This article appeared in Cybersecurity Law & Strategy, an ALM publication for privacy and security professionals, Chief Information Security Officers, Chief Information Officers, Chief Technology Officers, Corporate Counsel, Internet and Tech Practitioners, In-House Counsel. Visit the website to learn more.

There is a lot of excitement — and a lot of hype — around blockchain, the emerging technology that helped launch Bitcoin and that is now being touted as a potential solution to a myriad of business challenges across a wide spectrum of industries. While inflated expectations abound, the advertising industry is emerging as one of the more immediate, substantive and compelling use cases for blockchain technology. Use cases for the advertising industry may not seem as disruptive or obvious to those who are unfamiliar with the digital media market, but to advertising industry professionals, blockchain has even more transformative potential than it does in industries such as remittances, capital markets, food supply chain and government services. Unlike other industries, the real impact of blockchain on the advertising industry is likely to occur “behind the scenes” in ways that may very well go undetected by most consumers. In many respects, this can be taken as a sign that the use cases are more practical and real.

For those still struggling to understand what blockchain is, all you really need to know is that blockchain is a new type of database that brings together four key characteristics in a way that no other database has done before:

  1. Public-Private Key Cryptography enables enhanced data privacy/security.
  2. Distributed Networks increase network security and trust among parties.
  3. Data Immutability (via hashing) prevents tampering with records.
  4. Disintermediation allows us to “cut out the middleman” in data transfer.

By combining these four characteristics, blockchain enables new efficiencies in situations where multiple independent entities rely on, update and use the same dataset. These efficiencies may be realized in applications for currency, payments and capital markets — but all of these are highly regulated areas, where creating scalable new solutions will require overcoming many legal hurdles. In contrast, the advertising industry is far less regulated, making it a prime target for blockchain innovation.

Digital Ad Data Management

There are three main use cases for blockchain in the advertising industry. The first is driving efficiencies in digital ad data management. While digital and mobile media have created immense opportunities for advertisers, this has come at the price of significantly increased complexity in tracking relevant data as a digital advertisement moves from an advertiser to a digital service provider (DSP) to an ad exchange/network; and then to a software service provider, a publisher, and finally to an online viewer. The current digital ad supply chain involves multiple independent entities with diverging incentives and varied legal relationships, and provides different levels of transparency into a fragmented and siloed set of information. Binary relationships govern most of the information exchange and product flow, with most parties having insight into only the steps immediately before and after their role in the chain. Transitioning to a blockchain-based system enables all parties involved to view the entire digital supply chain — all in real-time, and with a remarkably enhanced degree of trustworthiness and data integrity.