In digital marketing, recommendations from experts is one of the strategies with the highest conversion rates. Customers are more likely to buy a product when it is recommended by someone they deem to have expert knowledge about the product. A recommendation from an expert is known as "affiliate marketing."
Traditionally, all of the intermediaries involved in an affiliate marketing network must be paid - meaning the merchant has to pay more and the content publisher receives less than if there were no middlemen. But now, with blockchain technology, there are companies working on solutions to this traditional expense.
The Affiliate System
A blogger who educates young mothers about baby care can decide to recommend favorite baby care products and get paid for it by the brands being recommended. According to a study by Extole , customers who are referred to a brand are up to five times more likely to convert than customers who aren't.
Even when this marketing strategy is widely used and has a high success rate, it is not without challenges. Many of the issues emanate from centralization, where brands and content publishers have to go through third parties to interact. A typical affiliate marketing model includes at least four parties, namely the merchant, the affiliate network, search engines and the content publisher.
Affiliate networks act as an intermediary between the merchant and the content publisher by bringing them together, tracking link clicks and conversions and facilitating payments. Simply put, the merchant pays the affiliate network to identify and engage content publishers, track their performance and make payments. This model is not only costly but ineffective, given that it depends on the legitimacy and expertise of the affiliate network.
With the traditional affiliate marketing model, there is no clear way for merchants to track how their money is being used by the affiliate network. It is not uncommon to hear complaints about how merchants have paid affiliate networks and the affiliate networks then underpay or refuse to pay content publishers.
In other instances, the affiliate networks choose to work with cheap but disreputable content publishers, a thing that does more harm than good to the brands being marketed. Additionally, most affiliate networks lack proper tools to track link clicks and conversions, which means that many times they give inexact data to merchants.
The Blockchain Solution
Just like in other industries, decentralization is one of the main solutions blockchain technology is bringing to affiliate marketing. The technology seeks to make it possible for merchants and content publishers to collaborate directly, tracking link clicks and conversions transparently.
A blockchain project known as Attrace , for instance, is introducing a platform where merchants can directly engage content publishers and track link clicks and conversions from them. This means that with the Attrace platform, merchants can tell with certainty the contribution of a given publisher toward marketing their products.
The project also applies smart contracts to settle payments, meaning that content publishers are only paid when they meet the predetermined objectives. Without the intermediaries, the merchants are able to get maximum value for their money and the content publishers get paid directly, with no added expenses from middlemen.
Another blockchain project, known as RefToken , is underway with the same goal of bridging the gap between merchants and affiliates. The best thing about this project is that it will allow these parties to interact and rate each other. With the rating system in place, each party will be motivated to offer the best effort to maintain a good reputation.
As blockchain technology continues to grow, there is no doubt that more solutions to the digital marketing sector are yet to come that will change the face of marketing and create a better user experience for all.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
