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Facebook privacy issues will spur adoption of Blockchain ad tech

by Avivah Litan  |  March 21, 2018  |  1 Comment

The latest Facebook debacle with Cambridge Analytica should serve as a big cold wake up call for every user of Facebook and major Internet service that uses personal data for advertising.

After all, advertising revenue represents the economic lifeline that fuels these businesses – they can’t live and grow without it.  Facebook and Google dominate the digital advertising market – and together earned about $113B in revenue from digital ads in 2017. The next top four competitors all together earned just under $11B in 2017 revenue.

Against a severe backdrop of privacy transgressions, it’s reassuring to see a door open to smarter better more decentralized digital advertising business models. In these models,  consumers actually own their own data and control where and how it’s used.  Consumers are the ones who should be paid for their information – not Google or Facebook or any other middleman.

Welcome to Blockchain-based advertising platforms!  We just published a research note on it “Market Insight: How to Capitalize on Disruptive Blockchain-Based Advertising Platforms That Enable GDPR Compliance”.  These new platforms are currently under development but are already partly implemented in the beta version of the Brave Attention Token Platform.   See Basic Attention Token. We expect many other companies to participate in this ecosystem, as some already have.

The new model theoretically works like this:

blockchainBATdiagram

 

Road Ahead

The road ahead is totally uphill – and a very steep climb at that – for these alternative blockchain based advertising models, as discussed in our research note.  Most advertisers and publishers will not be motivated to actively engage with this new business model until the privacy-enabling browser interfaces to them are used by a critical mass of consumers – at least 25-50 million of them to start.

Indicators of Change

Nonetheless, consider these positive indicators of change:

  1. Facebook’s most recent privacy debacle with Cambridge Analytica is permeating into the public’s consciousness as consumers face the stark fact that their data is FAR from being privately held.
  2. Many advertisers and publishers are justifiably angry with current digital business advertising models, claiming they don’t see their fair portion of returns going into their pockets.
  3. 11% of the online global population has already downloaded ad-blockers. (Earlier this year Google responded by blocking the most annoying ads from appearing in their Chrome browser —  but skeptics hailed it as a self-serving move that Google took to preserve their own ad revenues).
  4. Regulators in the U.S., U.K., and Canada are starting to question the seemingly monopolistic powers of Internet gatekeepers, such as Google and Facebook.  We can expect the most regulatory action from European countries, where GDPR data privacy laws becomes effective this May.

Public Distrust will Fuel Adoption of BlockChain based systems 

All of these indicators add up to a simmering public backlash and growing distrust in central power brokers – whether they are governments or mega Internet companies.  This points to more adoption of blockchain technology in the future.

After all, some say that blockchain’s fundamental value proposition arises from public distrust of governments in the case of crypto-currency, and of middlemen in the case of other non-crypto blockchain use cases.

Push Back

When I bring the new blockchain based ad platforms up with my colleagues, one of the main push-backs I get is around how valuable Google’s and Facebook’s free services are.  Yes that’s certainly true but the old adage ‘you get what you pay for’ also rings faithfully true.

Personally, I would prefer paying for these ‘valuable’ services. To me that’s a better option than being beholden to these services who assume that if they give me a free service, they have an intrinsic right to violate my privacy while they use, abuse and sell my personal data.  I also have no doubt that if the big Internet gatekeepers earn less ad revenue so that they can no longer profitably sustain their monopolistic grip  on the consumer Internet,  plenty of innovative companies will quickly fill any voids or gaps that result.

Bottom Line

Public distrust is mounting every day – and much of this phenomena appears to be for good reason.

Maybe, just maybe, we will see these new blockchain based digital advertising business models slowly take hold. Then the only person I theoretically have to trust is myself.

 

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Avivah Litan
VP Distinguished Analyst
19 years at Gartner
34 years IT industry

Avivah Litan is a Vice President and Distinguished Analyst in Gartner Research. Ms. Litan's areas of expertise include endpoint security, security analytics for cybersecurity and fraud, user and entity behavioral analytics, and insider threat detection. Read Full Bio


Thoughts on Facebook privacy issues will spur adoption of Blockchain ad tech


  1. Richard Parry says:

    Assuming this complex approach can get off the ground, would the data that is passed to advertisers, albeit for a fee and encrypted, ever end up in-the-clear so that it can be on-sold to aggregators again. As desirable as the intent, the methods looks awfully complicated. But perhaps well worth it. As for paying for services: it’s hard to see how that is not going to be part of an end game.



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