Whether or not you rate the longevity of cryptocurrencies, it’s hard to doubt the soundness of the technology that underpins them - blockchain, whose underlying functionality is summed up succinctly by the World Economic Forum as “a decentralised database of every transaction involving value”.
By storing blocks of information that are identical across its network, blockchain, by design, can’t be controlled by a single entity and has no sole point of failure. This robustness and versatility empower the technology with the potential to disrupt any industry that relies on frequent transactions, including - that’s right - affiliate advertising.
But it’s unlikely this is news to any reader; following a year clouded by concerns of ad transparency, the dialogue around blockchain in marketing is moving swiftly beyond mere chatter, with adopters keen to capitalise early on the tech amid advertisers’ cries for ad spend accountability and demands for trust.
Earlier this month, The Marketing Group (TMG) launched a global media agency called TRUTH, utilising blockchain-based contracts that are automatically executed the instant their terms are met - or ‘smart contracts’ - the agency vowed to provide “100% transparency” in the digital advertising and media industry. But TMG is by no means the first to test the water.
Calling itself a “trustless” affiliate marketing platform owed to eliminating the possibility of fraud, and built on Ethereum blockchain technology, RefToken was founded in June this year by Jan Sammut, a marketer who previously worked in the online gambling sector; It’s an industry which relies heavily on affiliation for user acquisition, and whose mire of poor practice saw the concept “born out of necessity”. Earlier this month, RefToken even launched its own cryptocurrency for use by clients.
“Over the years the industry became saturated with bad actors, meaning that doing due diligence on affiliates began to take up as much time as the negotiation and relationship management,” Sammut told PerfomanceIN.
“Once we realised the potential that the Ethereum protocol presented, it was instantaneously obvious that this market would be the perfect application for it.”
Having operated the company for less than six months with just €100,000 in seed investment, Sammut is still confident enough to call the combination of a distributed ledger of transactions coupled with smart contracts “the silver bullet that the affiliate industry has been needing for the last 10 years,” claiming it will eliminate merchant skimming, prevent rogue merchants withholding payment from affiliates, prevent fraud, and resolve affiliate’s cashflow problems.
The only casualties, Sammut claimed when asked about potential disruption, would be the industry’s “bad actors”, who would be “brought to light” by the resulting level of transparency; “Once the wider market learns of the benefit that a platform like RefToken brings, it will become a trust mark in its own right to use it - a universally recognisable commitment to transparency and honest business practices,” he said, adding that those choosing not to adopt it would eventually place themselves under suspicion from adopting members.
Risk of disruption
It stands to reason that blockchain-exclusive networks and ad platforms offer a much more secure and transparent solution in the shadier spaces of affiliate, for example, that of the gambling industry of which RefToken was born, and other “fringe industries” such as the diet pill market. Whether there’s enough demand for imminent sea-change implementation in established whitehat sectors, such as telco, travel, and finance, however, is up for debate.
“Generally speaking, disruption comes from solving a problem or making life easier, and I’m not convinced there are material enough gains in a blockchain affiliate network that would make them appealing in the more traditional industries,” said Edwyn McFarlane, business innovation director at European affiliate marketing network Awin.
“A network tends to live or die by its reach, and nothing about a blockchain affiliate network would give it more reach, more advertising opportunities or make it more attractive to advertisers, so the risk of disruption feels low for now.”
For McFarlane, the risk of disruption is much more likely to occur in the realms of programmatic, where, if blockchain was used to share insights into the placements and visibility of ads, it could be “quite impactful”; while he praises the technology as a “brilliantly utopian concept” and an area worthy of exploration, McFarlane believes the existing “openness” of the industry means there’s little to gain from creating a pureplay blockchain affiliate network.
In light of RefToken’s launch of its own currency, however, McFarlane is steadfast in his belief that there is no place for cryptocurrency payment within the affiliate industry; “the anonymity afforded to people paying for and driving sales would need verification at the point of withdrawal to ensure relevant tax laws are being met,” he commented; “The volatility [of cryptocurrencies] also means publishers and advertisers would rarely know how much they’ve earned and that’s not a situation I believe either party would be comfortable with.”
Are we ready?
Ask the performance marketing industry at large about the possibility of the technology taking hold, however, and there’s an overwhelming sense that wide adoption might not be as so far away, and will indeed be welcomed. Earlier this month, PerformanceIN ran a survey on 100 of its readers, asking more broadly; “Will we see a wide adoption of Blockchain ad trading in 2018?”. Over half (52%) believed there would be, basing reasoning on the added security and benefits of smart contract technology in particular.
While 8% were unsure, 40% said no, but, given the option to qualify their answer, it was hard to find solid denial of the possibility; many predicted that 2018 would simply be “too soon” for wide adoption of blockchain technology owed to a lack of readiness, but considered the next two to three years realistic.
For now, it seems blockchain is here to stay, and while we may not see a transformation to the technology in performance marketing next year, we’re more than likely to witness a continuation of what’s become a clear trend of adoption over the last six months.