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Enough About Blockchain Can’t Scale for Digital Advertising

lucidity logoEverybody in the Advertising Technology community has heard at least one person say some version of: “Blockchain can’t scale for Digital Advertising.”

It’s a great excuse to say “no” to a Blockchain-based solution. A recent tweet went as far as to suggest that in order to scale for programmatic, Blockchain would have to run at 16 million transactions per second.

I want to take a second to dissect that notion so that the community understands what assumptions are being made when making such blanket statements.

First, in what instance would Blockchain need to scale at the precise speed of Digital Advertising? The only reason would be if a company is actually running the RTB auction on the Blockchain. In other words, every ad request from a publisher that goes to multiple SSPs, which then route to a universe of DSPs, would have to run “on-chain”.

But is that really the use case for Blockchain in Digital Advertising? Does anyone really want to create a new set of competing networks that run everything on an admittedly slow and expensive technology?

What 16 Million Transactions Actually Look Like

Second, let’s say programmatic does transact at the rate of 16 million per second. Would Blockchain need to hit that same number? Are there really 16 million ads being displayed via programmatic auctions every single second? Doing some quick math on the back of a napkin, here’s what that would look like:

  • 16,000,000 transactions every second
  • 960,000,000 transactions every minute
  • 57,600,000,000 transactions every hour
  • 1,382,400,000,000 transactions every day

If you divide that final 1.3 trillion per day number by the number of US households, you get approximately 4,227. This means that I and every American including my newborn goddaughter and my non-online parents should be seeing 4,227 programmatic ads every single day. As many ads as I see, there is no way I am seeing even a fraction of that.

In reality, every ad that is displayed programmatically results in multiple bid requests by the time it reaches a DSP. Take a look at an ads.txt file (try this one: https://hubpages.com/ads.txt) and you’ll see that multiple SSPs are involved in each potential placement. Those SSPs often recirculate those bids. And so a single placement can result in tens if not even close to a hundred bid requests.

So Digital Advertising isn’t nearly as big and fast as some like to boast at the end of the day.

Technology Evolves. So Does Blockchain

Furthermore, why do people in a highly technical industry assume that Blockchain technology hasn’t evolved?

Most of those who doubt Blockchain have literally been a part of driving the rapid technological changes that have shaped the past 20+ years. They probably remember setting their computer to download a 50 megabit video clip and hoping that the modem connection didn’t drop overnight. I remember using the Silicon Graphics computers at my school to download the first viral South Park video. It took me a week of trying to do it.

Now, we’re streaming 4K movies. And in places with a better Internet connection than even the US, downloading a movie is almost instant.

Similarly, Blockchain has evolved. There has also been rapid development in the technologies behind Blockchain. There are new frameworks and platforms that allow developers to achieve incredible scale while still delivering on the promise of trust by design and absolute transparency.

Fulfilling the Blockchain Promise

Those of us using Blockchain technology have done ourselves a disservice over the past couple of years. We are as much to blame as anyone.

Companies have over-promised and under-delivered. We’ve seen scam artists make a quick buck via an ICO without the faintest idea of how to deliver. There have been a number of projects developed by outsiders who simply failed to understand the complexities in technology, business incentives, and advertisers and publisher needs to architect a solution that addresses market needs.

And, there has been no shortage of marketing gimmicks that purport to be “Blockchain influenced” or tout silly results by duplicating originally centralized data on a distributed ledger. While some of those disingenuous companies are still around, most have fallen by the wayside.  I don’t hear much about them these days.

So, if you’ve been sitting on the sidelines because somebody told you that blockchains can’t scale, it’s time to take another look. Blockchain is no longer just a concept without a use case.

There are real companies doing real work. The IAB TechLab blockchain working group is bringing together companies from across the industry to create new measurement standards – specifically, how a shared ledger can help with industry initiatives like supply chain objects, seller.json, and ads.cert. Other companies are working on publisher identity and registry. Others are focused on identity and consent management. Others are solving supply chain reconciliation.

We’re beyond the point of naive companies making bold statements about running auctions on the chain to cut out value-adding intermediaries like DSPs and SSPs.

The children have left for the playground. Now the adults are in the room.

Read more: Can AI Save Digital Advertising?

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