While nearly all digital advertising is now bought and sold using automated systems, the process is far from frictionless. Large numbers of intermediaries and, at times, outright fraud, have challenged the programmatic advertising market.
Even so, by 2019, more than 80 percent of all digital display advertising in the U.S. will be programmatic, according to a study by eMarketer. That’s a $45 billion market that, for all its automation, still requires a wide variety of players to work together including advertisers, publishers and agencies, but also a wide range of intermediaries ranging from demand side platforms and supply side platforms, data management platforms, trading desks and independent verification providers.
That’s why digital advertising giant Mindshare entered a partnership with blockchain platform developer Zilliqa last year. Earlier this month, Zilliqa announced Project Proton, a digital advertising blockchain initiative that will bring together representatives from across the programmatic advertising ecosystem to test its platform as a solution to the sector’s challenges. Along with Mindshare, participants include Rubicon Project, one of the world’s largest advertising exchanges, Mediamath, Integral Ad Science and Underscore CLT.
ThirtyK spoke with Zilliqa CEO Xinshu Dong about bringing programmatic advertisers to its platform, the solutions to scaling and what it will take to create a sustainable digital advertising model involving blockchain technology. Before coming to Zilliqa, Xinshu Dong was a technical lead for several government cybersecurity projects and led the research for Anquan’s blockchain.
ThirtyK: How did Zilliqa become interested in the digital advertising sector?
Xinshu Dong: We are a platform builder. We want to empower people to use decentralized apps. If you look at the advertising space, there are many problems that can potentially be solved with the power of the blockchain. Even big companies have to [address] cheating, and people are taking huge cuts without contributing substantially to that ecosystem. There are so many players, and it’s not easy for one or two players to cut costs. You have to get everybody on board, and for all these reasons, people don’t necessarily trust each other. Blockchains and Dapps can help everyone come together.
It’s not just about money, it’s also about being fully compliant or keeping a competitive edge against competitors.
It’s quite straightforward, but the high volume of advertising and the millions of transactions can’t be sustained by today’s public blockchains. We want to use advertising as a use case for the potential of the Zilliqa platform. It will demonstrate the scalability of the platform.
ThirtyK: How does Zilliqa address scaling issues?
Xinshu Dong: We use several components in our technology to significantly improve the efficiency. One is sharding, or dividing the blockchain into different groups that can process connections securely in parallel. We also have a much improved version of the consensus protocol and new ways of communicating different messages. All these technological pieces put together can make blockchains run much faster.
Pushing Blockchain Adoption
ThirtyK: How did you get so many industry players to agree to work together on Project Proton?
Xinshu Dong: It’s an interesting example of how we can push blockchain adoption forward. The first push comes from the technology players like us, but industry sectors have to push as well. Mindshare is very progressive, and they are very influential, so it was easy for them to bring other people on board. They speak the same language and do business together.
Trials will happen very soon to test the blockchain infrastructure. As a second step, we may run more extensive experiments with additional infrastructure and bring in additional partners.
ThirtyK: What are the objectives of Project Proton?
Xinshu Dong: The first objective is to test the technology to make sure we can find a way to leverage it to address advertising in a more transparent and efficient manner. The second objective is to develop a viable economic model so that everyone will have sustained interest and incentives to stick with this model. It’s quite different from how they do business today, and we need to make sure they’re incentivized to stay.
ThirtyK: What do those economic incentives look like?
Xinshu Dong: If you look at all these players from the brand to the publisher, everyone gets a cut. There’s no incentive for one party to reduce their margins. But the whole space is already being questioned. You have to do something.
On the more positive side, all the players want to [emphasize] efficiency and transparency. The margins may become smaller, but the volumes will be larger.
ThirtyK: What have you learned so far?
Xinshu Dong: That [for advertisers], it’s not just about money, it’s also about being fully compliant or keeping a competitive edge against their competitors. Blockchain power is a de facto competitive edge by itself, but on the other hand, there’s already a model where you want to share enough information to make the business run, but you don’t want to share anything else. [Advertising companies] will have to be open enough to decentralize their business, while keeping some of the information so they retain that edge.