Understanding the Brave Revolution: Why Its BAT Business Model Makes Sense

With the rise of increasingly intrusive ads the popularity of tools known as advertising blockers started to take off. In 2012 ad blockers exceeded 50M users. By 2016, when Brave was announced, ad blockers counted over 200M active users which was almost 5% of the entire internet population at the time. Their rapid adoption, however, created a lot of tension that descended into warfare among advertisers/publishers and companies like Eyeo.

So when Brave was announced 4 years ago the internet was split in two. On one side there were publishers for whom ad blockers had become a pain point as they damaged their ability to pay their bills through advertising revenue. On the other side, consumers’ rejection of ads had created an opportunity for some companies to offer better user experience. The former accused the latter of running a good old-fashioned extortion racket, they also tried to make ad blocking illegal but never managed to win in court. Companies like Yahoo even went so far as to lock out ad block users. Others resorted to anti-blocking software. An arms race followed where each side tried to outmanoeuvre the other but as the ad-blocking trend kept gaining traction the financial future of publishers was being threatened.

It was in the midst of this confrontational and tense atmosphere that Brave was launched. No surprises then that the Newspaper Association of America (NAA) threatened a lawsuit few months after its launch. In a public release, NAA’s lawyers argued that Brave’s business model was trying to monetise content that wasn’t theirs and they would take them to court to defend their copyright and trademarks. Today, as Brave slowly comes to life, we know that this couldn’t be farther from the truth. Back then, Brendan Eich (founder of Brave) responded that Brave would be the solution to the ad blocking problem for publishers, not part of it.

How does Brave end the ad blocking war?

A common path for ad blockers has been that of reversing roles by whitelisting certain advertisers or rebranding as ad networks that offer a better advertising experience. The whitelist business model was developed, adopted by companies like Eyeo, who accepted payments from advertising middlemen such as Google and Facebook to display their ads while blocking the rest. To justify the whitelist model the notion of acceptable ads was introduced whereby ads from Google were classified as acceptable. Soon after Eyeo, and other companies like the Israeli startup Shine, also launched their own advertising network.

The problem with the whitelist business model and the better advertising experience model is that they are a rehash of the status quo only that instead of neglecting ad experience, it neglects incentives for better free content. Browsing experience is the sum of content quality and advertising experience. No advertising or acceptable ads alone cannot lead to a better browsing experience if the quality of free online content deteriorates. As long as each side remains entrenched in the ad-block war, users will always have to choose, at some point, between content quality or absence of ads. Their experience would be marked by a continuous switching on and off of their ad-block depending on what content they are trying to access. This oscillation is best illustrated in a Forbes survey where 42% of visitors who were asked to turn off their ad blockers did so. A browsing experience where users have to constantly switch on and off their ad-blockers to get access to quality content is proof that ad blockers who don’t reward publishers are suboptimal because to access content in quality sites you will have to turn them off, at least temporarily.

The solution, as with most things in life, lays in the middle. It is here that Brave’s model makes a huge difference. Instead of splitting ad revenue between itself and the users, Brave also rewards the publisher where each ad conversion happens and does this based on the quality/depth of the conversions that happen on their pages. By rewarding publishers (55% of the ad revenue), Brave also introduces an additional variable that makes it easier to identify and eliminate ad fraud. In fact, while counting only conversions incentivises fraud, comparing the distribution of conversions among different sites makes it easier to identify organic conversions from forced ones. This in turn disincentivizes abuse.

Unfortunately very few seem to appreciate Brave’s unique triangular approach. It ensures, to start with, user privacy and rewards for publishers proportionally to the quality of the content they produce as determined through independent and nonmanipulate metrics. These two ensure better ROI for advertisers by making it easier to discover quality content. This built in system of checks and balances makes of a Brave a finely tuned browsing machine that is superior to ad blockers because it ensures the same UX while also rewarding and encouraging quality free content.

Another thing worth noting is that Brave’s incentive design has nothing to do with the get-paid-to-watch-ads model it is often (mistakenly) compared to. In this sense there are several reasons why Brave’s model, where publishers and users are paid in BAT, does not fall in the get-paid-to-watch ads category. Here is a brief list:

1. Brave ads, should you decide to allow them, are seamless in that they do not require you to jump out of your normal browsing habits such as by logging in a platform whose sole purpose is to display ads. Brave defends you from spam and then gives you the choice to open up space for advertising while browsing. Brave enhances your browsing experience, it does not force you to browse ads.
2. The user does not decide when or where the ad is displayed, the user only decides whether they want to be reachable through ads or not. How and where the ad is displayed is decided by Brave using encrypted user data and their distribution AIs. Users who use Brave to earn rather than to browse the web can be easily identified by looking at the quality of conversions on each site. If a user, for example, clicks indiscriminately their impressions, clicks or views will probably be red flagged artificial and hence they will get rewarded less and less per conversion in the long terms disincentivising such behaviour. I’m sure Brave already has AIs in place to check for abnormal behaviour. On the contrary, pay to watch ad platforms didn’t work out because advertisers would pay for “conversion” regardless of where or when it happened and regardless of overall user behavioral profile. In fact most of the time these platforms required you to sign in a specific panel where ads and videos would be displayed.
3. In Brave you know that the advertiser has agreed to display their ads throughout the web on your own terms. As a consumer I’m much more likely to buy from a company that has agreed to respect my digital space than from someone that is shoving ads down my throat at every chance they get.
4. Users are incentivised to turn on ads, but not beyond the point of what’s acceptable for them. I have screened various posts on Twitter and Reddit and on average if you activate ads you stand to make a few bucks per month. This amount is more likely to be used as digital pocket money to tip other creators than to be withdrawn and used as income.

Summarising I believe that Brave will revolutionise the ad industry because it delivers a superior browsing experience that is leveraged to enable consensual advertising. This is used to identify and reward quality content that in turn increases the ROI for advertisers making it also a better performing advertising platform as it grows.