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Combating Click Fraud & Reinforcing Trust and Transparency in Marketing Using Blockchain

digital marketing

Combating Click Fraud

The emergence of the Internet as a marketing channel and an advertising platform has enabled brands to promote their products and services online and to establish and maintain relationships with their clients. The Internet is also an efficient communication tool that allows firms to interact directly with consumers and keep them informed about their latest products, services and firm developments. Although the importance of having an online presence is undisputed, the reputation of the marketing and advertising industry has been plagued by a never-ending series of frauds,scandals, and deceptive campaigns.

As online sponsored search dominates the business model for a majority of search engines, click fraud considerably tarnishes the credibility of the online advertising landscape. This phenomenon is a result of the automated nature of online advertising and the increasing sophistication of target marketing. Click fraud is an intentional act in which a natural person or organization tries to obtain illegitimate interests or drain a competitor’s advertising budget using automated scripts, computer programs or employing natural persons to mimic legitimate web users to click on online advertising. Click fraud has been identified as a severe threat to online advertising, with additional costs for advertisers amounting to $44 billion by 2022.

Of prime importance is the economic incentive of fraud perpetrator and publishers who have been accused of committing click fraud to increase their revenues. Although some search engines try to compensate advertisers for click fraud, reports have shown that they have attempted to understate its magnitude. To combat click fraud, numerous solutions were suggested, such as selling a particular percentage of all impressions to advertisers or the application of pay-per-click advertising models. However, these preventive measures are not sufficient. The pervasiveness of click fraud is due to a lack of intermediaries who track online advertising and provide third party measurement approaches capable of increasing trust and reducing some of the concerns. That is to say, advertisers must engage with independent click fraud monitoring companies to resolve the ambiguity surrounding the divergence in the reported click fraud rates. Even though an external audit service might be beneficial, it can also be unaffordable for small and medium-sized companies. Besides, it is highly likely that search engines refuse to compensate an advertiser based on click fraud metrics generated by an independent audit firm, especially in cases reporting significant click fraud numbers. Also, the lack of transparency in search engine efforts to fight click fraud has created the impression that they have not done enough to track or prevent click fraud.

The advertisers are still unable to gain full, trusted knowledge and control over the state of their online ads. The consequences of click fraud for marketing and advertising are severe since it jeopardizes advertising’s effectiveness of targeting potential customers involved in content, service, or product-related information search. Search engine marketing tactics may diminish trust and the reputation of network media. The impact of click fraud manifests itself in increasing advertising costs. Moreover, unsuccessful advertising campaigns are caused by the reliance on unreliable, inadequate, and untrusted analytical data. The losses span from financial to brand reputational damage and can be significant in the case of peer-to-peer botnets, which use an overlay network for exchanging and controlling data, making their detection challenging. Therefore, brands need to embrace resilient defense mechanisms as the online environment is rife with high traffic botnets.

Blockchain technology can mitigate certain risks associated with the potentially devastating impact of click fraud by creating a more trustworthy digital marketing environment for consumers and brands alike. A blockchain-based platform can motivate stakeholders in the advertising industry to operate in an open and collaborative environment where each party acts with honesty and integrity. For example, information asymmetry (i.e., when one party has more or more accurate information than the other party) is one of the motivations for click fraud which can be addressed in a blockchain ecosystem. More precisely, supervision and control over the publishers can be reinforced by leveraging the comprehensive analysis of qualifications, credibility and historical information, and by creating a collaborative modus operandi. Much of this is owing to the immutable, transparent, and auditable nature of transactions that the technology enables. For instance, it is possible to ensure end-to-end transparency over online advertising-related activities such as the authentication of clicks.

The “adChain” platform serves as a transformative protocol within the advertising technology industry which allows ad space users to benefit from campaign auditing and near-real-time impression tracking. The platform draws on the strength of blockchains immutability to curb the attempts of pay-per-click providers to benefit from fraudulent ad clicks and traffic. Another novel advertising platform called “Ubex” harnesses blockchain technology along with other critical emerging technologies such as Artificial Intelligent and neural networks to achieve more precise media marketing data for advertisers, publishers and target consumers. In this model, blockchain assists in eliminating irrelevant ads and better managing data clicks, impressions, and revenues for each web site linked to the system, thus helping advertisers to optimize their budgets. Apart from promoting transparency, the prevention of click fraud allows advertisers to more effectively assess consumers’ habits online. As such, the traceability features provided by the technology guarantee genuine customer visits. Practically, this can be achieved by assigning customers to authenticated and verified profiles on the blockchain. This removes the possibility of using device emulation software to fake installs from the advertising model and will result in higher accuracy in targeting and personalization due to real-time ads traceability. This approach enables marketers to obtain reliable data, generate more enhanced analytics, and thus to craft compelling marketing campaigns. By way of illustration, Lucidity’s blockchain pilot with the Japanese car manufacturer Toyota resulted in a 21% increase in campaign performance. A blockchain-based platform marks the transition from the probabilistic measurement of clicks and impressions to a deterministic data model. Likewise, Pinmo integrates blockchain infrastructure into its overall media advertising strategy aimed at better ad campaign tracking and more precise analytics. These examples are illustrative of the blockchain’s potential to prevent click fraud and to promote enhanced trust and transparency in the marketing and advertising industry.

Reinforcing Trust and Transparency

Trust is vitally important in B2C e-commerce. Despite this strong assertion, consumer confidence and trust in brands have been severely eroded. According to the 2018 Edelman Trust Barometer, brands witnessed a significant decline in consumer trust in 2017. To a large extent, the level of trust is determined by the quality of the technological infrastructure. Today, the Internet enables transactions in the absence of face-to-face contact. For this reason, a brand’s success is contingent on the level of trust and transparency that it can generate. To empower trust and transparency in digital marketing, blockchain technology can allow brands and consumers to operate in a more secure and transparent ecosystem. Building on features such as the consistency of information, transparency, and immutability, blockchain technology helps to establish trust in the system itself (i.e., “trust by design”). The trust protocol of blockchain guarantees consumers (e.g., potential buyers) and the firm’s existing customers that brands and marketers are behaving with integrity and honesty.

In this context, blockchain-enabled trust is both an antecedent and an outcome of consumer-centric transparency, especially when consumers share their Personally identifiable information(PII). Blockchain can help to avoid malicious marketing of counterfeit products that infringe upon the intellectual property (IP) rights of the original manufacturer and violate copyright laws. This is owing to the ability of the technology to facilitate end-to-end product traceability and strict monitoring rules. Furthermore, blockchain-enabled transparency breeds trust because consumers
have greater visibility and verifiability over the compliance obligations of brand claims. This can include the verification of credence claims such as organic, halal, and other third party certifications, the firm’s business practices, and even their involvement in corporate social responsibility activities (e.g., fair trade, ethics, and sustainability measures). Ensuring this high level of transparency, marketers will be able to signal several positive traits, emphasizing their altruistic motive to look out for the best interest of consumers . The example of NYIAX (New York Interactive Advertising Exchange) demonstrates the role of blockchain technology to promote a transparent marketplace where a matching engine ensures a fair exchange of future premium advertising inventory as guaranteed contracts.

Implementation is the Key

The organizations have to identify the problems existing in their marketing strategy and implement sustainable blockchain based solutions which will increase their profitability and credibility in the market.

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