Can Blockchain Rebuild Marketer-Agency Trust?
The past decade has seen the marketer-agency relationship go from a partnership built on transparency and trust to one that’s fraught with suspicion. As agencies look to heal the divide, how can they bring trust back? Blockchain is the answer.
The Uphill Audit Battle
Since the early days of advertising, audits served as the primary mechanism to demonstrate transparency and contractual conformance between marketer and agency. Back in the day, these audits were simple affairs. Large media spends on print and television flowed to a small number of publishers and broadcasters. A handful of third-party measurement providers served as de facto currency for reconciliation.
Digital media has changed all that. With a proliferation of digital participants, fragmented processes, and complicated reconciliation, the once-straightforward task of tracing the flow of funds is now the expensive, time-consuming domain of specialized auditors.
The digital explosion, in other words, has fueled diminishing transparency—giving marketers the sinking feeling that a shrinking percentage of their spend now goes toward working media.
The agency, for its part, feels the same uneasiness on the programmatic front. As buys traverse through intermediaries, agencies feel that fees charged are not aligned to value provided. Publishers end up bearing the cost of reconciliation, dispute resolution and delayed payments.
In a digital world, media audits are harder—and trust suffers.
The Blockchain Solution
To restore trust in the media business, we should turn to the blockchain—through a blockchain-based media network.
Blockchain networks take existing multi-party transaction chains—in which oversight is hard—and let the network and the community provide oversight. Specifically, blockchain networks enable oversight in two primaries ways:
- Blockchain’s distributed, immutable and open ledger through which participants can see the complete history of transactions within the network. The open ledger keeps participants accountable.
- "Smart contracts"—code that executes to validate contractual terms and conditions— performance delivery discrepancies being within acceptable tolerances, for example. These allow multi-party transactions to flow at scale.
Both forms of oversight could work directly within a media buying framework, as I’ll explain below.
Media Transactions Fit Blockchain-Driven Network Models
Media contracts and media buying are the type of complex, multi-party network of transactions that blockchain technology was built to support. These contracts are multi-party in nature. Agencies execute audience buys from publishers using marketer-authorized media spend. Audience data and verification providers, ad tech platform participants, and inventory aggregators also play a role in those buys.
In a blockchain media network, every contractual transaction would be written to an immutable log shared by participants. Auditing would be as simple as tracing a specific transaction across the supply chain. Reconciling purchase orders against invoices and invoices against delivery would be enshrined in the permanent record of the blockchain. Simple dashboards could provide visibility into working media versus fees. And, permissioned blockchains with transaction encryption would limit visibility to authorized participants.
At the same time, smart contracts could ensure that every transaction adheres to agreed-upon terms and conditions. Delivery would be reconciled by smart contracts against cryptographically signed data from measurement providers. Payments could be automatically authorized based on agreed-upon payment terms.
Simply put, we’d be able to operate the hyper-complex media landscape of today—while still enjoying the level of oversight and trust that was easy to achieve with yesterday’s media. Plus, all the resources saved on the drudgework of reconciliation can be re-invested in actual media activity.
Creating a Media Blockchain Network
Here we visualize a simple end-to-end, media contract blockchain network:
To be sure, even a simple model such as this raises several challenges:
- The media industry operates on executing contracts. By contrast, blockchains—originally used for managing cryptocurrency exchange—operate on transactions. Creating a blockchain network for media buying requires a bit of re-working the model. We’d need to re-imagine media activity and records – such as purchase orders, campaigns, and invoices – as assets that are exchanged.
- Critical to this re-modeling is a clear, agreed-upon participant directory and standardization of terms (or master data). You can’t have transactions at scale without clear standards around what’s being bought and sold, and by whom (media transactions are typically not anonymous).
- The smart contracts and the consensus model for writing transactions into the blockchain need to be implemented.
- A means for media verification and measurement providers to sign and stamp delivery details into transactions needs to be created.
- Application programming interfaces (APIs) need to be developed for media and finance workflow applications to integrate with this network.
The good news is that with existing technologies all of this is achievable now. That technology includes such blockchain platforms as the open-source Hyperledger Fabric, which support enterprise-level, consortium-based models that enable both transparency and privacy.
Finally, while blockchain networks currently are too slow to manage many types of high-volume, impression-level transactions, media contract settlement volumes fit easily within blockchain network transaction capacity.
Transparency Builds Trust
Many marketers have reacted to agency trust issues with defensive moves—such as dialing down agency fees, or taking media activity in-house. That’s understandable; but in a less suspicious world, we could return to paying fair margins for value that’s clearly delivered.
We have the technological capability to make that less suspicious world now. A blockchain media network will make media auditing a straightforward task once again. It will create the framework for renewed trust—and for putting the marketer-agency relationship back on track.