How Blockchain will revolutionise Affiliate Marketing
The following article was published on LinkedIn.
The affiliate marketing industry was worth approx. 13 Billion US $ in 2018 with annual growth of 12%. Affiliate Marketing is used by 80% of brands, is one of the most profitable forms of online advertising and continues to grow year on year. But the industry also faces challenges, as it still is too complex, multi-layered and not transparent enough. Topics like fraud and attribution issues keep making headlines. At Tradedoubler we believe that the affiliate marketing industry needs to change fundamentally. Rising technologies like Blockchain can help to revolutionise our business.
At Tradedoubler we just recently announced our product vision based on an open platform that will enable automated and transparent direct relationships between advertisers and publishers by using Blockchain technology for the storage of data. Transactional data will be accessible and fully transparent to eliminate fraud and enable the development of new functionalities around payments, reporting and attribution.
What is Blockchain and how does it work
A Blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. All transactions are stored in blocks that are chained together. Each block contains a cryptographic hash of the previous block, a timestamp, and the transaction data. By design, a Blockchain is resistant to data modification. The secure digital ledger system is based on an encrypted, decentralized database and is virtually unhackable.
By creating Smart Contracts, self-executing, automated digital contracts, all parties agree on the same business rules and can be sure that all transactions are credible, trackable and irreversible. Smart contracts do not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations.
Benefits of Blockchain for Affiliate Marketing
Blockchain technology might help to solve a lot of the current challenges in our business. By creating an environment in which trust is not required, advertisers will rest in the knowledge that they only pay for the completion of clearly defined end user tasks, and publishers will rest knowing they will be paid for their efforts. This technology will render transactions safer, faster, more transparent and fully auditable for all parties.
Better transparency and reduced fraud: By using Smart Contracts on the Blockchain and moving away from the Pay Per Click model, issues around trust, disputes and fraud are effectively reduced. Cookie spamming and artificially generated machine traffic will be constrained and honest publishers will receive better value.
Undisputable attribution: Blockchain provides the ability to truly and independently track the conversion of any given click, providing an indisputable and tamper-proof attribution of performance.
Direct communication between advertisers and publishers: Opening the platform up for direct relationships will lead to better alignment between ads and publishers’ websites and thereby result in improved conversion rates.
Easier access to affiliate marketing for smaller merchants: Lowering entry barriers for small businesses and emerging markets merchants will enable more long-tail and non-traditional partnerships.
Shorter publisher payment delays: The use of Smart Contracts will eliminate late and disputed payments because commission payments will be issued automatically and every transaction is stored indisputably on the public ledger of the Blockchain.
Better control on publishers: By getting more in-depth traffic, sales and conversion data, advertisers will receive valuable reputation statistics about publishers.
Removal of adblockers: Drops in advertising effectiveness will be reduced by removing adblockers.
Increase the level of advertising measurement: Real-time reporting gives all participants more options to pull exactly the information they require.
Better protection of user data, compliance with GDPR regulations: Thanks to Blockchain technology, members of the platform are not connected to each other and cannot be affected by hacking.
The Tradedoubler Solution
In 2018 we already saw a couple of small companies emerging that understood the potential of Blockchain technology for the affiliate industry. But as Robert Glazer stated in his article The Implications of Blockchain for the Affiliate Industry, most of them won’t succeed in attracting enterprise brands and the “more important impact will come from major players deciding to adopt aspects of the technology into their products. As the use of blockchain becomes more widespread and successful, chances are high that market leaders will use it to enhance their existing offerings by bringing down costs and increasing speed and transparency.”
Tradedoubler will be the first leading global affiliate marketing network offering a truly transparent, decentralised affiliate marketing platform using Blockchain technology for the storage of data. For the actors of affiliate marketing a secured and transparent Blockchain technology will render their relationship with trust derived from complete transparency and auditability.
Bottom line, we expect the whole industry to benefit from enhanced transparency and auditability, including an overall increase in market spending and better repartition of value to stakeholders in the value chain. We also expect new models to eventually emerge on the back of the disruptive capabilities provided by Blockchain-based affiliate marketing platforms.
This article was published on LinkedIn by Matthias Stadelmeyer.
Matthias is CEO at Tradedoubler since 2014 and has since then remodelled the business fundamentally. He is an experienced strategic leader with strong background in sales and technology. Due to his expertise in blockchain and data technology and his visionary view on digital marketing trends he is a sought-after keynote speaker and regularly shares the stage with other industry leaders.