“An ad network, a surveillance capitalism lobby, an ad fraud consultant, and an ICO factory walks into a bar…”


adToken is the hook in a pitch that we call “Adnetwork 2.0”. It’s the first of a kind, but not in an exciting or positive sense. Actually, it just marks the beginning of an era where ad networks (at least for a while) will be interesting and seem valuable again.


Remember that time, +20 years ago, when a bunch of well dressed not-so technical guys from various backgrounds came to the online advertising scene with a promise that they would make it better. Those companies came to be known as ad networks, and they are, some argue, the root of the most pressing issues in online advertising (and the internet). The ad network model turned out to be the most popular “get rich scheme” hitting the internet in its first +20 years. Thousands of companies flocked to it in search of a quick buck. Actually, it is kind of a scam and Business Insider wrote about the ad network model as a Ponzi scheme already in 2008[0]. Ponzi schemes and other similar scams require two things in order to be sustained and keep making money for the people behind them:

  1. New fools must keep coming in
  2. The biggest old fools can’t pull out

When either one of these stops happening, the house of cards goes down. That’s exactly what’s happening with the +20-year-old ad network scheme. It is only a matter of time when the great majority of the current 10,000 or so ad networks will not have enough new fools coming in, while the old fools abandoning. Simply put, the ad network era is coming to an end.

Instead of trying to milk a dying cow, the most eager operators are already eyeing the next scheme. This makes sense; why not leave when you’re still “winning” in the sense that you have not yet been called out as a con. If you have any doubt about ad network model being a form of a con, you have to talk with people who setup and ran ad networks over the past +20 years. Then you will find out. Don’t take my word for it. And yes, some are legitimate in the sense that even though they take 50% or more commission, they make a sincere effort to add value. Most take the commission, with no sincere effort for much else than taking the commission and doing the absolute minimum it takes to keep getting new money coming in.

On its website, adToken (adChain) says that CPM is at the root of online advertising problems. It’s not that simple. It would be far more accurate to say that Ad networks are at the root of online advertising problems. Actually, performance (conversion) and click networks are generally far more likely to be just fraud, as opposed to CPM based networks. This is well known even within the less savvy adtech crowd.


The main promise adToken is associated with, is to provide a “fraud free” advertising environment. This is promised through implying that the initial publishers have been verified fraud free and that there is a system in place, which in fact is the only tangible function of their blockchain, to ensure that only fraud free publishers can be added to their registry. Two points regarding this:

  1. Nobody has a way, nor will have a way anytime soon, to guarantee a given publisher is fraud free
  2. It took us minutes to come up with a multitude of way how highly fraudulent publishers can get into adChain

In the case of point 1, any respectable ad fraud researcher knows that it’s not possible to give a credible fraud free guarantee. In this regard, one of the most respected individuals covering the topic of ad fraud said:

“Cool tech, but won’t solve fraud”

In the case of point 2, it is actually hard to find justification for why adChain would not become a way for large scale fraud publishers to legitimize their operations. We sure could not find any, while we could easily find many scenarios where that is exactly what will happen. Further, it will allow now legitimate publishers to use “audience extension” and other techniques, while enjoying the “stamp of approval” of being part of adChain.

Just like the ad networks have done for the past 20 years, it seems that adToken is kind of a business model where anything the buyers want to hear, is said without taking much time to think if it makes even theoretical sense.This is not so surprising, given that adChain is actually just an ad network, setup by another ad network.


Let’s first look at the companies and brand names that are directly related with adToken. In fact, there are quite a few, which makes it much harder for anyone to start digging deeper into what adToken actually is and who is behind it.

  • VidRoll (the ad network behind it all)
  • adChain (seems to be more like project name)
  • MetaX (same people as VidRoll)
  • MetaXchain (seems to be the same as MetaX)
  • adToken (the cryptocurrency token associated with adChain)

It seems, that all of these are the same group of people, who are actually the VidRoll team and their advisors. Based on a brief background check (always perform background checks on companies and individuals that make claims about dealing with fraud), we immediately identify several causes for concern. Everyone should do their own research, so we will not share the details here except for two things. One is a case related to Vidroll LLC[1].

It’s a case where allegedly Vidroll had left a video traffic bill of $200,000 unpaid to Division-D, another Adtech company. The second “red flag” is that in a panel discussion hosted by MetaX, two key individuals involved in the adChain project readily admit having in the past “monetized fraudulent traffic”[2]. If you go to casino and count cards, you get a lifetime ban. If you do as simple of a violation as insider trading for a small amount of money on Wall Street, the feds will hunt you down and put you to prison for years. In adtech, it seems, you’ll use it as a credential to peddle your next money making scheme.

There are two more parties involved in the adToken project:

  • DMA (Data & Marketing Association, previously Direct Marketing Association)
  • ConsenSys

ConsenSys is what could be referred to as an “ICO Factory”. A company that as its sole business model exploits the Initial Coin Offering model, fuelled by the mindless hype around the cryptocurrency space. We will cover ICO model a separate section below. First, let’s take a look at DMA.


The three principal parties in online advertising are the publishers, the advertisers, and the internet user. All other parties are intermediaries. The fundamental problem in online advertising, beyond fraud or any other aspect, is its utter disconnect from the internet user. Unfortunately, adToken does not mention the internet user, or consideration to their rights, at all. On the contrary, the key role DMA has in controlling the adChain (at least initially), suggests the opposite. Whereas the first blockchain based advertising token, the Basic Attention Token is privacy-by-design, it seems that adToken is no-privacy-by-design. To understand this better, we have to understand two things clearly:

  • DMA (and its members) have an unfair advantage in the adChain registry (at least initially)
  • DMA is possibly the most significant proponent against online privacy

DMA is the organization that is possibly the most responsible for profiling of internet users becoming a standard practice, in comparison to any other single entity. It seems fair to say that DMA is to online advertising, what NSA to the intelligence community. Without surveillance of unwitting citizens, it would cease to function. Profiling of internet users is a practice that has been since its inception used by oppressive governments to make bloggers disappear, ISIS to recruit disgruntled westerners, swing the Brexit vote, and allegedly to win the US election. It will take decades to find another idea, that has created so much animosity against online advertising,  as the idea of profiling has. DMA was a key factor in the recent Senate ruling against protecting internet users from ISP and telco companies selling their data to anyone willing to pay for it. Thanks to this ruling, now it will be even easier for adversaries of the US to get access to in-depth profiling data and use it against the interest of its people. The DMA is led by a long time data profiling lobbyist, Linda Woolley.

According to What Stays in Vegas: The World of Personal Data – Lifeblood of Big Business – and the End of Privacy as We Know it, she gave a fiery speech highlighting DMA’s and her position regarding profiling[3]. Below is an excerpt from the book:

Then she potrayed a dark future in which the Federal Trade Commission and ‘privacy zealots” had gotten their wishes and persuaded Congress to bar the collection of personal consumer data without their permission. The nightmare-scenario law would bar Internet tracking and prohibit the use of public records to gain insights. “Consumers even have the right to say: ‘My marketing data is mine, and it’s private, and you can use it or sell it'” she said.


By now most have come across the psychotic cryptocurrency markets, and Ethereum powered ICOs (Initial Coin Offerings) where anyone able to create hype around their idea over a period of few months can cash in, in what comes down to a financial market without regulation. A typical ICO pitch may include “compelling” sales arguments such as the one below (from an actual ICO sales pitch):

There is stark resemblance with how ICOs are being marketed, with the most lucrative internet marketing scheme of all time, the so-called product launch formula. Though the ICO model is far more potent, as it’s basically selling “stocks” as opposed to a bunch of videos that allegedly tell you some latest marketing secret. Remember, we have regulation in the financial markets for a reason. Somebody that everyone in Adtech respects (and there are not many people like that) said it very well:

“the ICO space is like adtech on steroids”.

Let that sink in for a moment. Financial market, absent any kind of regulation or oversight. Let’s also not forget that as it stands, adtech is not exactly regulated either. So how about combining the two; taking the worst kind of adtech company i.e an ad network, and building an ICO around it. Seems legit.

The first such combo, where we have an ad network doing an ICO, was witnessed on 26th of June (adChain/adToken). According to the PR, it went really well. The thing to understand about ICOs though is that “well” means that the company behind it ends up making a lot of money in a very short period of time, without actually having to show anything substantial for the money. Mere hype is enough to get to this point.


An ad network, a surveillance capitalism lobby, an ad fraud consultant, and an ICO factory walks into a bar and they come up with an idea, which is not new in the online advertising space; let’s tell the buyers what they want to hear, package it with a lot of hyperbole and perceived complexity, so that gullible buyers are incapable of asking the right questions.

In this case, gullible buyers refer to ICO investors first, and advertisers second. Let’s first see what happened with the token after the ICO. Based on the press release[4]:

  • The cap for the sale was 10 million USD
  • The cap was reached in 23 seconds
  • A supply of 1,000,000,000 tokens was issued
  • From this 600,000,000 went into circulation

It seems, that this results in the initial offering token price to be $10,000,000 / 600,000,000

  • The initial offering price per token was $0.017

Using data from Bittrex Exchange[5] we know that:

  • The current 24 HIGH is $0.03

In other words, it’s almost doubled. This estimate is roughly consistent with the fact that today, the adToken market cap is $18,938,760 [6]. Due to the facts that there are no requirements for involved parties in terms of transparency/disclosure, and that the cryptocoin/ICO space is one big hot mess, we’re making this as an inference from available information.

What we can say for sure, is that there has been wild volatility in the bid/ask prices for adToken from 2nd of July onwards since the data became available:

  • July 2nd = $0.06
  • July 4th = $0.12 (+100%)
  • July 8th = $0.03 (- 75%)

After that, it had stayed more or less similar to the $0.03 mark established on 8th of July. What is this based on? Did the company release some key information regarding its ability to deliver on its promise? No. Did they make an acquisition of some sort? No. Did they announce key hires? No. Actually, nothing happened. All of this is pure speculation. The below graph from Bittrex, the exchange trading ADT (adToken) gives a picture of the kind of volatility we’re talking about. The plot starts on 3rd of July 2017 and ends on 24th of July 2017.

What is this volatility based on? Did the company release some key information regarding its ability to deliver on its promise? No. Did they make an acquisition of some sort? No. Did they announce key hires? No. Actually, nothing such happened. All of this is a result of pure speculation. The below graph from Bittrex, the exchange trading ADT (adToken) gives a picture of the kind of volatility we’re talking about. The plot starts on 3rd of July 2017 and ends on 24th of July 2017. We’re talking about volatility in powers, not %.


Going forward, we will see countless companies whose business model is actually not the pitch they make to advertisers and their media investment partners, but their business model is making money in the ICO/Cryptocoin market. Some of these companies will come outside of adtech, but most will come from the ad network space. They will team up with a company such as ConsenSys, who helps them with the blockchain and Cryptocoin part, they do a white paper that outlines some novel idea that allegedly solves some big problem, partner with Cryptocoin media outlets, setup slack channels and Reddit subreddits, have a medium blog, pays a PR firm, and does a bunch of other stuff to build hype around their ICO. They rely on the idea that online advertising, with its hundreds of billions of spend and a plethora of doom and gloom statements coming from big advertisers to tap in to, is at the same time appealing and impossible to understand for the ICO/Blockchain crowd. Then they take the result of all that hype i.e. their “ICO success”, and do the reverse; rely on the fact that advertisers and their partners do not understand the ICO/Blockchain space.

Immediately after the ICO, they pocket the money (Ethereum), and the speculation kicks in. The company holds a significant part of the tokens and simply watches how ICO sharks manipulate its token. Sometimes this will work, and sometimes it will not. What this means for advertisers, is that that there will be a completely new kind of scam to watch out for, one where the original intention is to make money from the crypto coin market, and not from the online advertising market. Another variation is where initially there is an intention to solve a problem for advertisers, but due to the way the ICO/crypto market operates, the operation instead is bogged down with managing various issues that come with token based models. For example, having just a few parties control most of your tokens. In the case of adToken, just 233 token holders [6] own adTokens. Yes, some of those token holders represent more than one entity, for example, if it’s an exchange, but also some individual entities represent more than one token holder (i.e. one entity has many addresses under which they hold the tokens). In contrast to adToken’s 233 holders, Basic Attention Token (BAT) is owned by 7,413 token holders (over 30 times more).

Even if the company in question was never able to deliver on its original promise, it would not matter much, as it would be hard or impossible to validate by the online advertising industry. An industry that has proven incredibly incompetent in doing just that, validate and make sense of vendor claims. Still today almost nobody seriously questions “fraud free guarantees” or other similar gimmicks, where the advertiser is led by the nose into a false sense of security while the industry burns in flames. Indeed, the “this is fine dog” have quickly become a favored mascot for the online industry among those that understand its problems better.

Instead of seeking actual solutions to problems, particularly below director level operators in both advertisers and agencies, individuals look for convenient ways to not have to talk about the actual problems. This is exactly the kind of psychology that will help the Ad Network 2.0 models thrive.


Whereas the original ad network model came to be more about arbitrage than anything else, the new model will not change or even promise to change in that respect. Instead, it will attempt to hide the corrupt underlying model by mixing it with hyperbole, in form of blockchain/cryptocurrency, combined with whatever might be the hottest topic in the minds of advertisers and agencies at the moment. Given that media investors have a poor understanding of issues such as fraud, and almost no understanding of blockchain, but have a strong emotional response to both, such a scheme creates a very potent mix for a new breed of online advertising snake oil peddlers. As we had highlighted in the above sections, this time there is a new element, financial speculators whose sole interest is to buy and sell tokens in order to maximize their own profits. In a sense, the ad network 2.0 model is going to be about arbitraging arbitrage more than anything else.

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