how blockchain can solve today’s digital media challenges€¦ · 21 dvertiser erceptions how...

How Blockchain Can Solve Today’s Digital Media Challenges

TM

Justin Fromm VP, Business Intelligence

Andy SippelEVP, Client Solutions

©2018 Advertiser Perceptions | How Blockchain Can Solve Today’s Digital Media Challenges

Blockchain is dominating consumer and trade headlines across every sector, yet the advertising industry lacks clarity on what blockchain is and how it functions. Although it is best known as the backbone of cryptocurrencies like Bitcoin, organizations in digital identity management, green energy, and even refugee relief have found ways to apply blockchain for more accurate and expedient transactions. The technology has become a mainstream business tool across multiple industries and is making significant inroads into the digital media ecosystem.

As a new data architecture, blockchain has the potential to improve upon the siloed and centralized systems we currently use to discover, purchase, and measure ad inventory and delivery. However, the entre-preneurial nature of the blockchain space has generated a confusing set of offerings, and education around the subject is generally opaque. Half of advertisers report having met with a blockchain provider, just 1-in-10 has executed any ad buying using the technology. Blockchain is positioned to improve issues that significantly affect advertisers’ ability to derive the full value from their digital media invest-ments, but further clarity on its mechanics and capabilities is needed for advertisers to move beyond initial investigations.

To make blockchain a navigable and actionable space for media professionals, XCHNG has partnered with Advertiser Perceptions to measure attitudes toward and adoption of block-chain media solutions. This paper uses data collected from a survey of 300 advertising decision makers from Advertiser Perceptions’ proprietary database collected in May 2018.

Introduction

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Though cryptocurrency has brought blockchain to the forefront, the troubled narrative around these digital assets has tainted the image of blockchain in other business uses. Two-thirds of agency and marketer professionals are skeptical of blockchain media solutions specifically because they view cryptocurrency to be unstable or unreliable. In order to separate the two, let’s take a look at what block-chains consist of and how they work.

Essentially, blockchain is a new configuration of familiar components. All of the information connected to a transaction is stored in a shared ledger. Rather than having one party act as the central entity to verify all of the components of that transaction, blockchain relies on the distribut-ed computing power of multiple providers to reconcile and corroborate the data.

A blockchain functions like a cloud-based spreadsheet document but with a specific set of rules. Multiple parties can access the blockchain in real-time, but no one can remove information. Each new piece of information must retain an author’s original digital signature and be approved by the parties on the chain. Additionally, no new information can contradict existing data. In this way, blockchain ensures that every new entry is agreed upon by all parties and traceable to its original entry. This ledger, a secure repository, also supports permissioned access to the data so that any one party only has access to the data required to complete their function in the transaction (e.g., inventory identification, viewability, delivery, etc.).

Blockchain, basically

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Nearly 7-in-10 advertising decision makers indicate that ineffi-ciency, lack of transparency, and inaccuracy in the digital media supply chain are significant issues keeping them from deriving the full value of their digital media investments. More than half of these decision makers believe that blockchain technology will help to address these issues. But how?

While walled gardens (such as Facebook and Google) have made it easier to identify and message directly to advertisers’ target audiences, reliance on these platforms has exacerbated supply chain issues. These closed markets obfuscate the process en-abling them to charge premiums, restrict access to data, and in-advertently leave room for hidden costs and fraud. Smaller, in-dependent entities demand multiple, time-consuming streams for discovery, buying, delivery, verification, and payment.

Blockchain as a media solution

GOOGLE

ADVERTISER

APPROACHABLE, END-TO-END SOLUTIONS TO REACH AUDIENCES AT SCALE

FACEBOOKFacebook’s Market

Facebook’s StandardsFacebook’s Measurement

Facebook’s Fees

Google’s MarketGoogle’s Standards

Googlek’s MeasurementGoogle’s Fees

XCHNG

Open MarketXCHNG Standards

Open Market MeasurementOpen Market Fees

Working with centralized players means advertisers are tied to those players’ standards and fees for me-dia buys. Blockchain media solutions, like XCHNG, create a transparent environment where buyers and sellers agree on standards, and fees are market-driven. By en-abling sightlines between disparate media players, XCHNG mitigates fraud and enables planners to better optimize campaigns.

Transparency is better.

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Rather than employing various third-party, centralized entities to verify the ad buying and delivery process, blockchain relies on incentivized individuals (nodes) to verify each step of the pro-cess through a shared, incorruptible record of the transaction. This de-centralized ecosystem allows for a more egalitarian field of buyers, advertisers, publishers, supply-side publishers (SSPs), demand-side publishers (DSPs), and measurement and rating platforms, all operating along a common set of rails. This for-mat enables targeting and activation of audiences and bolsters efficiency of ad spend.

Currently, billing on myriad reports from multiple parties is a time-consuming, antiquated practice that favors bargaining over verified data. Reconciliation also renders digital plans sus-ceptible to billions of dollars in ad fraud, as third parties race to deliver to plan. Nearly 40% of respondents note frequent or constant discrepancies between ad server and publish-er delivery reports, and just 1% report that they never experi-ence such divergence between first- and third-party reporting. Blockchain prevents discrepancies and fraudulent views by pro-viding an immutable, validated record of every phase of the ad delivery process.

Traditional insertion orders are history. Traditional IOs grew out of print media at the dawn of advertis-ing. Digital media has created a whole newset of rules for the marketplace, yet advertisers still transact on tedious, manual documents. Capitalizing on the dexterity and automated nature of digital, XCHNG utilizes smart contracts. The digital agreement takes each ad buy from identifi-cation and pre-verification of the buyer, the seller, and the ad in-ventory through embedded and programmable terms, payment structure, and to payment upon successful delivery. The reconcil-iation process happens quickly and painlessly.

With high fraud and increasing costs associated with digital marketing,

advertisers are looking for solutions that offer trust, transparency and cost efficiency

for their digital media spend. Blockchain technology offers a disruptive, yet open

approach to fixing these issues, which the current programmatic buying ecosystem

has so far failed to provide.

— Anil Kutty, Director Mobile Products at DCMN

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Speed, scalability & security are keyWhile most blockchain solutions aim to put all media on equal footing, not all solutions are created equal. When identifying the strongest blockchain media solution, closely consider security and speed. These are the differentiators that elevate some media solutions above the rest.

Speed & ScalabilityThe promise of blockchain goes unfulfilled if the media solution cannot perform at the speed and volume necessary to keep up with digital advertising transaction and decisioning. Just over half of advertisers and marketers are skeptical that currently available blockchain media solutions can operate at a speed consistent with manag-ing media transactions. Still, about three-quarters are confident that blockchain will evolve to handle the speed and volume necessary for digital media solutions.

SecurityBy design, a blockchain is a self-policing, verifiable ecosystem, but privacy and security considerations vary by offering. Advertising decision makers are split on whether or not blockchain is a secure method for transacting media buys. This issue is muddied by attention-grabbing, alarmist headlines in the cryptocurrency arena. Advertisers should be sure to understand how any solution addresses security.

Digital is fast and vast. A successful blockchain media solution must enable fast consensus and recording of transactions at the scale required for digital media. In live testing, XCHNG showed speeds of 180,000 transac-tions per second per insertion order. With a framework that enables unlimited smart contract insertion orders, that capacity reaches millions of transactions per second, far outperforming the needs of even heavy users in today’s fast-paced digital environment. The XCHNG daily rolling chain architecture, which precludes the need to distribute historical data, ensures that each node is participating at the highest efficiency and that past transactions are private and secure.

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When will blockchain media solutions become mainstream?Buzz about blockchain in media is in full swing—but when will blockchain be a regular topic in plan-ning meetings? While only half of respondents report meeting with a blockchain creator or provider to discuss a media solution, most of those who plan to purchase data utilizing blockchain technology see it happening within the next two years.

Many blockchain media solutions now occupy the field, but few have the industry experience and relationships to launch scaled campaigns in the short term. About three-quarters of me-dia professionals surveyed believe that any blockchain solution needs to include all the players that are involved in the transaction today—from placement through optimization and reconciliation.

Blockchain will be used to illustrate the incremental value to a media buy. This end-to-end media activity

ensures total transparency and accountability for

every dollar invested in advertising, resulting in

far greater ROI for brands.

—David Orman, Co-Founder Verasity

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Key takeawaysBlockchain is more than cryptocurrency. The volatility of popular digital assets is not a reflection of corruptibility or instability of blockchain. While nodes are incentivized with digital assets, the value of the incentive is only as strong as the accuracy of the ledger. It is in each node’s best interest to maintain the integrity of the ledger.

Speed and security are vital for any digital advertising blockchain solution. The solution must operate at the speed of digital media and secure first-party data while still enabling the decentralized structure at the heart of the blockchain.

Third-party intermediaries can be removed from all forms of media buys through a blockchain media solution designed specifically for the digital marketing landscape. This creates a safer and more efficient ad buying environment.

Hit the ground running. A blockchain media solution needs to be connected with the big industry players to provide maximum functionality to advertisers from the start. Kochava, which measures $6 billion in ad spend annually, created Kochava Labs SEZC to design and deploy XCHNG, with functionality in mind. An indepen-dent organization, Kochava already has all the touchpoints of supply and demand throughout the eco-system. While there have been several efforts to unify blockchain technology and digital ads, none have addressed the end-to-end nature and none have been inspired by a company with the reach and

experience that Kochava already has in the industry.

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Advertiser Perceptions is the global leader in research-based business intelligence for the advertising industry. Our exclusive insights, practical advice and knowledgeable guidance produce actionable solutions that deliver results and enable our clients to thrive in today’s complex and competitive advertising market.

AdvertiserPerceptions.com l [email protected] l 212-626-6683

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how blockchain can solve today’s digital media challenges€¦ · 21 dvertiser erceptions how...

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