$BAT In-Depth Analytical Project Review Pt. 1
In this article series, we’re going to go ahead and take an in-depth look at one of my favorite projects out there in this cryptospace — one that is beloved to a lot of individuals at this current point and rumored to be added to Coinbase relatively soon.
A project called $BAT.
So, to say that the dev team has at least some experience in this space, would be an understatment.
So, let’s start from the basics and work our way up in this review so that we can get a full understanding of what this token entails.
(Disclaimer: This is part 1 of a multi-part review, so stay-tuned for future updates!)
What is the Basic Attention Token?
We’re going to look at what this token is, in a nutshell in this section.
Now, as stated above in the introduction, this is an ERC20 token — which means that it was created from a smart contract on the Ethereum blockchain.
What is it Used For?
The purpose of the Basic Attention Token ($BAT) is to be used in conjunction with the Brave Browser (don’t worry, we’ll get into all of the cool features of the Brave Browser very soon).
Basically, $BAT has their own web browser (i.e., like Chrome, Internet Explorer, Firefox, etc.) that users can download and use to surf the web. Now, on a basic level, the advantage of this browser is that it removes all ads from the internet.
Yup, you read that right. It removes all advertisements from the internet. So, the browser by itself is pretty damn useful and cool. Now, again, we’ll get into more about what this browser does, but for now, just keep that in mind.
Where Do the Tokens Come In?
The tokens are used to address a major issue in online advertising, and that’s targeting the right demographic in order to drive traffic toward their brand, idea, website etc.
Obviously, in a world where the CPC (cost-per-click) model reigns supreme, many advertisers have been defrauded out of millions of dollars from websites that have ‘gamed the system’ by either:
A) Driving in fake traffic to click on advertisements in order to raise their CPC count and thus, increase their ‘payout’ by brands.
B) Placing the advertisements on their website in such a way where users that inadvertently click on some portion of the web page will end up triggering a pop-up advertisement. This, too, allows site owners to ‘finesse’ or exploit advertisers.
Now, there’s a catch-22 in this situation because, most regular internet users don’t really like advertisements. This doesn’t need to be explained if you’re an internet user, you probably already have an intuitive sense of why.
You don’t like being interrupted with a pop-up about some product that you may or may not like or being forced to watch some sort of advertisement for 5 to 30 seconds about a product that you’re not even interested in before you can proceed to the content that you actually want to view.
Now, here’s the purported advantage of the $BAT token:
Once users sign up for a wallet through the Brave browser (process seems relatively simple), they will receive 25 free $BAT to start off with (that must be used for tipping creators on the platform).
From there, users can decide to receive $BAT tokens as a ‘reward’ for viewing advertisements. According to the $BAT team, these tokens can then be converted down to fiat currency for the user. So, the idea is fairly simple, but very useful for users.
What this system equates to is this:
If you aren’t using the Brave browser currently, you’re more than likely viewing advertisements on the pages that you visit (except for this one, because we’re ad-free currently). So, if you switch over to $BAT browser and decide that you’re fine with continuing your former browsing experience (i.e., with advertisements), then you would essentially be paid for your browsing time.
When considering that some individuals are internet junkies, this could be a pretty solid incentive for them to use the $BAT token.
Basic Attention Token Whitepaper
Now, it’s rare that we jump into the whitepaper so soon into a review, but it’s almost mandatory for a project like $BAT for a few reasons:
- There are a lot of unanswered questions that you (should/probably) have based on what was written above since it was only a brief summary of how the project works.
- There are several more questions that we’re going to see if we can answer via the information provided in the whitepaper.
- And we’re also going to explore the tokenomics for this project as well.
So, let’s dive in.
For those that are unable to find it, the Basic Attention Token whitepaper is posted below for your edification (it’s a pdf document):
The Abstract is fairly straightforward, so we’ll skip over that. More or less, the abstract reiterates the premise of the project and the reason behind $BAT’s creation as any good abstract should do.
So let’s start with its ‘value proposition’.
Value Proposition of $BAT
This is the first section of the actual whitepaper after the table of contents (use the table of contents to find all of the subsequent sections that we’re going to cover here in this whitepaper).
The three facets of the token’s purpose that the whitepaper mentions above are; to serve users, to serve publishers (i.e., creators), and to serve advertisers.
So, for the remainder of this paper, we will be weighing the proposals within to see if those three goals have been sufficiently met.
Analyzing the ‘Introduction’ of the $BAT Whitepaper
As stated in the introduction of the whitepaper, ‘attention’ is essentially what advertisers are looking for when they pay to submit their advertisements in various locations.
Without attention, the ads are useless, even if individuals do end up clicking on them. So, the project’s philosophy on how advertising works is accurate. The $BAT browser also mentions that there is a need for publishers to make money as well.
In the whitepaper they state,
“In theory, excellence would be rewarded. The best journalism and entertainment would receive the attention and funding it deserved.”
And then it goes on to state at the end of that subsection that the whitepaper will,
“Outline a new solution that creates a transparent and efficient Blockchain-based marketplace for publishers, advertisers, and users, accurately valuing and rewarding the key driver of Internet content: durable user attention”
Evaluating the Potential Benefit of $BAT for Advertisers
Now, when it comes to the bit about advertisement, the Basic Attention Token team is correct — advertisers do appear to be fed up with the decreasing effectiveness of advertisements online and elsewhere.
This is corroborated by a recent research report posted by Nielson, a “global measurement and data analytics company”.
Nielson also curated the figure you’ll see directly below that shows how much weight each facet of advertising has in generating revenue for advertisers:
It’s worth noting that, in the figure above, an advertiser’s ‘reach’ and ‘targeting’ abilities constitute approximately 30% of the advertisement’s effectiveness.
These are two areas that the Basic Attention Token asserts that they will assist advertisers in enhancing through their Brave browser and ecosystem design.
It’s also worth mentioning that a major crux of the value offering for advertisers to use the Brave Attention Token is that it will assist them in targeting specific audiences.
This is something that the Nielson study notes that advertisers do not pay enough attention to.
In fact, in the study, it states that:
“ Despite increased conversations about precision targeting and repeated proof that consumers react better to more personalized advertising, less than half of fast-moving consumer goods (FMCG) brands today are doing a good job of reaching category or brand buyers. When a campaign isn’t delivered to a buyer target, the creative has to work even harder to drive sales.”
Nielson also provides the following graphics to show how consistently advertisers poorly target their intended demographic/audience:
Another facet of the $BAT token that makes it a boon for advertisers, according to the whitepaper, is that it can assist advertisers in reaching a larger audience and ‘reach’ is another major factor that was outlined in the Nielson research report as being a crucial factor in enhancing an advertiser/advertising campaign’s success.
In the study, they also state,
“ It may seem obvious, but reaching a large number of consumers with advertising is critical to the success of a campaign: only consumers exposed to an ad can be influenced. This also study examined 863 recent cross-media campaigns across all verticals and measured the volume of impressions for each of them, as well as the reach achieved with those impressions.”
It is also no secret that advertisers have very deep pockets, so the Basic Attention Token team is appealing to an industry that can essentially fuel the entire $BAT ecosystem if enough of them sign ‘on board’.
Recent research shows that in 2017, money spent on digital advertising actually exceeded money spent on televised advertising for the first time.
Thus, the demographic that $BAT is attempting to reach is expansive, to say the least, and it appears that this industry is poised to continue posting gains in the coming years.
$BAT Token’s Value Offering for Publishers
Now, this is the portion of the value offering where $BAT may have a bit of trouble convincing content creators that there is a substantial inherent benefit for them financially.
This is because, while the $BAT team implies in the first section of their introduction that, “The best journalism and entertainment would receive the attention and funding it deserved” via the Brave browser and $BAT ecosystem, there is nothing in their proposed set-up or current implementation that indicates that this goal would be any closer to coming to fruition than it is now.
The $BAT team is accurate in stating that,
“Publishers have lost billions in revenue while fraud has skyrocketed.”
Charitable donations from one’s viewers is already a concept that is in implementation (albeit not in the form that $BAT is proposing), and these alleged inequalities between a publisher’s quality of content and what they actually receive still exist.
So, it is hard to imagine that $BAT’s ecosystem would be able to definitively close the gap permanently.
Analyzing the Rest of the Introduction
According to $BAT, the state of advertising at present provides “an inefficient and troubled market” ($BAT Whitepaper; Section 2.1).
In this section, the team cogently argues that attention is essentially what advertisers are paying for.
In the reviewers’ opinion, the attention is not necessarily the end that the advertiser is looking for, but rather a means to an end (i.e., the end of actually converting a lead into a sale), but the point still stands the same. ‘Attention’ is the intermediary requisite for any and all advertisers that are looking to profit from the money they spend on their advertisements.
The next section laments on the woeful inefficiencies of the ‘attention’ (advertising) marketplace in the current state of things ($BAT whitepaper ; Section 2.2):
This section also addresses the inefficiencies that are imposed upon publishers in the midst of this ecosystem as well.
In the reviewers’ opinion, these statements are well-supported and they do depict inefficiencies that are currently plaguing this portion of the ecosystem. However, there is some question as to whether $BAT will effectively serve as the ultimate solution to this portion of the ecosystem, it does appear as though the token may help alleviate some of these inefficiencies significantly.
Social Cost of Breached Privacy
This aspect of the $BAT ecosystem discussed in the whitepaper confers one of the greatest benefits for users that are considering transitioning to the Brave browser.
In the paper, it states:
The information presented above is indisputable and the $BAT whitepaper does a good job in presenting figures directly below this segment to corroborate the assertions about dwindling privacy:
Excerpt from the whitepaper Figure 2: “Typical Tracking on Large Content Sites”
Fraud Perpetuated Through Botnets and Botfarms Online
This is yet again another segment of the whitepaper that outlines a major problem in the digital advertising sphere that is currently draining substantial revenue from the space and reducing the effectiveness of advertisers’ efforts.
Thus, this too enhances the value offering of the $BAT token if they are able to sufficiently mitigate this issue via their ecosystem.
Recently, Juniper Research published a study (2018) that corroborated the assertion made in the $BAT whitepaper that a substantial and unmitigated amount of revenue in the digital advertising sphere is lost to fraud annually. They also revealed in this study that this number appears to be increasing year over year at an accelerated rate as the space continues to grow.
The publication, Digiday effectively summarized the results of this research in a recent article published this year, titled, ‘The fight against ad fraud in 4 charts’.
In the article, they note that,
“Juniper Research estimates that advertisers will lose $51 million (£36.5 million) per day on ad fraud in 2018, totaling $19 billion (£13.6 billion) over the year. Publishers like News UK and the Financial Times have cracked down on fraud after investigations into their ad tech stacks revealed they were losing revenue to the tune of millions a month. Meanwhile, marketers like Procter & Gamble, Unilever and the Royal Bank of Scotland have been paying more attention to how their budgets are spent, bringing more marketing in-house.”
This is the end of part 1. We don’t want to inundate you with too much information!
The purpose of this portion of the $BAT review was to cover the most basic fundamentals behind this project and assess its potential future direction.