Intermediaries, such as media agencies, take a large portion of the advertising money between buyers and publishers. Now, a new tech company called Joorschain wants to solve the problem. With blockchain technology, they intend to change the entire digital marketing industry.
The American merchant and businessman John Wanamaker supposedly once said that “half the money I spend on advertising is wasted; the trouble is I don’t know which half”.
In the advertising industry, it has long been known that a large portion of the advertising money, often over 50 percent, disappears on the way between advertisers and publishers. The reason is the many intermediaries that exist on the market.
“From the moment an advertiser wants to spend money on displaying their content through a publisher, there are many steps in between. There are various digital exchanges, media agencies, you name it, so a lot of money is lost on the way. The many intermediaries also cause a fraud problem. Oftentimes, there is a party in the chain that has something to hide and indicates false numbers to get paid more”, says Carl Aspenberg, CEO of Joorschain.
Solves the problem with blockchain technology
The company Joorschain launched in November 2017 with the goal of making digital marketing more effective.
Now, with the help of blockchain technology, they want to let advertisers and publishers meet on a completely transparent, decentralized and secure platform, where intermediaries do not get as much space.
“Sure, media company X could run a central node where everyone can log in and see how everything goes. The problem is that media company X can suddenly change their minds and turn off transparency. They can also get new, shady owners who could manipulate the data in the central database that they control. However, this can never be done in a blockchain solution”, says Carl Aspenberg.
How do the intermediaries disappear?
“Normally, these intermediaries work in isolated systems, so they do not show how much they buy for and how much they sell for. Therefore, one does not really know what value they contribute with. But if you instead put the data into a transparent database on a blockchain, everyone in the entire value chain will see if a particular intermediary does not add that much value, and then you can just as well skip it”, says Carl Aspenberg.
Carl Aspenberg, CEO of Joorschain. Image source: Press photo
Adding existing customers
In total, around 15 people work either part time or full time with Joorschain. The company is based in Zug, Switzerland, a city that has become famous for the many tech- and crypto companies that have established there, but the company also has offices in Stockholm and Gothenburg.
Behind Joorschain there are four already established advertising companies, some of them from Sweden, who already have existing customers. It is also these customers who will be transferred over to the new blockchain platform.
“Many other tech companies generally do not have any existing business, they want to get in and compete with traditional business with their blockchain ideas. I do not think investors fall for that because they know how expensive, difficult and complicated it is to get customers. From day one, we will already have a number of users and customers with us, who we only lift over to our platform. That’s what I would say is at least 90 percent of our unique selling point”, says Carl Aspenberg.