Kochava built its mobile ad measurement business to bring transparency to a growing industry. Mobile advertising is kind of murky, riddled with problems like slow payments and ad fraud, so the company has been building a full ecosystem to bring blockchain to digital advertising.
Kochava CEO Charles Manning said in an interview with VentureBeat that the company is adding four new advisors and new partners to Xchng, a unified, open source blockchain framework for digital advertising. Sandpoint, Idaho-based Kochava plans to launch the full ecosystem for a protocol-based blockchain mobile advertising system by the end of this year or early next year.
“We are building a blockchain to bring digital advertising onto a decentralized framework,” he said. “We have a lot of buyers of ads. We are getting historical suppliers of ad inventory on board.”
Manning is making the announcement at the Mobile Growth Summit event in San Francisco.
The new advisors include David Weild, CEO of Weild & Co. and former vice chair of Nasdaq; William Mougayar, blockchain industry veteran and author of The Business Blockchain; Paran Johar, CEO of Modern Marketing Summit; and John Maffei, CEO of Matcherino.
The partners and the advisors will help the company in its effort to get the wider industry on board. Kochava already measures about $6.5 billion in mobile ad spending per year.
“This is a classic marketplace scenario,” Manning said. “If you launch Uber, and no one has heard of Uber, you have to have drivers, riders, and others in the ecosystem. We have to get our supply partners on. We’re excited about having them and a bunch more in the queue to get ready for the next two or three quarters.”
Blockchain is a transparent ledger, or accounting system, that is decentralized, and because it is spread across a network of computers that verify the ledger, it is secure, transparent, and accurate. The problem is that it takes a long time to update the blockchain across all of those computers, so you can only update the ledger 10 times a second. That’s too slow for digital advertising, where there can be millions of transactions in a second.
Manning said he first went “down the blockchain and cryptocurrency rabbit hole” about two and a half years ago. Intrigued by the technology’s potential, he asked his team (dubbed Kochava Labs SEZC) how to apply blockchain to the advertising process so you could observe everything from ad serving to measurement to ratings to payment — with all of it integrated and coordinated so that it was transparent. He assigned his team to create a “consensus engine” that would operate much more quickly than available options. They succeeded, and last year Kochava started sharing the system with other companies to figure out how it could be used to buy and sell media.
His team called the technology they developed Xchng. It has no intermediary and is a protocol-based custom blockchain that allows buyers to purchase ad inventory through the protocol and sellers to publish their inventory on the system. All of the immutable data is found in the smart contract for all to see. The Xchng framework will be powered by the Xchng Token (XT), which will be used to buy and sell media or pay for services surrounding media transactions.
“We started building a first blockchain prototype a year and a half ago, and as the initial coin offering (ICO) craze happened, we started talking about it,” Manning said. “We are now exposing it via the OnXchng partner program. We have signed 10 partners in the adtech space, and we have signed advisors.”
Manning hopes to address problems plaguing the current system, such as fraud and distrust.
“The inefficiencies are around data discrepancy,” he said. “In ads, you have a publisher ad server, an advertiser ad server, and a third-party measurement company. That’s us. The entire reason that exists is because no one trusts each other. You have to serve the ad impression, you have optimize how it is served for the right creative, and the measurement partner has to see how effective that was.”
He added, “What we want to do is codify this to an open blockchain so that everyone is working with the same pipes. The moat that many companies create is by saying these guys are onboarded, so unless you work with them, you can’t buy from us. If everyone has a common spec on an open blockchain, it’s more efficient.”
The system could also make it easier for publishers and ad companies to do business outside of major networks such as Facebook and Google.
“If I had to pick up the phone to call up every single media source and understand how to deal with each one, that doesn’t scale,” Manning said. “This is like the third rail of media buying. You have Google. You have Facebook. And you have Xchng.”
“The blockchain industry is growing by leaps and bounds, bringing new and disruptive solutions to markets,” Weild said in a statement. “Successful initiatives will consider all stakeholders right from inception — advertisers and consumers, their agents plus governing bodies. Importantly, governance and integrity are priorities at Kochava. For this reason, the team has had great success in building relationships with their partners. So I am excited to be on board and eager to help Charles and his team drive Xchng’s success.”
Asked why he is making Xchng open source, Manning said, “Blockchain is going to disrupt digital ads. Instead of being disrupted, we decided to design how that disruption was going to happen and help facilitate it.”