AdEx - A Decentralized Ad Exchange for Digital Advertising

AdEx is a decentralized ad exchange built on Ethereum blockchain and smart contracts. The AdEx platform is designed to disrupt and replace the traditional digital advertising models by providing a transparent, focused solution for advertisers to collaborate with ad publishers and reach the best potential clients.

The core feature of AdEx will be the so-called AdEx User Profile - a personalized page that allows every end user to understand and control the ads delivered to them. Giving more control to the user is highly beneficial for advertisers since users voluntarily provide more information about their preferences and consumer behavior, about their shopping habits and purchase preferences. This means that with the help of the user’s AdEx Profile advertisers achieve surgical precision for ad targeting and ensure a high Return On Ad Spending (ROAS).

The AdEx profile will be automatically generated for each user. Users will still be shown ads even if they do not tweak their profile and preferences.

The technology of AdEx leverages blockchain and smart contracts, thus eliminating the complexity and confusion of existing ad serving networks. The network is regulated by the users and the users only, taking care of the most common issue advertisers today are facing: lack of transparency and incorrect/unclear reporting of advertising campaign results.

Lack of consumer consent

Solution: The AdEx Profile

As we mentioned earlier in this paper, each and every user, to whom AdEx serves ads, will have their own profile where they can be as precise as they want outlining their interests and preferences. This profile will ensure that consumers only see ads that are relevant to them. For advertisers this means more precise targeting, less opportunities for mistakes when setting their campaigns, and higher conversion rates.

Privacy concerns and data misuse

Solution: Blockchain ensures anonymous use of big data

The blockchain technology, which AdEx utilizes, allows anonymizing large chunks of data so it is only used for statistical purposes. Put simply, with the help of blockchain, advertisers still get to receive and process data about their target audiences and consumers in the form of statistics only - without compromising the privacy of these consumers.

Problem #2: Privacy concerns and data misuse

Solution: A decentralized exchange that can be audited Due to the fact that AdEx is based on blockchain, advertisers can easily trace every click/view and verify every component of a campaign (participants, ad placements, impressions and clicks, etc.). The information is decentralized so it can’t be hogged or manipulated by the ad exchange so advertisers are only paying for actual results.

Problem #3: Lack of bidding transparency

Solution: A decentralized exchange that can be audited

Due to the fact that AdEx is based on blockchain, advertisers can easily trace every click/view and verify every component of a campaign (participants, ad placements, impressions and clicks, etc.). The information is decentralized so it can’t be hogged or manipulated by the ad exchange so advertisers are only paying for actual results.

Problem #4: Unclear and/or misleading reporting

Solution: Unified real-time reporting Blockchain provides a universal data set that every advertiser can understand and use to analyze campaign performance. Further to that, AdEx will allow real-time reporting (existing networks require at least few hours to aggregate the data and show it to the advertisers). This way, advertisers can quickly spot trends and adjust their campaigns for maximum conversions. With real-time reporting they can also easily test if a campaign is set and tracked properly.

Problem #5: Ad fraud

Solution: The AdEx anti-fraud mechanisms

AdEx will equip advertisers with technical mechanisms to trace and prevent fraud and invalid ad traffic. This technology in combination with the transparency, real-time reporting and audit accessibility of blockchain helps deliver a platform where advertisers know exactly how much and why they are paying for advertising inventory.

Problem #6: Ad blockers & ad blindness

Solution: Clever, meaningful ads that people want to see

AdEx will deliver unintrusive ads that are precisely targeted. Through this, the end users will be seeing ads that are facilitating their consumers habits rather than annoying them. The exchange will also offer advertisers to select for their ads visual design that resembles native content as much as possible .

Problem #7: Central regulation

Solution: User-powered governance

With AdEx, the consumer determines what’s right or wrong. The power of crowdsourcing has proven itself over the recent years, and the “consumer is always right” statement has never been more true.

Furthermore, we believe that giving users the power to essentially filter out bad advertisements will be beneficial for overall conversions, and therefore advertisers and publishers.

Problem #8: Payment methods limitations

Solution: Cryptocurrency

Blockchain and the use of cryptocurrencies allows literally anyone to take advantage of advertising possibilities to grow their business.

Problem #9: Lack of focus

Solution: Focus on one niche industry

The AdEx team comes from a background in VOD and video streaming - and this is why the network will initially work with publishers who are exclusively video entertainment providers. We know this market and we know how to best serve it so advertising there is beneficial for all the involved parties.

This does not exclude the possibility of AdEx opening up to other types of publishers in the future with AdEx V2 ( see Roadmap ), or developing multiple sub-divisions of AdEx, each catering to a specific niche.

Token

Within the AdEx ecosystem, the AdEx token (ADX) will be used internally to buy or sell advertising space and time. Advertisers would be able to create ads, and then place bids for them, setting the bid in ADX token. The advertisers may bid for a specific number of impressions, clicks or conversions (e.g. sign-ups, purchases, etc.). Once the Publisher accepts a bid, the token will be frozen until the Publisher proves that they have completed the goal. When that happens, the token is transferred to the Publisher’s balance. Certain actions within the network would be incentivized by the creation of additional tokens, which will be received by whomever committed that action. This will ensure slow, on-demand inflation of the token so that there’s enough in circulation for the network to be healthy and usable.

Full process walk-through

1. The publisher registers themselves, their website and the ad property in the publisher portal.
2. The advertiser registers themselves and the advertising campaign in the advertiser portal.
3. The advertiser places their bid for 1 executed conversion goal (for the sake of simplicity, only 1; in the actual platform, this value will be set to 10-1000 conversion goals).
4. The publisher accepts the bid.
5. The user goes to the website and triggers the SDK.
6. The SDK initializes, pulls data from the AdEx Core smart contracts, the publisher and the advertiser; it then finds out that the publisher accepted one bid, and the 1 conversion goal is not yet realized; it pulls data from IPFS to display the ad, and broadcasts it, meanwhile logging a "Load" and "Impression" to the hyperlog database.
7. The user clicks on the ad (logging "Click" on the hyperlog) and signs up for the advertised product, therefore triggering a confirmation from the advertiser side that the conversion goal is met.
8. Since the bid should now be executed, the publisher calls the AdEx Core to confirm with the aggregated data of executing the bid; the advertiser confirms this and the AdEx Core (ADXExchange in particular) unlocks the ADX reward and transfers it to the publisher.