On average affiliation accounts for 30% of online retailer’s revenue, with the percentage increasing for highly competitive markets such as insurance, banking, finance, online gambling and forex. Over 80 percent of advertisers and 84 percent of publishers run an affiliate program. Despite the importance of this channel it has been neglected and to this day runs on protocols conceived in the 90s. Affiliation has been broken for a decade, and RefToken is the platform to fix this industry which is so crucial to online businesses.
In its current form affiliation works as follows; an unfortunate affiliate manager is tasked with trawling through thousands of websites or social pages cold emailing them one by one offering them a commission for every converting user they refer. A conversion could be something like a user requesting a call-back, making a deposit, signing up or purchasing something. The response rate for this workflow is around 10%, and is followed by several back-and-forth emails where commission levels and thresholds, payment methods and various T&Cs are negotiated.
Once negotiations are concluded the affiliate is given a unique link via which they are to refer traffic (hence the shortened links in your favourite fitness/fashion/business guru’s posts), each time a user clicks though that link a cookie is dropped in their browser and all activity taken by that user is attributed to that affiliate. At the end of each day the merchant uploads a file with that day’s sale amounts to an affiliate platform which calculates the affiliates commission for the day, the next day the affiliate can check what they earned yesterday, and if they hit the minimum payment threshold (as it’s not feasible for merchants to effect payment for small amounts) by the end of the month a payment is issued.
The above model is a relic from the 90s and has multiple gaps that are abused by parties on both sides of the deal, some of which are:
- Merchants withholding payment for spurious reasons
- Rogue merchants popping up, building an affiliate program and vanishing after a few months without paying affiliates
- Affiliates being caught up in a merchant’s legal issues and not getting paid (poker sites during Black Friday are a great example)
- Merchants skimming sales amounts or adding arbitrary ‘program management’ fees
- Affiliates abusing Cost Per Acquisition (CPA) campaigns by incentivising users to make minimal deposits or sign-up for call-backs with no intention of purchasing a service (usually in return for ‘gold’ or ‘power’ in freemium games)
- Affiliates running chargeback fraud where purchases are made with stolen credit card details close to the end of the payment period with the resultant chargebacks being hitting the merchant long after the affiliate has been paid their commissions
RefToken will disrupt the affiliate industry by leveraging the immutability and transparency of the blockchain, and the self-governance and enforcement of smart contracts in the following manner:
- The platform will feature central affiliate and merchant directories segmented by niche, eliminating thousands of hours of manual labour
- An in-app messaging system will allow merchants and affiliates to communicate without spamming each other
- All deals will be governed and enforced by smart contracts
- RefToken’s wallet will sit in-between the user and the merchant, eliminating the possibility of merchants skimming sales amounts
- Once a transaction is detected between the user and the merchant’s wallet the commission payment will instantly be paid to the affiliate, solving their current cash flow issues and preventing affiliate payments being caught up in force majeure issues
- In order to publish a deal, merchants must commit the required tokens to fund it in an escrow wallet governed by the deals smart contract, eliminating withheld payments and vanishing merchants
- All sales and transactions will be managed on the blockchain, eliminating chargebacks
- Blockchain based identity management will make short work of weeding out incentivised users abusing offers
Fixing the trust issues plaguing affiliation will usher in a new dawn on what is already a formidable marketing channel, empowering companies of all sizes to decide how much they want to pay for specific actions, and conversely allowing affiliates to realise the true value of the audiences they’ve built.
RefToken will build a global collaborative network of brands, marketers, content creators, merchants and influencers, so that everyone from blockchain vloggers on YouTube, to yoga instructors on Instagram, to news outlets and industry sites can partner up and work with companies ranging from established organisations all the way to start-ups working out of their garage for their mutual benefit and growth.