How blockchain could help to automate advertising contracts?
We live in a world of massive automatization. It is not a question whether to automatize but how? In this article I will focus on how the blockchain technology could automate advertising contracts between media publishers, media planning agencies, media trading desks and advertisers.
Problem: manual governance of contracts
What are the problems of existing advertising contracts?
- Manual reconciliation of contracts. There is a huge flow of contracts, orders, invoices among media publishers, advertisers and media buying agencies. Not everything in this flow is completely digitalized, for example, some media publishers still manually govern the contracts (check payments, assign penalties or credit lines to advertisers), manually reconcile volume rebates with media buying agencies and individual advertisers.
- Manual governance to manage suspicions. There are at least two sources for suspicion — rebates and performance. Advertisers don’t always know and/or get benefits from rebates which media buying agencies receive from media publishers. And there is a suspicion regarding how and whether media publishers fulfill advertisement contracts, e.g. whether there are real clicks or how much people have viewed advertisement? To check and manage suspicious advertisers conducts their own audits or relays on third parties.
Solution: smart contract governance
How the technology could automate advertising contracts in a more efficient way?
- Algorithms (or smart contracts) for governance of contracts. Media publishers, media agencies, advertisers could established privately distributed ledgers (blockchain). It would serve as an immutable database both for connecting their own business IT systems and for storing algorithms (or smart contracts) that govern contract settlements. Smart contracts could be used (1) to automate invoicing and schedule payments, or (2) to automate governance of contracts like stopping advertising if advertisers exceed credit line or they haven’t paid previous bills on time or (3) to automate reconciliation of rebates — to calculate and distribute rebates automatically among all advertisers and media agencies.
- Supervision by artificial intelligence (AI). Imagine that AI oversees any workflow in blockchain and notifies if there is a suspicion of “click fraud” or boosted performance statistics from media publishers, etc. And only these cases would have been investigated by employees.
I see the future where standard contracts are settled by technology. It may be a software as a service for media industry. A software would analyse and settle contracts or warn about suspicious cases. If you are eager to assess costs and benefits from using this solution, I am ready for an up to 45 min Skype talk or meeting you in person. You are welcome to contact me to email@example.com.