Despite seeing substantial growth in popularity, topping Google search trends amid the recent halving, the coronavirus pandemic and mainstream coverage, the cryptocurrency industry has somewhat been left out of the advertising world by online ad networks, social media platforms and even national governments.
In 2018, Facebook banned cryptocurrency advertising amid the initial coin offering hype. Later that year in March, Google followed, banning all advertisements of cryptocurrencies, especially ICOs, and binary options. In the same month, Twitter also banned all cryptocurrency advertising, except for a few public companies.
Several social networks in China also applied bans to crypto advertising, following the introduction of restrictions by the Chinese government. These bans, of course, were not random attacks on crypto but rather a blanket measure to prevent scams and illegal fundraisers from acquiring users through these platforms.
In fact, it is possible to advertise on Facebook, for example, if the user files a formal request with Facebook. This measure is used to force potential scammers to go to Facebook rather than the opposite. Milo McCloud, the creative director at Paradox Group — a crypto-focused marketing agency — told Cointelegraph:
“With recent developments on both [Google ads and Facebook] platforms allowing for blockchain-related content to be advertised only after undergoing heavy scrutiny, it is the first step in the right direction to the mainstream acceptance of blockchain technology as an important industry that can tackle many problems we currently are facing.”
The aftermath of the crypto adpocalypse
The industry fought back against the many bans and restrictions on cryptocurrency-related advertising. In fact, several companies in Russia, China and South Korea have banded together to form the Eurasian Association Of Blockchain and subsequently filed a lawsuit against some of the social media companies behind the bans.
Although things have somewhat improved for cryptocurrency advertisers and publishers, there are still many restrictions. Tanya Petrusenko, the head of business development at Bitmedia — a crypto advertising network — told Cointelegraph:
“Today, things have changed, and now they allow some ads, but in order to launch a campaign, a crypto company should undergo a number of procedures, show multiple licenses, and there’s still no guarantee that even if everything is ok, Google or Facebook will approve the ad in the end. This limits marketing freedom for many businesses because even if someone runs a shop where crypto is used as means of payment, it will be difficult for them to advertise it using traditional digital channels.”
Innovating out of necessity
Given the bans on major advertising networks, the booming crypto industry has been forced to adapt. Several crypto-centric networks, along with many other marketing and PR agencies, have been created to fulfill the demand of advertisers in the space, as well as to improve the earnings of crypto-centric publishers, by making ads more targeted and relevant. Tiberiu Stingaciu, the CEO of Coinzilla — a crypto advertising network — told Cointelegraph:
“Being a niche sector, the crypto advertising industry primarily focuses on solidifying partnerships with major fin-tech publishers. This helps broaden the potential audience advertisers can reach. At the same time, a lot of work is being put into more technologically advanced advertising tools such as programmatic advertising, RTB, and overall optimization of the advertising campaigns.”
While advertising companies and even publishers have been able to circumvent these restrictions and even innovate within their own right, the issues within the advertising industry extend far beyond the world of cryptocurrencies and blockchain technology. Centralization of the industry by IT giants like Google and Facebook has led to a lack of any real threatening competition and no reason to strive for improvement. However, some blockchain projects have been trying to find ways to appeal to advertisers, publishers and the advertising audience to benefit greatly, creating an incentive for significant changes to be made.
The many challenges in the online ad industry
There are many fundamental issues in the advertising network like an overabundance of middlemen and third-party service providers that are required to navigate the space to a lack of transparency and even advertising fraud which is rampant in the industry. As Cointelegraph previously discussed, only around $0.35 for every dollar of advertising revenue makes it to the publishers, which, of course, leads to lower revenue for publishers and higher prices for advertisers.
Advertising fraud is also a major issue in the industry, as $44 billion will be lost to ad fraud by 2022, which creates major losses on all sides, including the end-user, and leads to even higher prices for advertisers. Transparency is also a major issue even when actual fraud is not involved. Advertisers may have little notion of how their money is being spent as Petrusenko explained:
“I believe that transparency is and has been the main issue. The lack of knowledge as to where advertiser’s money goes opens a large loophole for fraudulent traffic. Censorship is another huge issue now because traditional ad networks are restricting many ads especially when the subject relates to crypto. This prevents many online businesses from growth and drastically limits their reach.”
Along with these issues, consumers have also grown increasingly concerned with their privacy even when it comes to online advertising. The aforementioned tech giants glean an immense amount of data from and about their users and their preferences. While this does lead to more targeted advertisements, it’s usually not very welcomed by the consumers whose data is “sold” without their full knowledge or consent or even the possibility of monetizing said data. Stingaciu told Cointelegraph that adblockers have become an issue, as “users are oversaturated with ads from all directions, and more are turning to adblockers to escape the barrage of ads coming their way.”
Blockchain tech in the ad industry
Although crypto has been left out of the industry, blockchain technology has been making waves in the digital advertising space in the same ways it is doing so in many other industries: by eliminating unnecessary middlemen, streamlining direct relationships between the contributing parties, and providing monetization tools.
Companies aim to cut the middlemen by providing a self-service platform built on top of a blockchain network. Ivan Manchev, the communications manager at AdEx Network, explained how this system makes use of the Ethereum blockchain in a conversation with Cointelegraph: “On a self-serve platform, advertisers can start a display ad campaign in less than five minutes and send their ads to targeted publishers,” adding: “Both parties receive real-time reporting, and payments flow directly between them once impressions are verified.”
Another company in the space, the Brave web browser, has tried a different approach, positioning itself as a competitor to Chrome and other browsers. It has created a utility token known as Basic Attention Token, which serves as an incentive mechanism for users to share their data with advertisers. Brave browser enforces this by offering users more privacy by blocking online trackers.
While Brave is indeed an innovative solution and has been gaining traction, it certainly has its flaws. Recent reports of links being replaced with referrals have been made. And while these do not have a devastating effect on the end-users, this has forced the company to apologize and removed this function.
Other blockchain-backed ventures like All.me and Atayen have also been pushing this type of model forward. All.me, a digital network featuring a built-in wallet and exchange, aims to share 50% of all advertising revenue with its 600,000 users. The Smart Advertising Transaction Token, or SATT, was created by Atayen to reward influencers and other users who create customized advertising campaigns, as well as to receive payments directly, which targets a more niche corner of the ad industry with a similar model as Brave’s.
What the future holds for crypto and advertising
Will blockchain technology be able to change online advertising? While the outlook is extremely promising, these alternatives have a long way to go when it comes to competing with giants like Google or Facebook, which dominate the online advertising market, given their massive user base and reach.
Nevertheless, there are many signs that point to the growing use of blockchain technology in the advertising industry. For example, Brave browser has recently joined the instant global payments network PayID, and IBM has even partnered with big advertisers to create a blockchain-based solution to reduce inefficiency and fraud and improve the digital advertising industry. According to Manchev, blockchain technology’s immutability and direct payment capabilities can truly revolutionize the world of online advertising, telling Cointelegraph:
“The immutability of the data and the consensus on instructions and payment terms pre-delivery can help reduce the supply chain steps and decrease costs for advertisers and publishers. On the other hand, crypto payments can introduce new payment methods. […] This can increase publishers’ liquidity, eliminate the need of custody of funds by ad networks, and increase security for both parties.”
As blockchain technology continues to take over the advertising industry and as crypto itself continues to strive for a more regulated and transparent market, it is likely that cryptocurrency companies will be once more allowed back in the “advertising party” and be able to target a more mainstream audience, which may be imperative for mainstream adoption of Bitcoin (BTC) and crypto as a whole.