Web3: Future of the Internet and Digital Advertising or Off Chute Experiment?

Change is inevitable, especially in the ad tech space which is constantly developing new systems to improve itself. A new wave of experimental ideas is washing over the ad tech industry that many believe will ultimately have a great impact on the open web. 

The first era of the internet was created in the 90s. It was characterized by static, text, and graphics. The second era of the internet, our current phase, was dominated by social media. Web2 is characterized by its interactivity but is dominated by larger companies such as Google and Facebook which own a monopoly on the data surrounding content creation and advertising. 

Web3 is proposed to remedy the monopoly of these larger companies. It will give power back to consumers to own their own data and allow publishers to create stronger relationships with them. 

In addition, it is believed that Web3 will address many of today’s consumer privacy concerns, specifically those related to third-party tracking cookies. According to Tre Titone, Web3 could “fundamentally alter the ownership and governance paradigms established with Web 2.0.”

The driving force behind this movement is to leverage blockchain technology to create an inclusive web where people are part of the value exchange and have control over their data and privacy.

What Is Web3?

Luke Mulks, Vice President of Business Operations at Brave Software, asserts that the “driving force behind this movement is to leverage blockchain technology to create an inclusive web where people are part of the value exchange and have control over their data and privacy.” 

The term Web3 was first used in 2014 by Gavin Wood, a co-founder of the Ethereum blockchain. Most theorists classify Web3 into three main categories which include decentralization, ownership, and transparency. 

Decentralization shifts the storage of information from one central system to a multitude of systems. While in Web2 data is stored on one server belonging to one particular owner, Web3 ensures that there is no single authority on data collection and distribution. 

Ownership of data is enabled by decentralization. Recently, more people became aware that within Web2 their data was being collected and used for profit by tech companies. In Web3, users will have ownership of their data and decide how to dispose of it. Consumers will be able to sell their data and choose who to send it to and how it will be used. 

Blockchain technologies provide immediate transparency to all transactions. Consumers will see more clearly how publishers use their data and who they share it with. This will significantly shift the processes within the advertising ecosystem.

Web3 and Its Influence on the Advertising Ecosystem

Many laud the positive impacts that Web3 could have on the advertising industry if it is fully implemented. However, industry experts believe that more work must be done for agencies to connect with consumers. Since consumer data will no longer be stored by a small number of owners, digital marketing will match publishers and advertisers directly to people without any third-party involvement. 

Vitaly Gerko, CPO and Co-Founder at OTM, insists that “to stay relevant and successful in Web3, brands will have to build closer relationships with their consumers. In this new iteration of the internet, catching users’ attention will require more effort, but at the same time, Web3 will provide more opportunities to build tighter connections with the consumer.”

In addition, Web3 is projected to offer more accurate data. Publishers will have direct access to their actual consumers instead of the image of the consumer that is presented by a vendor. Essentially, Web3 marketing will focus on “building meaningful relationships with your customers and creating partnerships that benefit everyone involved.” Publishers will need to reframe their thinking of customers as numbers in a database and more as people.

Untrustworthy systems, such as third-party cookies will be obsolete. Brendan Eich, Co-Founder & CEO, Brave, highlights that “cookies were invented in order for web-based applications written in JavaScript to preserve state on each local device. The problem with cookies however is that they are created and controlled by service providers, not the user.”

Ad tech within Web 3 will not center around building massive databases and squeezing out huge margins from the advertising supply data chain. It will provide ad tech solutions that benefit the user, publishers, and advertisers. In addition, it could help save revenue that would otherwise go to third-party intermediaries.  

Web3 in Real-Time

Of course, Web3 is still in the early stages of development and it is hard to determine how or when it will begin to affect publishers and advertisers.

Although industry experts assert that it could be smart for the ad tech industry to begin experimenting with Web3. Brett Rakestraw, Director of Strategy for creative branding firm Elevation, insists that “It will affect brands on virtually every level, and the sooner brand stakeholders start experimenting and connecting with their audiences in these new ways, the better.” 

The most high-profile experimentation with Web3 in recent years has been NFTs or non-fungible tokens. NFTs allow publishers to deliver unique value to customers, from specific collectibles like magazine covers and tokens. About $13.8 billion was spent on NFTs in 2021. 

In addition, Mulks alludes to a Web3 dApp called Skiff that offers an end-to-end encrypted email service. 

“Skiff is a dApp that you can sign in with your wallet directly from the browser,” says Mulks. “Instead of going through an authentication process with an email and password that is susceptible to data breaches, you just use your wallet and sign in with your private key from your wallet. You can access your email based on your wallet ID.” 

Wallets could also be used by consumers to connect their identity to sites, and instead of logging in they would sign for transactions using their privacy key. This would reduce any worries of data leakage. Although wallets enable identity portability for consumers, they could still expose them to cyberattacks. 

For anybody to understand the future of advertising, they need to focus on the future of privacy, and the future of data ownership and control, not blockchain. And if you focus there, you will see a very clear future.

Criticisms of Web3

Mulks argues that the biggest challenge with Web3 is determining its usability. 

“I think that the biggest barrier to Web3 has been usability and bringing some value to the market,” says Mulks. “I believe it’s a short-term problem. With any nascent technology, the early adoption phase is always like, when you’re going to have the most extreme Wild West stuff happening such as people getting scammed.” 

John Roa, CEO at Caden, maintains the belief that the decentralized web has a usability issue. Furthermore, Roa argues that the conversation around Web3, or what he refers to as the Semantic Web, has lost its initial purpose. 

“The conversation around Web3 has over-indexed into NFTs and cryptocurrency,” says Roa. “There was a former definition before it sucked into the crypto vacuum. The definition for the last probably 10 to 15 years has been this evolution into the Semantic Web which was to create standardization and normalization of data on the web.” 

Instead, Roa advocates focusing specifically on privacy. 

“The bigger disrupter is privacy and regulation compared to ‘Web3’,” says Roa. “For anybody to understand the future of advertising, they need to focus on the future of privacy, and the future of data ownership and control, not blockchain. And if you focus there, you will see a very clear future.”