Spindl, a Web3 startup founded by Silicon Valley veteran Antonio Garcia Martinez, has launched what it considers the first true on-chain advertising network.
Like Web2’s off-chain ad networks, this connects advertisers, publishers and providers of so-called attribution services that track where customers come from. In this case, the ‘publishers’ are providers of crypto wallets that increasingly resemble social apps, with news feeds and ‘discover’ tabs.
To be clear: the provision of advertising content would take place outside the chain as usual. But the advertisers would transfer the money for a campaign to a smart contract, which would only release the money to the publisher once the attribution provider, by looking at on-chain data, verifies that an ad led to a sale. According to participants, carrying out advertising activities in this way provides benefits for all parties.
“It’s more transparent. It’s fair. It’s inherently on-chain. It’s, to put it bluntly, better for privacy,” said Garcia Martinez, CEO of Spindl, whose core service is attribution. “We don’t use weird, sketchy Web2 data,” like consumers’ browsing history or their personal information, to target campaigns — just on-chain transactions, which are already public.
“We don’t doxx anyone,” he said.
This article is part of CoinDesk’s Web3 Marketing Week series, presented by Cookie3.
What does it bring to advertisers?
Unlike the cost-per-mile model of web advertising, where advertisers pay a price based on the number of times consumers see ads regardless of whether they purchase anything, this network’s advertisers only pay for on-chain conversions, according to García Martinez. Such events could include a user minting an NFT, exchanging tokens through a decentralized exchange, or depositing cryptocurrency into a DeFi liquidity pool.
In turn, the wealth of public data on crypto wallet activities allows for more sophisticated prospecting.
“Many of our customers are looking for Web3-native ways to target new users,” said AJ Banon, general partner at Serotonin, a marketing agency that will buy ads on the network on behalf of crypto projects. He gave a hypothetical example of a project that wants to sell fashion-related NFTs for 0.05 ether (ETH) a pop.
“A traditional way to target someone might be to find out who follows Louis Vuitton on Twitter, and also follows a Web3 account,” Banon said. That’s crude compared to what you can do with on-chain data: search for users who minted an NFT in a certain period (say, the last 24 hours); reducing the results to those who paid something close to the project’s target price; of the remaining 50,000 users, this is further reduced to 12,000 who have fashion NFTs in their wallets.
“Now we have a truly targeted audience that we have a high degree of confidence will convert,” says Banon.
What’s in it for publishers
Referring to wallets as publishers may sound strange. But Garcia Martinez, who worked as Facebook’s first ad targeting manager in early 2010, sees these services quickly evolving into portals to Web3, as Yahoo did for Web1 in the late 1990s. Like Yahoo, they can make money from ads to supplement their transaction fee revenue.
The wallet industry has become “super competitive,” so providers are “super motivated to become more than a transaction app,” says Garcia Martinez. “I think you’re going to see a lot of social experiences and transactional wallets coming together.”
On this side of this market, the new network’s flagship participants are Collab.land and Daylight, which will sell advertising inventory on behalf of crypto wallet services, Garcia Martinez said. (He said he couldn’t identify the wallet providers themselves.)
Traditional publishers, such as crypto news sites, can also use the network, he said; Decrypt and RugRadio have conducted test campaigns.
Collab.land is best known for its integrations that allow users to log into crypto community’s token-gated websites, Discord servers, Telegram channels, and the like with their wallets; on its website it has more than 10 million wallet connections. Daylight is bringing an additional 5 million active wallet addresses to its partners, Garcia Martinez said.
What’s different, what’s next
Other ad networks claim to be proprietary to Web3, but “there’s nothing Web3 about it,” says Garcia Martinez. “They just have a few crypto issuers that they resell inventory for. Nothing really happens on-chain.”
Spindl has no plans to issue a token for the network, although Garcia Martinez has not ruled it out. For now, payment can be made in stablecoins such as USDC or other existing tokens.
The network is also not tied to one blockchain. The chain’s choice depends on where the advertiser wants to track events or payouts, Garcia Martinez said. Most customers use Ethereum Virtual Machine-compatible chains, or their own chains, he said.
Currently, Spindl is the network’s only attribution provider, which verifies that an ad impression led to a conversion and thus acts as the smart contract provider. oracle, for a reduction in income. Garcia Martinez said he wants to open the network to rivals in the coming months.
“It’s a real mindset shift for us to come from a world where we compete ruthlessly… and suddenly I have to put on my little protocol hat and say ‘welcome’ to a lot of these companies,” he said. “But that’s how it is.”