Blockchain in Advertising: The Winning Architecture of XCHNG

This past week, I had the opportunity to present at the MMA SM2 Innovation Summit during AdWeek This was the first public summary of XCHNG, the related architecture, the unofficial introduction of the OnXCHNG program and an open Q/A session from participants. Matthew Hrushka from Rosetta Stone joined me for the discussion as a panel participant to facilitate a lively session.

For those that are new to the discussion, XCHNG is the open blockchain framework for digital advertising that Kochava has built over the past few years. Unlike other projects that are attempting to apply blockchain to particular facets of digital ads, our approach is holistic in nature and is focused on managing the workflow process of insertion orders between buyers and sellers all the way through fulfillment, measurement, and payment. Suffice to say, it was an exciting presentation. It was also notable that many of those in attendance were also customers of Kochava — relying on our platform to measure their existing advertising efforts. It seems only natural in this discussion to show how this next-generation open system is both innovative and new to the industry, but also a continuation of what we’ve already been doing to serve these leading brands.

We were joined by marketing and advertising leadership at Coca-Cola, American Express, Intuit, Ally Financial, The Weather Company, GSK, Marriott, Allstate, Campbell Soup and many others. Leading agencies and premium publishers were also in attendance.

There were 3 key takeaways from the presentation:

1. There is a confluence of forces which are driving authentic demand for a new way to connect the paper-based IO to the advertising technology that fulfills those orders and the resulting measurement framework to verify execution. It was collectively validated that the success of Facebook and Google is a function of these vendors a.) making it easy for advertisers to buy at scale and know what they’re buying, b.) removing the supply chain challenges of inter-connectivity behind the scenes and c.) providing some level of measurement pre-built into these platforms. Despite this, there is a dependence on these two platforms for 50% of the media being bought — and a very strong desire exists to unify all other media under an integrated system which is open and more transparent — but also easy and able to scale.
2. Blockchain represents a potential answer to address this demand by codifying the IO as a smart contract provided that the implementation of blockchain handles for the buying dynamics of those advertisers
3. Advertisers and Publishers, despite being technical, are NOT interested in doing the work to ideate and build on top of blockchain technology. Even if they did, there would be a lack of uniformity which would obviate the value of such a system built in pockets by each inventory source. Instead, there is a palpable hunger for a system that exists which does the work for them, enables advertisers and pubs to run on top of said system, run at massive scale, and ensure that there isn’t singular “vendor lock-in.”

In short, the discussion validated much of what we’ve done to build out and make XCHNG open to all.

The questions were enlightening. I expected all of them, but enjoyed confirming what was on the minds of the audience. A few examples included:

1. If it’s open, how do we make sure our buying patterns remain private? Answer: XCHNG handles for this by having buyer, seller and verifier signed into the IO and the contents of the IO are encrypted. While the IO’s are fully transacted on a decentralized network, the contents of those IO’s are obscured from outsiders.
2. How are you going to scale? Blockchain doesn’t scale! Answer: The XCHNG implementation applies open ledger tech where appropriate and off-chain usage where appropriate by partners in the ecosystem that are selected as part of the IO. Kochava, as one available Verifier on XCHNG would continue to provide off-chain configurable attribution — writing the cleared transactions to the ledger as immutable proof of execution against the IO/Smart Contract.
3. Is this more like a direct to site buy or will we buy from dsps or ad networks in the future on XCHNG? Answer: Both. There is tremendous value in what the ecosystem of buyers provide. XCHNG is really a mechanism to codify the IO down to a smart contract that is verifiable and against which proof is provided. Whether the buy is direct, via ad network, DSP, or via PMP exchange, the contract is traceable.

This week, our own Breaux Walker (SVP Blockchain at Kochava) is presenting in Barcelona at the Blockchain Solutions Forum to do more of the same. We’re really excited about the growing interest in the XCHNG framework.

Now that we’ve been talking about XCHNG a bit more, we’re getting a lot of questions about whether we have a White Paper to illustrate what we’ve built and our roadmap for the future.

We do have a White Paper and plan to publish it in the coming weeks along with an explainer video and more information on http://xchng.io.

Once the OnXCHNG program is officially launched, we’ll let everyone on our mailing list know. If you’d like to be involved, feel free to sign up.