Lesson 1: Organizing Issues in the Advertising Industry

The Current State of Online Advertising

Today, the cost of online advertising using the Internet amounts to $300 billion annually worldwide.

This means that more than $30 million worth of online advertising transactions are conducted every hour.

However, only 50 companies account for the majority of the global online advertising market, and two of them (Google and Facebook) account for 80％ of the market.

These so-called Tech Giants are exploiting 96％ of the growth in online ad spending, while the revenue to advertisers via advertising continues to decline.

We, the consumers (viewers), who view the ads, are also being slowed down by the ads, causing pages to load slower and wasting battery power.

The following are some examples of the negative effects that online advertisements have on viewers

• Delay of about 5 seconds: slow down the loading speed of web pages
• As many as 124 trackers: More media sites and other sites trying to get data on visitors.
• Ads cost $23 per month to load: Extra payments due to unintentional downloads of ads and trackers
• A threefold increase in the risk of privacy being compromised: the number of viruses such as malware and ransomware in 2017

To combat these issues, adblocking tools have been installed on over 600 million devices worldwide.

Let's sort out the current situation of stakeholders

There are three major stakeholder groups in online advertising: "advertisers," "ad publishers," and "ad viewers.

In the current online advertising market, there are a number of negative effects on each of these stakeholders.

Advertisers

Advertisers, who are the starting point of the advertising industry, should have been able to achieve transparency and quality through online advertising.

Online advertising was supposed to provide transparency and improve quality, as the Internet allowed for tracking and data collection to streamline the improvement process.

However, transparency and quality improvement have become a lost cause as so many intermediaries exist before the advertiser's ad is placed on the web media and reaches the viewer.

Such an existence is simply a source of complexity and opacity.

Publishers

Web media and other ad publishers play an important role in connecting advertisers and viewers.

However, the presence of many intermediaries between the three parties has caused delays in loading speed due to data transfer.

This has also reduced the opportunities for viewers to view content other than advertisements, which has led to a drop in the viewer's evaluation of the site.

The presence of intermediaries has also caused a decrease in the revenue paid directly from advertisers to the publishers.

In addition, the loss of revenue from ad-blocking tools is becoming too large to ignore.

Viewers

In the modern age of the Internet, viewers of advertisements are becoming aware of the various ways in which their privacy is being exploited via advertisements.

Online advertising schemes have been developed to increase transparency and attract the attention of more relevant viewers.

The data collected from viewers was originally intended to be used only to deliver quality ads and to make them more personal.

In reality, however, the collected data is being sold to outside parties, or ads that are of little interest to you are being delivered, and there is no benefit to the visitor.

As a result, viewers have come to have a bad image of advertisers.

Viewers' interests are becoming more expensive

In the age of Internet-based information overload, people can only pay attention to a limited amount of information.

It can be said that there is no future for the advertising industry unless we rethink the process of placing advertisements with the viewer at the center.

This is where a new online advertising mechanism utilizing blockchain is expected to emerge.

In the next lesson, we will learn about the next generation of blockchain-based advertising, especially web browsers.