The Hot Seat: Can Blockchain Save AdTech?

Blockchain has been heralded by the media as the saviour of the entire AdTech ecosystem and even more extremely – the world, after being likened to the internet for its potential to revolutionize the way people communicate and do business. It seems every day a new blockchain initiative is launched to tackle the efficiency issues that plague every industry from FinTech to Fashion all claiming to ‘transform, accelerate and optimize the way enterprises do business’ and ‘give a voice to each participant along the supply chain.’ At all of the conferences we’ve attended this year, speakers and panelists across industries have described AdTech as the industry most ripe for blockchain disruption. But is the hype legit? Can blockchain really solve the industry-wide fraud crisis? And how will it keep up with the speed of real-time bidding? To learn more about blockchain’s application for AdTech and Kochava’s newly launched XCHNG initiative, we caught up with Kirill Sofronov, a blockchain consultant, Matt Hrushka, XCHNG’s Product Marketing Manager & PubNative’s own blockchain enthusiast and Head of Business Intelligence & Yield, Shreyansh T.

Matthew

Q: Tell us a bit more about yourself and the work you’re doing at XCHNG

My name is Matt Hrushka and I lead Product Marketing for XCHNG in addition to being the primary Contact for the OnXCHNG Partner Program. I’ve been involved in the cryptocurrency space since 2015 and have a deep knowledge about distributed ledger technologies including blockchain. My professional experience in the digital advertising space makes me uniquely qualified to understand the application of blockchain to this particular industry. I previously served as the Mobile Marketing Manager at Rosetta Stone and before that was the Ad Operations Manager at Verve Mobile.

Kochava created an R&D subsidiary, Kochava Labs SECZ, to begin work on an open platform to equip the digital advertising ecosystem with an open and unified blockchain framework.

XCHNG is a full end-to-end ecosystem framework, transforming the insertion order process, fraud mitigation, measurement and ultimately creating a more efficient, transparent ecosystem for buying/selling media. XCHNG doesn’t replace the current users within the space—it’s designed to change the landscape we transact in, and to even the playing field. Our framework is decentralized and available to anyone in the digital advertising landscape.

Q: What do you see as the main benefits of blockchain technology for the ad tech industry?

The digital advertising ecosystem is ripe for a revolution. Blockchain is the disrupting technology that promises solutions to some of the greatest challenges facing the industry today: inefficiency, fraud, lack of transparency, and lack of standardization. Blockchain offers a new paradigm that removes centralized and siloed parties, connecting everyone together within a more efficient platform.

The overall goal of blockchain is to enable direct transactions between parties, increasing efficiency and transparency. XCHNG dramatically reduces the need for third-party intermediation in digital advertising. Whether advertisers (buyers), publishers (sellers), or other industry players, all parties stand to benefit from a more transparent, efficient marketplace. Advertisers in particular, frustrated with today’s cumbersome and wasteful system, are demanding that the industry move in this direction. XCHNG secures and standardizes the process of buying and selling digital advertising through decentralization, removing reliance on a central monopoly. The system, by definition is designed to be trustworthy. It facilitates the workflow of buying and selling ads through a smart contract insertion order (IO), enables the related targeting and activation of audiences, and bolsters ad-spend efficiency and security. It will usher in a next-generation advertising historical immutable system of record for all participants, and it will create an opportunity to tokenize the framework to treat digital ads as a true asset class.

Q: How quickly do you see the industry adopting the technology?

The success of XCHNG will be directly related to adoption by the digital advertising ecosystem, which, in turn, will be dependent on the framework meeting the requirements of its participants and truly providing a more secure, transparent, and efficient system. Kochava has sought key partners to join the project. Each will add expertise and guidance as well as added exposure for the project. We encourage and invite all interested parties within the current ecosystem to join our OnXCHNG Partner Program. Partners gain access to the code, roadmap, and timeline. It’s an opportunity to participate in the project that leverages blockchain technology while also customizing it for the unique needs of the advertising industry.

Kirill

Q: Tell us a bit more about yourself

I have been working in adtech for the last 6 years and exploring distributed ledger technology since Satoshi’s peer-to-peer electronic cash system whitepaper. At this point I am running a consultancy business, investing in digital assets and indulging into new paradigm shifts.

Q: Could you explain the basic premise of blockchain and its application for adtech?

Adtech currently faces many challenges including high fragmentation, huge transparency issues, fraud and lots of intermediaries not bringing much value. Blockchain just brings new attributes to a system which can work in a different way. This system has three inherent strengths: it is permissionless, it is decentralised and therefore censorship resistant and trustless. The application of such attributes can be used for any vertical including advertising to help solve most of the problems described above. At this point though, the majority of projects are highly experimental and it will take some time to get to mass adoption due to the fact that a token needs to be included as a currency on top of blockchain, otherwise the whole tech becomes an obsolete database. That’s why the majority of projects will fail since they are not thinking through the token economics and velocity problem. I think in the future we will see utilisation of a proper token model, consensus method and balance practical application like tracking the supply chain of ad delivery and viewability, immutable IOs, fraud prevention, utilisation of zk-SNARKs for public and private transaction records and there is so much more to explore!

Q: Could blockchain technology ever really work for RTB?

Depending on the context, I believe the best part of the RTB ecosystem is standardisation (unified ad formats, openRTB protocol), accessibility and speed. Blockchain has its own limitations and one topic of debate is definitely speed. DSPs are able to reach 1m queries per second these days, which means the layer of blockchain should be able to keep up. There are experimental technologies being built like the Directed Acyclic Graph or blockchains being able to process hundreds of thousands of transactions. Also, there is a big variety of off-chain solutions that can be used to speed up the infrastructure. One thing many people don’t realise is that we are just at a very beginning of this paradigm shift. It took the internet almost 20 years to go mainstream, so all things considered, blockchain is still very young and evolving. In the near future we can expect a few early adopters testing the tech for the advertising ecosystem.

Shreyansh

What challenges do you think blockchain addresses for AdTech companies?

Of course there’s the challenges like trust, transparency and fraud that Kirill and Matt have already mentioned. But besides these, blockchain and particularly the XCHNG model could also help with the some of the more operational challenges we face in AdTech like user data management and post-impression verification by providing a more secure way to record, review and execute every deal. Due to the mistrust between all stakeholders along the supply chain, countless man hours are often wasted trying to solve data discrepancies between each partner. But because every transaction that occurs on the blockchain is recorded and accessible, you can track the viewability of an ad and get full visibility into how it got from A to B. But perhaps the best part is that the participants within the chain remain anonymous. On the data side, a blockchain framework would allow vendors to log data transactions so data owners can know exactly which of its available data assets its partners took, and when.

Why did PubNative want to partner with XCHNG and not another initiative?

There’s already a number of ambitious blockchain initiatives out there for adtech but for us at least, the main reason we wanted to partner with Kochava on the onXCHNG partner program was for the opportunity to be involved in the roadmap direction and to collaborate with other AdTech partners on an Alpha release that we think has real potential to transform the AdTech industry. The challenges that XCHNG aims to address are felt by us all equally so it makes sense that we would work together on this initiative to deal with these issues head on. It’s easy to see the word blockchain now and think it’s just another marketing gimmick and a quick fix to what are very real, deeply rooted issues in the AdTech industry but the team behind XCHNG are deeply committed to this project and have been architecting the system for over two years now. It’s going to take time and effort for all the partners involved but we really admire Kochava and their commitment to challenge the status quo by standardizing the system and providing a transparent marketplace without a centralized monopoly. With the ad fraud crisis and the looming GDPR, issues like transparency and data privacy become even more pressing so we want to be proactive in how we deal with these issues to provide more transparency and efficiency for our clients.

For more information on this topic, shoot an email over to info@pubnative.net or to get involved with the OnXCHNG partner program, reach out directly to Matt Hrushka (MHrushka@Kochava.com) or visit xchng.io