Non-Fungible Tokens (NFTs) are starting to get a lot of attention in the world of content and not surprisingly, it has cascaded into our digital advertising universe as a potential means to stem fraud and improve transactional verification across the supply chain. Since making their first appearance in 2017, NFTs have exploded in growth this year (since early spring) with non-fungible.com, a data aggregator for the market, reporting $2.1 Billion in trades this month alone.
NFTs are unique, non-replicable crypto tokens that represent unique digital assets existing within a blockchain. It allows anyone with access to the blockchain to verify the asset’s origin and to determine its authenticity.
Purchased either with cryptocurrency or dollars, the blockchain keeps a record of all transactions with the buyer having official ownership of the “asset”. Early adopters suggest that NFTs represent the future of ownership across all kinds of property categories including art, real estate, and everything in between. For many, all arrows point towards the tokenization of assets as a means of security and convenience. The solution is particularly interesting for artists and creators who would like to monetize their content through transactional royalties generated across a blockchain. From a digital media perspective, this could bring major opportunities to the publishers as they look to secure their premium content. IAB Canada has held working groups in the past to discuss fraud in the form of pirated content used in illegal advertising practice. This type of solution would certainly help signal alerts and potentially protect the publishers and artists involved from getting their content hijacked.
Given the tremendous amount of content being re-distributed from publishers by the major media platforms, there is great potential to scale this type of solution as an important means to compensate the content creators fairly and securely on a performance model basis. Ad-supported redistribution of content on some of these platforms is currently not “paid back” to the creators who may own the copyright to their work but give up control over their creation to the platforms. NFTs could provide an unprecedented means to measure earned media exposure from all content assets which in turn, could become extremely powerful data across the board.
Looking bit further into earned media credit, today’s meme culture is difficult to measure against original content. Non-fungible tokens could provide granular level reporting on how often a digital asset, or a portion of an asset has been duplicated for the purposes of memes.
What if NFTs were applied to every single media creative produced before hitting the supply chain? Applying the same logic as all other digital assets, the content owners and all their stakeholders meaning the advertisers and their agencies, would have complete ownership of the data transmitted through activity within the supply chain. This of course would depend on many stars aligning and the supply chain operating on a scaled global network. Which brings us to some limitations that may be just as fungible as these shiny tokens (for now).
Fraud – always follows the money…There have been some reports of knock-offs and hijacking. This would most often occur when an asset is re-created and sold by another entity as their own.
Cost/Space – the digital assets themselves are not stored on the blockchain making it difficult to secure the assets without an enormous amount of bandwidth to support it. The cost of operating on an NFT basis at scale may be cost prohibitive until the industry finds a solution to address this issue.
Environment – according to Math PhD and Crypto Footprint Expert, Memo Akten, “The average NFT has a footprint of around 340 kWh, 211 KgCO2. This single NFT’s footprint is equivalent to an EU resident’s total electric power consumption for more than a month, with emissions equivalent to driving for 1000Km, or flying for 2 hours.” For any brands that support corporate social responsibility and are actively engaged in environmental custodianship projects, this solution is currently…unsustainable.
Reflecting on the limitations of other technologies like mobile phones, it’s hard to imagine the clunky gadgets with monochrome interfaces could ever have existed. These are early days, and this is a solution that is at the very least, moving in a promising direction for our industry. NFT’s heart is in the right place, only time will tell how it will become a de facto solution for an industry that so desperately wants to believe in ledgers.
IAB Canada will be reporting on NFTs as they develop within our industry. Some IAB members around the world are experimenting with blockchain and we look forward to continued discussions on this within the Tech Lab and our working groups. If you are interested in participating in IAB Canada discussions regarding NFTs, please reach out to firstname.lastname@example.org