The Affiliate and Referral Model
According to Nielsen’s research, a whopping 92 percent of customers are far more likely to purchase from a business if they were referred to it by people they knew. Another study by BI Intelligence estimates that at least 16 percent of all online sales happen through affiliate marketing.
Undoubtedly, affiliate and referral marketing top the list for the most effective marketing techniques. But of all the businesses that launch these programs, only a handful succeed. Traditionally, referral marketing data is hard to track, meaning that it’s difficult for companies to be able to track the impact of their marketing techniques.
When it comes to affiliate marketing, the fundamental problem is lack of transparency. “Reward per click” methods, a technique used by brands to pay affiliate sources, cannot be easily traced and is therefore highly prone to fraud. Marketers can create fake traffic toward a particular product to earn the reward that comes with a referral.
While affiliate networks such as ClickBank provide tracking tools to identify the sources of affiliate clicks accurately, there exists no way for vendors to verify the truthfulness of this information. It is not uncommon to hear complaints about affiliates or vendors gaming the platform to earn untruthfully.
The centralized nature of such programs means that marketing companies take most of the profits, which can be discouraging to affiliate marketers. Another problem with centralized marketing companies is that they have single points of failure, and incidents such as hacking can lead to brands losing business data and money.
Blockchain technology can be leveraged to bring these challenges to an end. Decentralized solutions take affiliate networks out of the game by enabling brands to transact directly and transparently with affiliates. Through smart contracts, the technology guarantees accurate tracking of “links” sharing, thus ensuring that those who share them get rewarded accordingly.
Blockchain-based referral and affiliate programs are hard to manipulate given the immutable nature of the technology, which guarantees fair play to users within the blockchain-powered affiliate and referral marketing programs.
Many new projects are popping up on the scene with decentralization and P2P marketing in mind. One of the most promising projects in development is a blockchain solution focusing on referral marketing known as 2key. This project utilizes smart contracts and AI to encourage people to refer their favorite products to as many friends and relatives as possible.
By fusing smart contracts into regular HTTP links, 2key makes it possible for brands to accurately track links throughout the referral chain and reward the participants when they reach a pre-defined goal. The project uses AI algorithms to ensure that links are shared with relevant audiences by disincentivizing referrers when their actions fail to generate impressions.
2key AI algorithms also calculate rewards issued to referral sources based on their reputation scores. All transactions, including payments for successful referrals and penalties for spam referrals, are facilitated through the platform’s official token.
Another promising project in the referral marketing space is Attrace. This project seeks to eliminate affiliate networks by making it possible for brands to interact and transact directly with content publishers. Merchants registered on the Attrace blockchain can track each link shared by publishers and reward them accordingly.
Traditionally, network affiliates operate as intermediaries between content publishers and brands, whereas with a blockchain-based affiliate program, content publishers are in control of their earning potential as they receive pay based on the quality of their affiliate referrals. Publishers looking to have quality referrals must, therefore, publish quality and highly relevant content.
Another project, known as RefToken, is utilizing a blockchain to bridge the gap between startups and content publishers or influencers. In the same way as Attrace, this project eliminates intermediaries and leverages smart contracts to enable brands to accurately measure the performance of their campaigns and reward publishers by their performance.
Several other blockchain projects are also exploring the decentralization of affiliate and referral marketing. As blockchain technology continues to take root in the industry, there is no doubt that better solutions are on the way. So, there is no better time for brands to explore the benefits of decentralized digital marketing.