Data is the new oil – the number of internet users worldwide is currently over 5.3 billion. Each of these online profiles represents a valuable repository of information. However, amidst this abundance of data, the pressing question is: who ultimately reaps the rewards of this vast wealth of information?
The answer becomes apparent when examining the revenue reports from big tech firms. For instance, Meta’s Q4 2023 revenue reached a staggering $40 billion, with advertising contributing a significant $38.7 billion to this total. Similarly, Google’s advertising revenue in 2022 constituted a substantial 77% of the company’s overall revenue.
Meanwhile, the average internet user derives no monetary value from the data they share online, nor do they have control over how big tech monetizes it. On the brighter side, this status quo is poised to change with the emergence of Web3-based ad platforms like AdEx, which promise a decentralized programmatic advertising platform.
Users Are the Products in the Current Landscape
Before diving into the details of how Web3 will disrupt the advertising landscape, let’s first highlight some of the shortcomings in the centralized model.
Most internet users believe that they are the ones who derive value from social media or other types of interactions, but the truth is that the companies providing these services are the biggest beneficiaries. In simpler terms, users have become just another ‘product,’ and in some cases, they are more valuable than the primary digital services being offered.
The most concerning aspect, however, is that internet users who place their trust in these firms not only find themselves exposed to ads they never consented to but also to social manipulations.
Consider the case of Cambridge Analytica, for instance, which collected data from nearly 87 million Facebook profiles and subsequently utilized it to interfere in various elections, including Brexit and the 2016 U.S. elections.
While Meta’s CEO, Mark Zuckerberg, apologized for this event, not enough measures have been adopted to give social media users control over their data:
- In 2021, Amazon was fined €746 million by the Luxembourg National Commission for Data Protection (CNDP) following a complaint filed in 2018 by a French privacy rights group.
- In 2022, Google found itself at odds with 40 states in the U.S. and settled for $391.5 million for misleading consumers that it was not tracking their location.
- In 2023, Meta was fined €1.2 billion by the Irish Data Protection Commission (DPC) for violating EU’s General Data Protection Regulation (GDPR) laws.
These examples are just the tip of the iceberg, but nevertheless reveal just how much big tech is getting away with when it comes to data usage and protection.
The solution? While regulators, especially in Europe, have been very stringent and have enforced heavy penalties, it is evident that big tech still has enough money to evade these hurdles.
Some of these companies are also introducing optional subscription models; Meta recently launched ad-free options for Facebook and Instagram to remain compliant with EU data protection laws. But while effective to some extent, these alternative models do not address the challenge of redistributing rewards derived from user data.
This is where Web3, in particular decentralized ad platforms, comes into play.
Web3: Redistribution of Rewards
Web3, the third iteration of the internet, promises an entirely new paradigm where internet users have full control over their data. Unlike its predecessor (Web2), the Web3 ecosystem is decentralized, which means that no single entity has the autonomy of control.
Users not only have the ability to customize what types of ads appear on their screens but also the option to completely hide their data or offer it to third parties for monetization – this is what is meant by redistributing the rewards.
While still in the nascent stages of development, there are several Web3-based platforms that are already painting a picture of what decentralized programmatic ad platforms are poised to offer.
Decentralized Ad Platforms: The Future of Advertising
One of the noteworthy mentions in this realm is AdEx, which has been in existence since 2017. What particularly stands out about the AdEx decentralized ad platform is the use of a Zero-Knowledge targeting engine. By design, this type of technology eliminates the necessity to collect or store user data.
Furthermore, unlike Google and Facebook, AdEx’s Zero-Knowledge (ZK) platform enables direct connections between Web3 advertisers and users who have customized their ad preferences. This means that users will only see advertisements that align with their interests, rather than being spammed with unwanted ads, as is common in Web2.
For advertisers, launching a campaign on this decentralized ad platform is also more cost-efficient, with a fee of only 7%, compared to the 25-30% commission charged by other demand-side platforms (DSPs). Moreover, if one chooses to use AdEx’s native token ADX, the fees are further discounted to just 4%.
Conclusion
The digital advertising market is projected to surge to $740.3 billion by the end of this year, yet, as usual, it’s anticipated that big tech will continue to dominate the lion’s share. While it may take some time for this dynamic to shift, that shouldn’t be the case in the next decade.
With Web3 in the picture, there is a tangible opportunity for the ‘small guy’ to leverage their digital property – particularly data. The paradigm shift towards decentralized ad platforms such as AdEx holds this promise of democratizing access to advertising platforms and redistributing rewards more equitably among users.
