken measures to correct the issue.

The issue with YouTube speaks to the larger theme of a lack of transparency in the space. There isn’t enough information at the disposal of the advertiser regarding what they’re buying and how much they’re paying for viewed ads. Duracell, furious after finding out how much of its money goes to hidden fees compared to the actual amount it spent on ads, built its own advertising audit system, whereby it relates directly with a demand-side ad platform and a brand safety vendor — all in a bid to be more informed of its advertising moves. Simply put, advertisers are looking for a more transparent way to connect with their customer and audience.

How does traditional ad buying work?

Typically, the advertiser — the brand that’s looking to connect with its audience — contracts a digital ad agency to manage its entire ad campaign, with the advertiser having a set target it aims to achieve from the campaign. The advertiser pays the ad agency an amount that would cover both the overall cost of creating ad content and the cost of distributing the ad content to the brand’s target audience/customers — these two types of costs are what digital media experts call non-working and working spend respectively. One thing to note here is that an ad agency’s overhead cost is also part of the non-working spend.

Once the ad agency has developed the content for the desired channels, it buys ad spaces — also called ad inventories — where the desired audiences would see the content. The ad agency has two options for buying ad spaces: buying directly from the publisher and buying programmaticallythrough an ad exchange platform.

This usually long process fosters a lack of transparency — hidden fees, fraud, traffic, measurement and viewability — especially with programmatic media buying. For clarity, the transparency issues here can be broken into two main parts:

  1. Fees and charges from vendors and other players along the supply chain.
  2. Fraud and viewability.

The first part is fostered by the long nature of the programmatic ad supply chain, as shown in the image below.

The road from advertiser to audience

With each arrow in the image above, you can think of ad dollars being transferred diminishingly. And in many situations, the advertiser isn’t aware of how much each player in this system takes. According to a report from the ad industry trade group IAB, 55 percent of programmatic ad revenue goes to ‘ad tech’ services, while publishers receive only 45 percent. The findings from IAB demonstrate that non-working ad spend (ad dollars that didn’t get to the publisher) cost advertisers more than working spend. There are two problems here. First, advertisers don’t usually receive sufficient information about these costs. During a Digiday Programmatic Marketing Summit earlier in the year, an unnamed advertising executive said:

“If we have problems with [transparency] today, then it’s not because of the technology powering advertising — it’s because we’re not sharing the information needed to stop brands [from] throwing money into a black hole. We’re having these conversations about transparency over and over again, but the knowledge needed to change the situation isn’t being shared.”

The second problem is that publishers, who actually provide the platform for brands to reach their audiences, are paid less than the intermediaries.

The ad fraud and viewability part of the overall transparency issues originate from publishers selling fake impressions (fake clicks and bot traffic). Domain spoofing, whereby a publisher somehow presents his domain to be a larger publisher’s domain, is another part of the fraud problem. Ad fraud reportedly cost the U.S. advertising industry about $6.5 billion in 2017. Again, as in the case of hidden fees, sufficient information on how publishers verify their traffic, and the processes that ad agencies and other intermediaries follow to ensure that they work with publishers with verified traffic, needs to be available to everyone within the ecosystem.

This is where blockchain comes in. Indeed, blockchain in advertising is likely to be where we’ll see the most rapid adoption. They are a match made in heaven. Advertising lacks the transparency of data and process. Blockchain offers the transparency of data and process.

Here are a few practical ways that blockchain can help bring transparency to the ad buying process.

For buy-side transparency: Blockchain for auditing

Truth Agency, founded by U.K.-based The Marketing Group, is working to help alleviate the transparency issues in programmatic advertising, mainly by rapidly auditing advertising transactions. As been stated by CEO Mary Keane-Dawson:

“We believe that advertisers are not seeing the full picture, in some cases money flows backward through the supply chain to pay for fees not exposed to the advertisers.”

Given that the problem of transparency is systemic rather than technological, Kean-Dawson believes that taking the entirety of ad buying to the blockchain is an unnecessary and complex endeavor, and that is why Truth Agency is only looking to use blockchain to audit ad transactions.

The blockchain startup looked at the ways some of the existing auditing services worked and simplified their processes by splitting it into two key parts: data collection and media contract verification.

The media contract is a ‘dumb contract’ that features the suppliers allowed within a certain campaign:

“These suppliers, along with the agreed fees (%, fixed price or CPM), whitelists, blacklists, etc. are recorded, along with what we call threads that allow us to match data between suppliers are recorded in a contract file and then transferred to the blockchain. The data collection element currently takes data from the various DSP, SSPs and publishers for the campaigns that we run, [and] this data is stored [in] the blockchain.”

Once Truth has the contract and data stored on the blockchain, it then processes each transaction from each supplier based on the rules written in the contract and publishes an audited version onto the blockchain on an hourly basis The company flags any transactions that cannot be verified through the data it has, such that both the advertiser and the team involved would be notified about the discrepancies.

Global ad software giant Mediaocean partnered with IBM in June to use blockchain to bring transparency to the “entire lifecycle of an advertiser’s media dollar flow.” As the statement goes:

“From issuing of the purchase order to the execution of media and payment — [IBM’s] blockchain is used to record all media transactions in a secure, immutable, standardized and comprehensive manner.”

For sell-side transparency: Proof-of-view to fight fraud

Transparency issues on the sell-side relate to the fake traffic count, bot clicks and domain spoofing discussed earlier. Verasity — a blockchain-based, video-on-demand platform similar to Vevue — is working to improve publisher transparency with its proof-of-view (PoV) blockchain technology. PoV, which is currently pending patent, is built to securely verify and record content consumption within the Verasity ecosystem. PoV features publicly auditable logs that contain all the view counts as well as anonymized viewer information for media buyers to view, according to Verasity. The company claims that the information included in the logs are GDPR, PCI DSS and ePrivacy compliant.

Verasity outlined six steps in its white paper that PoV follows to prevent fake views.

  1. PoV only records views from signed-in users, since the viewer’s unique ID is part of the information required for a view to be considered valid.
  2. Since most people are only able to watch one video at a time, the PoV will invalidate views from a user who is streaming multiple videos simultaneously.
  3. The PoV technology confirms that a video is actually being streamed by capturing information about the current frame at random times. Verasity claims that this measure helps weed out bot-generated views.
  4. Verasity requires that its video player, VeraPlayer, is visible within the browser and not scrolled out of view or minimized for that view session to be captured by the PoV system.
  5. Verasity would demand users perform occasional manual confirmations (think reCAPTCHA) should they exhibit suspicious behaviors such as viewing a video on a loop.
  6. Being a blockchain technology, view information is publicly available and auditable on multiple servers.

Using smart contracts to document views and who gets paid

TV-TWO, a player in the digital TV space, is also using blockchain to improve the advertising industry. TV-TWO has created a Smart TV app — currently being tested on Samsung and LG smart TVs — that allows consumers to watch a free, personalized video stream that is curated by a supervised learning algorithm, enabling more organic content variety and relevance.

Through a campaign management tool, brands are able to book their desired advertising spots on TV-TWO using TV-TWO’s tokens. The startup employs a smart contract, which single-handedly manages all the payments within the TV-TWO ecosystem. The smart contract publishes all the transactions that takes place regarding any single ad video — from advertisers to viewers and TV-TWO — on the Ethereum blockchain without any input from the TV-TWO team.

TV-TWO seeks to alleviate the scalability concerns of Ethereum blockchain by deploying off-chain signature patterns and state channel technology.

TV-TWO’s supervised learning algorithm is able to serve consumers with highly relevant videos by picking up data on each consumer’s “preferences in traditional TV, in-stream behavior, surveys and other data,” co-founder Philipp Schulz said. To offer relevant ads only, the anonymized data is used for campaign targeting by advertisers. The promise of TV-TWO is to serve consumers with personalized content on TV and offer advertisers accurate, trustless information in their campaigns.

TV-TWO recently advertised 20th Century’s recent blockbuster “Deadpool 2” on its platform — as part of its partnership with 20th Century Fox of Germany. Markus Schneider, 20th Century Fox’s German CFO, said the company is delighted with the results of the campaign, stressing the advantage of having direct access to their target groups on TV and paying for actual viewers only. It’s noteworthy that Schneider joined TV-TWO’s advisory board after the “Deadpool 2” campaign.

The Problem with incentivizing people to watch ads online

Advertisers are likely to appreciate being able to potentially know the actual number of people who “saw” their ad, but it’s not certain that Verasity’s PoV and TV-TWO’s system will be 100 percent foolproof.

With Verasity, for instance, there’s no way PoV can confirm that a user — even if they meet all the criteria mentioned above — are actually watching a video, although this shouldn’t normally be a problem. After all, if a user visits YouTube to watch a video, they mostly do it for a reason, which means they’ll actually watch the video. It’s a different story with blockchain-based, video-on-demand platforms. The lure to use blockchain streaming services is to earn money by providing your data and watching advertisements.

It’s therefore possible that a user could view videos that contain ads for the sole purpose of earning some money. This means that it’s possible for a user to play a video in a way that meets all the above criteria but stay away from their streaming device to do something else while the video is playing — and still earn money. In this case, even with the publicly available and auditable information of views, advertisers might still be unable to get a genuine sense of the value they get from advertising with Verasity and any other platform with a similar model.

One could argue that the tokens available for earning might not be valuable enough to encourage people to try to trick the system in this way. While that could be true, it’s still a downside worth noting.

The takeaway from our conversation and research of blockchain in the media space is that blockchain can definitely play a part in moving the media space forward, especially in the advertising space. However, as innovative as blockchain is itself, it cannot, as a single technology, take away all the problems in the media space.

Regulators like the Securities and Exchange Commission shouldn’t be acting as gatekeepers to new technologies like bitcoin, according to Commissioner Hester Peirce.

Peirce’s remarks, made during an interview with CoinDesk, follow the agency’s decision to confirmthe 2017 rejection of a bitcoin-tied exchange-traded fund backed by Cameron and Tyler Winklevoss, which reinforced the argument made in a publicly-issued dissent published alongside last week’s announcement.

According to Peirce –  who was sworn into office this past January and previously served as a staffer in the U.S Senate – the decision actually does a disservice to investors who are operating in the market.

“From my perspective, we need to be mindful of what our role is, and it’s not to be the ones who decide which innovations and which technologies get through and which ones don’t,” Peirce told CoinDesk.

She added:

“I think that’s a very dangerous position to put ourselves in, and I think it really does harm investors because it denies them opportunity.”

Perhaps unintentionally, Peirce’s dissent made her a kind of hero in the eyes of the crypto community, netting comparisons to the effect comments made by Commodity Futures Trading Commission (CFTC) chief J. Christopher Giancarlo had on his own social media following earlier this year.

In the days following what were perceived as his positive remarks about the technology, Giancarlo was quickly dubbed “Crypto Dad,” a nickname that’s now been extended to Peirce, who some have sought to label the “Crypto Mom” of seemingly supportive U.S. regulators.

But according to Peirce, her statement on Friday wasn’t intended as a remark in support of bitcoin; rather it’s in defense of new technologies and the people who invest time and resources in developing them.

“I’m not taking a view whether bitcoin is going to succeed or fail. I’m excited by the fact that people are thinking of new ways to do things,” Peirce told CoinDesk. “Bitcoin is one of those things, blockchain is one of those things, other cryptocurrencies – but again I’m not weighing on any particular innovation or any particular asset.”

Requirements satisfied

According to Peirce, the Winklevoss proposal was worthy of approval.

In both interview and in her Friday statement, Peirce argued that Bats BZX Exchange, the exchange that filed the proposed rule change and pushed for a review following the rejection by agency staff in March 2017, had satisfied the requirements as dictated by the Securities Exchange Act.

She argued that it was wrong for the agency to focus on manipulation in the spot market for bitcoin and that the risks in question were taken into consideration when BZX made its pitch to the SEC.

“I think the exchange, in making a decision to list this particular product, had looked into whether it thought investors were interested in it, and if investors are interested in it, I don’t see why we should stop them from having access to it.”

Indeed, in her Friday statement, Peirce contended that “approval of this order would demonstrate our commitment to acting within the scope of our limited role in regulating the securities markets.”

“If someone is trying to raise money for a legitimate project, as long as the person explains what he’s trying to do and what he’s going to do with the money that reveals everything material that investors need to know – I don’t think we should stand in the way,” she later told CoinDesk.

Nothing to follow?

Support or not, Peirce’s remarks earned her a big boost in Twitter followers, which as of the time of writing stands at roughly 15,800. Data from analytics site SocialBlade shows that at the start of the month, her follower count was at 1,275, representing a 1,139 percent increase.

And while she clarified that she’s not an advocate for bitcoin or cryptocurrencies, she said she finds the work around the technology “really exciting.”

“It’s not that I’m supporting any one asset, it’s just that I’m supporting the ingenuity and the creativity and the curiosity that’s motivating people to invest their time and money in these new technologies,” she said. “I think that’s exciting. But again, I can’t weigh in on any particular asset, including bitcoin.”

But according to Peirce, the crypto-faithful who are following her shouldn’t expect too many fireworks.

She concluded:

“It’s that my guess is that most of those followers will find most of my tweets very boring. Most of them are about very dull regulatory things.”

In a small apartment in the Gold Coast neighborhood of Chicago, Evan Witmer was buzzing with energy. For months, he had been quietly cloud mining bitcoin in Iceland and reaping the rewards—little to the knowledge of his roommate, Tony Dykstra. For a while now, Witmer has been discreetly celebrating his success in cloud mining by purchasing a bottle of champagne for every $100 he makes, amounting to many, many bottles of champagne.

He couldn’t keep his newfound obsession to himself anymore, though. Finally, he decided to invite Dykstra into the cultish, “infectious” world of cryptocurrency and blockchain technology.

Nearly a year or so later, Witmer and Dykstra have created a beginner-friendly, Pokémon Go-style app called .HIVE that rewards users for frequenting local haunts with SmartCash—a community-driven, decentralized crypto token.

The app will be implemented on the Trinity Christian College campus in Illinois, where both Dykstra and Witmer attended. Users can now sign up to test a closed beta version of the app, which is set to launch in mid-August.

In high school, Witmer purchased a handful of bitcoin when it was valued at around a dollar, however, he used it to buy “something stupid” in order to see if it would actually work. “Everyone has stories like that, missing out at the beginning,” Dykstra comments mournfully on his friend’s loss, “because no one could see this coming.”

Early losses didn’t dissuade, though. Witmer grew enraptured by the technology and began to draw his friend down the rabbit hole with him. “[Witmer] just eats, breathes and sleeps this stuff,” Dykstra says. “We’ll be watching a movie at night and he’ll just pull out his laptop and look at crypto news, crypto prices, all this stuff. It’s like, dude take a break. He just can’t resist it.”

.HIVE’s chief aspect is its low barriers to entry, meaning that anyone— not just crypto-aficionados —can play the game and earn SmartCash. Witmer and Dykstra view this as a pivotal step in making blockchain and cryptocurrency mainstream by introducing it to young people who can learn about the technology through a game.

“Basically,” Dykstra says, “[it’s] a way of making cryptocurrency fun and accessible. Obviously, Pokémon Go is very popular, but it’s not like you sign up for this as ‘I’m a blockchain enthusiast.’ It’s a fun thing, and you can go to you favorite place and sit there like you normally do and you’re going to be earning money. So, why not be apart of that?”

.HIVE is the latest addition to a growing industry of crypto-centered games, joining the ranks of EtherBots, CryptoCelebrities, CryptoCountries and the ever-popular CryptoKitties. Dykstra describes .HIVE as a “fun, less cute, more functional” game compared to CryptoKitties.

Dykstra and Witmer, at just 22 and 21 years old, respectively, are two in a million of young entrepreneurs entering the startup industry with big dreams for blockchain’s involvement. They attribute the phenomenon to the risk-taking, safety nets and lack of adult responsibilities that 20-somethings can afford to get away with.

“If you look at the chatrooms, that’s who the people are who are most adamant about [crypto],” Witmer says. “They’re the ones who are always going onto news platforms and flashing the ‘Buy Bitcoin’ signs.”

Their age has not turned off investors and partners for .HIVE. On the contrary, they’ve partnered with Trinity Christian College, located in Palos Heights, Illinois, where both attended school, to test their app among their roughly 1,400 fellow students.

The campus will act as what is called a “” on the soon-to-launch closed beta version of the game where users can simply take out the app, register that they are in the and earn SmartCash just for being there. The hope is that students will then use that SmartCash at their campus café, or to exchange it for dollars from a crypto ATM, a project that Witmer is also hacking away at.

According to Omar Sweiss, assistant professor of business at Trinity and a mentor to the duo, .HIVE will add to the college experience. “We are a Christian college. Our mission is greater than just education,” says Sweiss. “It’s getting our students ready because the world needs them. Crypto has so much value to underserved communities… We’ve had many situations where students can’t access the funds on their [student] accounts,” and blockchain and cryptocurrency could change that.

Trinity has quickly become a breeding ground for cryptocurrency and blockchain entrepreneurs and developers, with Witmer and Dykstra leading the charge. According to Witmer, who also acts as president and founder of the college’s crypto club, over 30 students have signed on to beta test the app already.

“First and foremost, we at [Trinity] don’t like to stifle innovation, even if it means some ideas fail,” says Sweiss.

With an integrated approach to business and development, Trinity students have the opportunity to pitch business ideas, access Chicago-based tech incubator 1871 and work with real  companies in classes. Sweiss even says that he thinks it would be interesting for the college to accept cryptocurrencies for tuition at some point.

Dykstra and Witmer aren’t the only Trinity-produced entrepreneurs, either. Ryan Hesslau launched an app called Above the Waves in 2017, which focuses on providing counseling and therapeutic technology to high school and college students.

After piloting the system on the Trinity campus, Dykstra and Witmer have big plans for expansion, hoping to sign agreements with brick and mortar businesses wherein they could pay .HIVE to be a, encouraging more patrons to frequent their establishments by offering rewards, such as through .HIVE paying for a coffee or grocery item.

While they’re just focusing on making games right now, it is clear that they want to be involved in the blockchain revolution eventually, which, according to Dykstra, “could improve the crap out of all these systems.”

A major new report from the U.S. Treasury Department published July 31 has called for a more agile and conducive regulatory approach to innovations in the fintech sector.

The 222-page report, devoted to ‘Nonbank Financials, Fintech, and Innovation,’ only fleetingly touches upon cryptocurrencies and distributed ledger technologies (DLT) such as blockchain, noting that these are currently being “explored separately in an interagency effort led by a working group of the Financial Stability Oversight Council.”

Overall, the document indicates a strong impetus on the part of the U.S. government to foster nascent financial technologies and to modernize existing regulatory frameworks in order to remove impediments to their evolution.

The report advocates “more streamlined and tailored oversight,” proposing a set of recommendations that suggest a strong inclination to rationalize overly complex regulations that may stymie growth. These include harmonizing unwieldy state-by-state money transmission legislation, which is notably currently applied to U.S. crypto exchanges.

Noting that interest in crypto assets has “substantially increased” from financial authorities worldwide, the Treasury singles out the dedicated efforts on the part of the G20 to set out appropriate metrics for monitoring the emerging sector.

While it notes that these include managing the “inherent risks” that crypto assets “currently pose for investor protection and anti-money laundering and illicit finance regimes,” the report cites a G20 communique from March that affirms “that technological innovation, including that underlying crypto-assets [sic], has the potential to improve the efficiency and inclusiveness of the financial system.”

The Treasury further acknowledges a range of DLT applications that are being developed by the financial services industry –– although it notes that their benefits are still “highly uncertain –– including:

“Commodities trading and securities settlement […] trusted identity products and services […] [and] the potential for central bank-backed digital currencies, or a tokenized form of a fiat currency that utilizes DLT, [which some assert] could potentially help reduce fees, processing times, and operational risk for market participants.”

The Treasury further advocates the use of regulatory sandboxes and encourages efforts “to create labs, working groups, innovation offices, and other channels for industry participants to engage directly with regulators. A “symbiotic relationship” between regulators and innovators “is needed to support the U.S. economy and maintain global competitiveness.”

This latter notion chimes with concerns voiced recently by the president of the U.S. Commodity Futures Trading Commission (CFTC), who said that the U.S. is “falling behind” other countries in fostering innovation. The CFTC’s president noted in particular that the agency lacked the legally sound procedures that would enable it to directly participate in trials of blockchain proof-of-concepts (PoC), despite that fact that it has created a dedicated LabCFTC for promoting innovation in fintech.

The players’ union for the National Football League (NFL) is partnering with a blockchain startup to help athletes license products on a decentralized network.

Announced Tuesday, the National Football League Players Association (NFLPA) plans to encourage its members to provide commentary, livestreams and other content for the FanChain platform, thereby earning revenue for themselves outside the games they play.

To that end, the NFLPA has purchased a minority stake in blockchain startup SportsCastr, the company behind FanChain.

SportsCastr’s platform allows anybody to set up streams and provide commentary on games, NFLPA vice president of business and legal affairs Casey Schwab told CoinDesk. With the new partnership, some NFL players will be able to earn revenue by providing commentary during live sporting events and otherwise creating unique content for fans to enjoy.

“When you look at blockchain, and obviously currencies have been the most ubiquitous use of blockchain today, but when we look at tokenized assets or tokens or [non-fungible tokens], we look at the different ways we can try to create products that are going to be sustainable and long-lasting,” he said.

Schwab added:

“Because of the decentralized nature of the platform, anyone can get on it, players can get on it. NFL players are really interested in blockchain, in crypto … if a player calls me and asks ‘how do I get involved’ I’d suggest he go on SportsCastr and start generating tokens.”

To bring in revenue on the platform, athletes can either earn tokens from the system by creating content for the platform, or have fans pay them with tokens directly.

Players may even be able to launch subscription-only streams, according to Schwab.

The platform won’t be limited to just football players, either. Schwab said that representatives from other sports are in discussions with the platform too, although he could not provide a timeline for any potential program launches.

Similarly, athletes will free to discuss or commentate on games from sports outside their own, he continued.

“We’re not limiting it to any sports. It’s really about engaging all athletes,” he said.

The NFLPA first started considering working with a blockchain startup several months ago, as part of its OneTeam Collective – the union’s venture capital arm. Schwab explained that the wing allowed companies to offer equity rather than cash when licensing trademarks or player time.

“I’m a big believer in blockchain and I think it will revolutionize our industry, sports, like it may have revolutionized industries like food,” he said.

As a result, the NFLPA looked for a platform with a solid foundation, which brought it to SportsCastr.

Schwab concluded:

“They are building an entire universe. To use an analogy, they’re not just building the video game, they’re building the video game, the console, the outlets [and] the television. That’s a big endeavor.”