LiC Pt.3: Can Web3 Save Advertising?
Lost in Crypto: Part 3 – Can Web3 Save Advertising
This is the third in a series of posts I’m writing to digest and reflect on what I learnt in the Blockchain and Cryptocurrency space where I spent a large chunk of my time professionally last year
I started my career in advertising, in June 2008; almost 12 months out of university and following on from a year of jobs and internships in e-commerce, publishing, and a soft drinks start up as well as intermittent stints on building sites to be able to afford the unpaid internships I finally felt. after a very listless year, that I was getting somewhere. That September, on the same night as Damien Hirst’s fire sale at Sotheby’s (appropriately named Beautiful Inside My Head Forever) became the highest grossing auction ever of new work offered by a living artist and exactly a year and a day after Northern Rock sounded the first clarion blast of the crisis, Lehman Brothers tanked. We’d climbed the lift hill and crested the trick drop, the real roller-coaster of the Financial Crisis was under way.
But this is not a post about my time in advertising during the Great Recession – nor my love of roller coasters. This isn’t really even about what happened around this same time, when Social Networking metastasised into Social Media, and brands, looking for greater efficiency in a downturn made a midnight deal with the adtech devil. The story of surveillance capitalism has been told by many better writers; The commentariat are well honed in ‘admiring the problem’. For well over a decade we have been tracked by tech firms who have been recycling the waste gasses of our digital exhaust and applying algorithmic pressure and heat to make digital diamonds. It’s a well worn cliche now, but we have become the product. We all know we’re being sold. But what about the buyers? The reality is, that whilst we’re being exploited, advertisers are being duped. The only ones really benefiting from this trade are the middlemen.
I joined advertising because I grew up watching the classics of late 20th century Ad-land. In the late 90s, works such as Tango’s St George, an epic absurdity of self-deprecating British bombast were frankly better than the TV that they were there to interrupt. Even the ads from a half generation before, such as Heineken’s ‘Water’ from 1985, the year before my birth, were infused in the popular consciousness. A decade or more after it aired, during my time working in market research, 1999’s Guinness ‘Surfer’ was still one of the most cited ads when I asked a focus group for their favourites. If I played any Brit the Flower Duet from Lakme, it would probably trigger a Proustian recollection of packed suitcases, suntan lotion and the smell of Jet-A.
Digital Performance Advertising changed all that. Though digital display ads had since the first banner ad in 1994, data from social media marked a new phase. Coupled with a climate of Austerity, only what could be measured mattered. Ad tech promised scientific efficiency by packaging up our behaviours and serving them up to advertisers so they could change our behaviours in each perfect micro moment.
The reality instead has been a dumpster fire that has neither delighted consumers or delivered for brands. In the process, core skills such as storytelling and creativity have been relegated by efficiency. But as Field and Binet have demonstrated time and again, efficiency is not necessarily effective. And the industry has suffered. Losing the smartest and most innovative thinkers, ironically, to places like Tech. It’s been a long time since I met a really inspirational big-idea Ad Strategist.
Talent in the industry is collateral damage compared to the great brand robbery carried out by adtech. Ex-Madison Avenue contrarian Bob Hoffman, who recently shut down his newsletter on the topic, has been a vocal critic of ad-fraud, highlighting the mounting evidence for the inaccurate, fraudy reality of the scalpel-like efficiency the big platforms have claimed. The ANA reported that ad fraud was costing US brands $120 billion in 2022. That’s more than 4x the 30ish billion spent on market research in the US. Big marketers are spending four times more trying to sell to the wrong people or people that don’t exist than they are on understanding the right people so they can swerve them better.
So advertisers are getting fleeced and we are getting flogged. What’s to be done?
As you might have guessed because this post sits in a series on Web3, I believe that this really is a case where “Web3 fixes this.” Blockchain offers the genuine possibility of redemption for advertising, impact for brands and fairness and transparency for users and consumers, specifically Self Sovereign Reputation and Self Sovereign Identities.
Put simply (by the internet’s very own talking parrot, chatGPT)
Self-sovereign identity refers to a system where individuals have full control over their own digital identities, rather than relying on centralised organisations to manage and verify them. This means that individuals can create, manage, and store their own digital identities, and share them with others as they see fit. It also means that individuals can retain control over their personal information and how it is used. This is different from traditional systems where organisations such as governments or corporations hold and control personal information. Self-sovereign identity is a way to empower individuals and give them more control and privacy over their own identity information.
Self-sovereign reputation builds upon the idea of self-sovereign identity by giving individuals control over their reputation information as well. Conventionally, information such as credit scores or more pertinently, browser and cookie data, social posts and interactions and online shopping and purchases are centrally held by big platforms or data brokers. Self-sovereign reputation lets users create, manage and control their own reputation information, and share it with who they want to, when they want to.
Allowing users and consumers to have absolute control over who knows what about them has huge implications for debiasing anything from loans to hiring processes. The two together offer total autonomy and agency for the individual both online and potentially in the physical world too depending on its implementation.
There are a number of interesting companies in this space already, such as Permission.io and the privacy-focused Brave browser includes a surf-to-earn 1st party advertising model that users can opt into. Protocols like Lens or the Farcaster ecosystem that are setting up infrastructure that is designed to allow users to maintain their reputational sovereignty and could form the foundation for better advertising for consumers.
This level of privacy and control, ironically, could also be the savior of digital ads and the advertising industry more broadly:
Being able to guarantee real human viewers could massively reduce the adtech fraud, plugging some of that 120 billion dollar hole. Trustless verification could push back on bots and spoofing and increase efficiency and effectiveness.
SSI and SSR could also be used to ‘opt in’ to more accurate targeted advertising, with the potential to even revenue share when combined with tokens and wallets between media owners and users. In theory you could be paid to watch ads that are either more informative, more useful or more entertaining for you personally. And if you didn’t like it or you changed your mind you could opt out, withdrawing your data and your consent without leaving a trace.
Lastly, there is also a potential boon for creativity. Less targeting means there would be a greater need for seduction and better upper funnel comms. AirBnB has already proved the power of brand; many others would be forced to follow suit.
This outcome is by no means inevitable and there is a big question over whether anyone cares enough to move away from our seamless, centralised, shitty solutions; but decentralised technology has created the opportunity to deliver a fairer, more equitable internet for consumers and brands. I say we take it.