Affiliate Marketing: How Blockchain Technology Can Change Affiliate Marketing
It’s Cryptomania right now.
I can’t even get a haircut or take an Uber ride without someone talking about Bitcoin.
It’s a fantastic piece of technology, but most of the conversation is based on it as an investment.
“Which coin can I buy to 10x my investment?”
“What’s the next ripple?”
I love making money as much as the next guy, but most people have no idea how powerful the underlying Blockchain technology is.
The internet changed every industry.
Blockchain will change every industry too.
The value of Crypto is that companies are utilizing blockchain technology to solve real-world problems.
I’m going to share with you some examples of how Blockchain is changing some industries, and how I think blockchain can affect the affiliate marketing industry.
What is Blockchain?
Let me explain what the Blockchain technology is so we’re on the same page.
Blockchain is a “digital ledger” that everyone has copy. If any transaction takes place, then it gets updated.
Everyone knows about it.
* It’s decentralized. No company has ownership of it (so no single point of failure).
* Once the transaction has occurred it can’t be changed.
* Transparency. Do you want to make a deal with someone and you’re not sure if they have the money? You can look up their address to see if they have as much money as they claim.
Here’s an elevator pitch I read online
“You (a “node“) have a file of transactions on your computer (a “ledger”). Two government accountants (let’s call them “miners”) have the same file on theirs (so it’s “distributed”). As you make a transaction, your computer sends an e-mail to each accountant to inform them.
Each accountant rushes to be the first to check whether you can afford it (and be paid their salary “Bitcoins”). The first to check and validate hits “REPLY ALL”, attaching their logic for verifying the transaction (“Proof of Work”). If the other accountant agrees, everyone updates their file… “Blockchain” technology enables this concept. “
Bitcoin is just one currency that utilizes Blockchain.
It’s the most well known and significant because it was the first, but there are a ton of other companies and coins using Blockchain beyond just being a currency.
How Some Companies are Using Blockchain to solve real-world problems.
A few weeks ago I discovered a coin called VeChain.
(*Note: I’m just using VeChain as an example. I don’t have any money in VeChain)
It’s a coin designed for the luxury market (Think Hermes and Louis Vuitton.)
What’s the biggest problem in the luxury market? Counterfeit items.
I can’t go to Chinatown without some old Asian lady asking if I want to buy a fake Louis Vuitton wallet!
It costs the industry billions of dollars in lost sales, and it hurts the brands’ reputation.
There’s also the problem as a buyer. How do you know the bag you’re buying is legitimate?
Blockchain to the rescue.
Here’s the value proposition of VeChain
* You go to a Louis Vuitton. Scanning the bag will tell you the history and details about that exact bag.
* Buying a 2nd handbag from Craigslist? Sorry but having a “receipt” and the “original” boxes don’t mean shit. You can easily buy those on eBay.
Having the app and blockchain technology can reveal if it’s real or not. It can also show you how old the bag is and how many owners it has had.
* Your handbag goes missing. You can file a police report on the bag. If someone were to buy your bag on Craigslist, then they would know it’s a stolen bag.
Pretty cool stuff right?
Improving Artificial intelligence using DeepBrainChain (DBC)
Note: I am invested in DeepBrainChain.
Artificial intelligence is one of the technologies set to change society and it’s happening as we speak.
Self-driving cars? Powered by AI.
Me asking my Amazon Echo what the weather’s like? Powered by AI.
It takes a massive amount of computational power for A.I. to work.
They’re not cheap to buy or maintain.
If you’re a new startup, it might not be “efficient” to buy and set up all these computers needed.
Why not outsource it?
DeepBrainChain wants to be the platform for A.I. computer power.
If companies have spare computing resources, they can “lend” out their power for a fee.
The project estimates that companies can save up to 70% in costs by using DBC.
You don’t need to rent out a massive warehouse. You don’t need to buy the computers / store them. And you don’t need the geek to setup / maintain the machines.
I hope these two examples can show you how Blockchain can be used to solve problems.
I gotta admit that these innovations aren’t as “sexy” as going to space or robots, but they are making industries more efficient.
What Problems Can Blockchain solve in Affiliate Marketing?
Lets circle back to Affiliate Marketing since this space is my baby.
Affiliate marketing has a ton of problems from the perspective of an affiliate marketer. Here are some of the biggest ones.
1. Are traffic sources sending the amount of traffic they say they are?
2. My conversion rate dropped by 50%. Are the advertising and networks shaving my leads?
3. I sent $100,000 to the network, and now they’re not paying me!
I’ve seen these problems happen over and over against the past decade.
As affiliates, we accept that that’s the way it is.
I think Blockchain can help evolve affiliate marketing and some of these problems.
Here are some ideas of mine.
Transparency in Traffic Sources
Here are some of the problems with digital advertising (Source: BasicAttentionToken)
Users are abused
- Up to 50% of the average user’s mobile data is for ads and trackers, costing as much as $23 a month.
- Ads use about 5 seconds of mobile load time on average.
- Ads decrease phone battery life by as much as 21%.
- Privacy is violated when large media sites host up to 70 trackers.
- Malware (malvertisements, ransom-ware) is up 132% in one year.
Publishers are hurting
- Google and Facebook take 73% of all ad dollars and 99% of all growth.
- Revenue is recently down 66%.
- Bots inflicted $7.2 billion in fraud last year.
- Over 600 million phones and desktops run ad-blocking.
- Publishers cannot seamlessly monetize value added services.
Advertisers are losing
- Advertisers lack good information on what they are paying for.
- Marketers are often fooled by bogus websites and bots that commit fraud.
- Targeting is poor, making users more likely to ignore ads.
A big industry.
Lots of problems.
How can Blockchain help?
First of all, you’re not going to see companies like Google or Facebook implement Blockchain solutions anytime soon.
You’re not going to disrupt yourself when you’re making money hand over fist.
And to be blunt, they don’t want to give you transparency. Transparency opens them up to Scrutiny.
Why would they volunteer to lose power?
And here’s a dirty secret of some traffic sources: they don’t mind too much bot traffic. It’s extra revenue for them.
Disruption will come from outsiders.
I wanna highlight one coin that’s aiming to solve it called the Basic Attention Token. Their proposed solution is attractive.
Basic Attention Token
The most well-known company trying to use Blockchain for advertising is Basic Attention Token.
Here’s the 80 / 20.
They created a Browser called the Brave Browser. The browser blocks all ads and cookies.
Everything is measured through Attention. How engaged is someone with your ad?
* The publisher creates a video online. They get paid with the BAT tokens (which can be converted to cash). The publisher gets a larger cut because the middle men are eliminated.
* The user (person watching the video) gets rewarded with BAT tokens as well. They also get to surf the web anonymously and without ads.
* The advertiser gets a better ROI. Instead of paying $.50 for someone who watched a video for a few seconds and left, I’m paying for how engaged they are with the content.
They also want to implement machine learning to help serve more relevant ads to you.
There are going to be many, many more advertising companies coming out targeting the digital advertising space.
I’m not sure if BAT will be the standard in the feel. In a way it’s almost too revolutionary, and Google / Facebook aren’t going down without a fight.
They’re going to have to convince people to use the BAT token, and content publishers to start accepting it.
But this is a space I’ll actively be watching.
Where Are My Leads?
You send 1000 conversions.
The affiliate network or advertiser decide they want to scrub or shave your conversions. That means your dashboard will only show 900 conversions. You’re out 100 leads.
Here’s the problem…there’s no transparency.
You have no idea that 1000 conversion were sent because you don’t have access to the “real” data or their backend.
You only see what they want you to see. You have to trust the networks. .
Enter the blockchain.
What if every conversion was tracked on a 3rd party ledger that everyone had access to?
No more scrub-o-meter because the network feels like it.
Advertisers and Affiliate Networks Not Paying
There’s a problem anytime you’re using an affiliate network or an advertiser.
You run the risk of them not paying you.
I’ve seen this happen over and happen again throughout the years.
* Maybe their merchant processing went down.
* Maybe they realized their profit margins aren’t that high.
* Maybe they’re just greedy assholes who want a new lambo.
You generated $100,000 with them and the wire mysterious never comes in. They claim that it’s a banking Holiday in their country and the wire’s delayed.
The wire never comes in.
They keep making excuses to buy time.
They steal from Peter to pay Paul.
Eventually, you realize that you’re never getting paid.
You’re angry but you realize it’s kinda hard to sue someone in a different country. Your only recourse is to write an angry post on STM.
How can we guarantee payments?
Smart Contracts are an innovation by the Ethereum platform.
You can an advertiser agree to run 1000 conversions and get paid $9 each.
They write a SmartContract, and you sign it.
You sent 1000 conversions and you automatically get paid the $9000 as soon as the contract’s fulfilled. You even get it in the currency of your coin.
The Problems of Implementation
I didn’t mean to come off so negatively towards networks, traffic sources, and advertisers. I’m writing it from the perspective of an affiliate marketer, so I am a little bias.
A lot of these ideas sound good on paper, but implementation will be hard.
The most significant issue is fraud.
It works both ways.
A SmartContract system where an affiliate is guaranteed to get paid? It’s a system rip to be abused by scammy affiliates.
If the system were to work then there needs to be better filters. I’m sure it’ll be 10x more straightforward to implement this for Cost per Sale offers, rather than lead generation ones (since quality has to be evaluated).
The second issue is affiliate marketing is a relatively small industry. Crypto’s young. There’s way more money disrupting the more prominent industries.
I don’t see blockchain affect affiliate marketing for years to come.
It’s interesting to see how affiliate networks differentiate from each other. At first it was just
“We have higher payouts”
“We have exclusive offers”
But if everyone’s saying the same thing then it’s not unique. Now we’re starting to see networks develop internal technology to set themselves apart.
I think the networks that can start offering more transparency for affiliates will gain a substantial competitive edge.
BlockChain is Changing the World
People have imagined the future as flying to Mars, self-driving cars, artificial intelligence, and robots.
Blockchain technology has snuck up on us the past few years, and most people don’t realize how big of an impact it’s going to make on us.
It’ll bring us a more transparent world.
It’ll bring us a more efficient world.
Featured Image by Nils Ackermann