I have read quite a few articles about blockchain and fascinated. I’m not interested in Bitcoin but I’m interested in the possibility blockchain as a technology has.
If you don’t know the blockchain, please read articles I read, like this and this.
If blockchain is not familiar to you but you are a developer, this and this may be interesting.
Use cases
There are so many use cases from payment to smart contract to database for IOT. But one thing very intriguing for me is supply chain optimization which is one of example of IBM. I have never worked for manufacturing sector and I have no idea what exactly supply chain is. But I have developed an affiliate advertising network as a startup founder. Since both supply chain network and advertising network is network in a nutshell, if blockchain could revolutionize supply chain network, I think it could potentially revolutionize advertising network too.
Let’s think about it!
How about applying blockchain to performance based marketing (A.K.A affiliate)?
What is affiliate advertising network in the first place?
Affiliate advertising network, sometimes called ASP (Affiliate Service Provider), is a platform service which connect advertiser(A.K.A merchant) and publishers(A.K.A media). ASP track performance and get money from advertiser to distribute that money to publishers based on performance.
Sounds simple. But trust me not at all.
There are agencies between advertisers and ASP. Most agencies, advertisers, and publishers use multiple affiliate services. Sometimes we have to treat end users as kind of node because sometimes end users get rewards like coupon and vouchers.
One of typical problem is that publishers have to wait more than 45 days to get money because ASP has to wait 30 days to get money from advertiser or agency. It’s insane. Another problem is publishers also have to accumulate enough money (like $100) to actually receive money because we can not send money without fees.
Let’s think about database. Since ASP is the middle man ASP keeps records which everybody else have to trust. But at the same time agency hold data to make reports to advertisers and advertisers also keep records because many advertisers use multiple ASPs and they need their own database to analyze entire data.
Yes, database is absolutely fragmented.
And there is a fraud.
What if there is a single secure shared database for all stakes holders?
Current affiliate network
Blockchain based affiliate network
Potential benefits:
1. Publishers can get money(token) instantly (now more than 30 days)
2. Publishers can get money from 1 cent.
3. Publishers can exchange the tokens with each others
4. Advertisers can give vouchers or other rewards easily to publishers and end users
5. Everyone can access consistent data. This will be helpful to agencies and advertisers. New analytics company may join to provide better analytics
6. New companies may join to connect advertisers and publishers because they don’t need to keep database or payment process.
7. Less fraud because we can analyze bigger consistent data. New companies may join to provide better fraud detection service.
8. New startups may join to provide unknown services because they can access consistent big data.
Potential problem:
1. Database keep growing and I’m not sure how big such ledger database can be. Since there are no incentive like Bitcoin for some nice guy to just keep the big storage for other guys, the eco system should pay for the cost for database.
2. Until enough number of advertisers start using the shared ledger database, there is no benefit. I mean there a chicken egg problem.
Conclusion
Feature-wise, most of features are possible even without blockchain but as far as I know affiliate service has not evolved much for a decade which may mean the industry don’t have motivation to evolve themselves.
But according to this article, market is still growing.
According to the study, the affiliate marketing space has matured into a significant channel for driving sales for advertisers of all sizes. US affiliate marketing spend will increase by a compound annual growth rate (CAGR) of 10.1 percent between 2015 and 2020, to an estimated $6.8 billion industry. The platforms that affiliate networks provide for advertisers and publishers are in many cases the engines of sales growth, offering measurement and quality assurance for both.
I think ASP need to change revenue model to survive if every stake holder can access shared secure database. I also think technology may not be ready for that…
But still very interesting… because completely new business model can be possible!
If someone want to experiment the idea of blockchain based affiliate system, please feel free to contact me. Let’s do it together.
Thanks,
