IBM and Mediaocean launch blockchain pilot with big marketers aiming to cut 'ad-tech tax'
IBM iX is joining with Mediaocean to pilot a blockchain network for media deals involving Unilever, Kimberly-Clark Corp., Pfizer, Kellogg and its IBM's own Watson. The pilot aims to improve transparency, fight fraud and get make-goods done more quickly.
Set to be announced Tuesday at Cannes, the pilot significantly expands a project IBM launched with Unilever this winter by adding more marketers and Mediaocean, the back-office middle player for more than $140 billion in annual spending across multiple media.
The pilot could help turn a technology that's been subject of countless speculative conference presentations into an everyday industry reality by late next year, says Mediaocean CEO Bill Wise. He believes the summer pilot will lead to a broader industry beta test early next year.
"I think by the end of next year we will have a fully functioning scalable solution that will be adopted by the majority of the industry," he says.
The initial client group is a start, bringing with them numerous media agencies, publishers, demand-side platforms such as Mediamath and third-party measurement companies such as IAS and Oracle's Moat.
"I started looking at this as not necessarily a moneymaker for Mediaocean, but as something the industry needs," Wise says. Among other things, blockchain will help reduce what the Association of National Advertisers estimates as 60 cents of every digital media dollar going to that it calls the "ad-tech tax," a complex web of middle players in every transaction, Wise says.
Blockchain time stamps transactions in a ledger visible to all participants but encrypted to prevent cheating or fraud. The aim is to provide better, faster visibility into who's getting paid for what.
"The greater confidence everyone has in the accuracy of all the transactional data, the easier it is to look at the data holistically and then diagnose what is providing value," says Josh Herman, global integrated marketing leader in IT at Kimberly-Clark. "That allows you to then test and control and say, 'If I spend less over here, what's the effect not just on the cost but on the return?'"
K-C wants to take a lead in blockchain akin to what it did in programmatic digital buying, where it was among the first to develop a proprietary trading operation, working with WPP's Mindshare.
"Once you identify where the money is going, who the players are and what each of them are doing, I think you'll see some redundancies in the supply chain that will allow some of that production money now going to the middle players to come back and hit the publishers," says Babs Rangaiah partner-global marketing at IBM iX, and a Unilever alum, who spearheaded the pilot.
Ultimately, blockchain could at least erect new barriers to digital ad fraud by preventing payments from going to the wrong parties. And for legitimate players, it can help automate the process of identifying and implementing make-goods in days rather than weeks, so that media plans aren't disrupted, particularly for seasonal products, Rangaiah says.
While the blockchain focus has primarily been on digital media, it also can be applied to payments across many media, Herman says.
The initial players in the pilot consortium were selected to avoid competitive overlaps, in part because Unilever had veto power as the participant in the first round of testing, Rangaiah says.
"We were doing design-thinking workshops, and having competitive brands in the room would make it less open and transparent," he says. But longer term, there's no reason competitors can't join in a common blockchain system, Rangaiah says.