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By
thekollab
- Updated: December 21, 2024
- 3 min read
By
thekollab
Blockchain technology is set to revolutionize the affiliate marketing industry by providing a secure, transparent, and efficient way for advertisers and publishers to transact. Web3 technologies, which include blockchain and decentralized applications, are already being used to create decentralized affiliate networks that eliminate intermediaries and enable direct peer-to-peer transactions.
In this guide, we’ll explore how blockchain technology will transform the affiliate marketing industry, and provide comparisons between affiliate marketing in web2 and web3.
First, let’s address a confusing element to this topic – which is the dual-use of the word “network”.
In a blockchain-based affiliate network, advertisers and publishers can transact directly with each other, without the need for a centralized platform or middlemen.
One of the biggest changes that blockchain technology will bring to the affiliate marketing industry is the development of decentralized affiliate networks. These networks operate on a blockchain and enable direct peer-to-peer transactions between advertisers and publishers, without the need for intermediaries. This creates a more efficient and transparent system that benefits all parties involved.
In contrast, traditional affiliate marketing operates on web2 technologies, where mediators such as affiliate networks & tracking platforms are used to connect advertisers with publishers. These central powers govern the terms and the tracking while taking a commission for their services, which can reduce the amount of money that advertisers and publishers receive.
Blockchain technology is inherently transparent and trustless, which means that all transactions on the blockchain can be verified by anyone on the network. This creates a system of trust that is not possible with traditional web2 affiliate marketing, where the process of verifying transactions is opaque.
For example, in a decentralized affiliate network, all transactions are recorded on the blockchain, which creates a permanent and immutable record of all activity. This reduces the risk of fraud or disputes, as all parties can easily verify the details of each transaction.
Conversely, web2 affiliate marketing relies on trust between advertisers and publishers, as well as the intermediary platform or service. This can create a system that is vulnerable to fraud or disputes, as the details of each transaction may not be easily verifiable.
[In web2] Bad actors can reject legitimate transactions in order to avoid paying commissions to deserved affiliates because they have all control over the status of the action. With web3 technologies, such deceit is impossible thanks to how the transparent, accessible, and immutable nature of blockchain can record actions. On-chain data will show if a sale was truly cancelled or refunded, or if a lead really did fail to convert.
Smart contracts will transform the affiliate marketing industry by providing a secure and efficient way for advertisers and publishers to transact.
For example, in a decentralized affiliate network, advertisers can create smart contracts that include details such as the commission rate, conversion criteria, and other terms and conditions. Publishers can then promote these offers using unique affiliate links, which are tracked and attributed using the smart contract.
Once a transaction is recorded on the blockchain, the smart contract can automatically calculate the commission owed to the publisher, based on the terms and conditions of the offer. The commission is then paid out in cryptocurrency, which is also recorded on the blockchain.
In contrast, web2 affiliate marketing relies on tracking platforms or affiliate networks to track and attribute transactions. This can create inefficiencies and delays in the payment process, as well as a lack of transparency and trust.
Decentralized affiliate networks have the potential to reduce costs for advertisers and publishers by eliminating third-parties and enabling direct peer-to-peer transactions. This can create a more efficient and cost-effective system that benefits all sides involved.
For example, in a decentralized affiliate network, advertisers can save money by not having to pay commissions to brokers such as tracking platforms or affiliate networks. Publishers can also benefit from the reduced costs of their counterparts, as they may be able to negotiate higher commission rates when transacting directly with advertisers.
Since affiliate marketing in web2 is reliant on these middlemen services, there is no choice but to pay them a fee. In addition to a commission per action, web2 affiliate service providers frequently charge monthly fees as well as intial set-up costs. This can reduce the amount of money that advertisers and publishers receive, and create inefficiencies in the system.
Decentralized affiliate networks can also provide access to new markets, by enabling advertisers and publishers to transact with individuals and businesses from around the world. This can create new opportunities for growth and expansion, as well as a more diverse range of products and services.
For example, in a decentralized affiliate network, advertisers can create offers that are available to anyone with an internet connection and a cryptocurrency wallet. This enables advertisers to target individuals and businesses from around the world, without the hinderance of traditional banking or payment systems.
Publishers can also benefit from access to new markets, as they can promote offers to a global audience. This can create new opportunities for revenue generation and growth, as well as access to a wider range of products and services.
In contrast, web2 affiliate marketing relies on traditional payment systems and banking networks, which can limit access to certain markets. This can create barriers to entry for advertisers and publishers, as well as limitations on the products and services that are available.
Blockchain technology can also provide increased privacy for advertisers and publishers, by enabling transactions to be conducted anonymously. This can create a more secure and private system that protects the interests of all parties involved.
In a decentralized affiliate network, advertisers and publishers can transact using pseudonyms or anonymous identities. This can provide increased privacy and security, as well as protection against fraud or hacking attempts.
Web2 affiliate marketing, however, relies on traditional payment systems and banking networks – which may require personal information and identification. This can create privacy concerns for advertisers and publishers, as well as potential security risks.
Another way that blockchain technology can transform the affiliate marketing industry is through tokenization. By creating unique tokens, blockchain-based affiliate networks can offer new incentives and reward structures that are not possible in traditional affiliate marketing.
For example, advertisers can create their own tokens that are used to reward publishers for promoting their products or services. These tokens can be used to incentivize specific behaviors, such as promoting certain products, driving traffic to specific landing pages, or achieving specific conversion rates.
Publishers can also benefit from tokenization, as they can earn tokens for their efforts and contributions to the network. These tokens can be used to access exclusive offers, or traded on cryptocurrency exchanges for other tokens or cryptocurrencies.
Tokenization can also create new revenue streams for advertisers and publishers, as they can earn tokens for their efforts and contributions to the network, which can then be exchanged for fiat currency or other cryptocurrencies.
In contrast, traditional affiliate marketing relies on cash-based incentives and reward structures, which can be limiting and less flexible. Tokenization enables the creation of unique and customized incentives and reward structures, that can be tailored to specific goals and objectives.
Blockchain technology will transform the affiliate marketing industry by providing a secure, transparent, and efficient way for advertisers and publishers to transact. Decentralized affiliate networks, smart contracts, and increased privacy are just a few of the benefits that blockchain technology will bring to the industry.
Affiliate marketing professionals who are interested in staying ahead of the curve should explore the potential of web3 technologies, and start preparing for the future of affiliate marketing by signing up to our newsletter.
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Copyright 2024 TheKollab.