Blockchain Becoming a Game Changer for Influencer Marketing
The Korean magazine ICO CROWD has published an article by our co-founder and CMO, Aleksandra Morozova: “Blockchain Becoming a Game Changer for Influencer Marketing”. Check the English version of the article.
In most people’s minds, the term “blockchain” is synonymous with bitcoin and other cryptocurrencies. While understandable, it is only part of the picture. By its very nature, this powerful distributed ledger technology has the potential to positively transform many existing lines of business. One of the areas set to benefit the most from blockchain is advertising and marketing, and specifically influencer marketing. In August 2017, the global population was around 7.5 billion people, and nearly three billion (or 40%) of them use social networks every day. As social media platforms such as Instagram, Facebook, YouTube, and Twitter continue to expand their sway, influencer marketing is proving to be one of a marketer’s most powerful tools to reach their target audience. This is especially true when talking about members of Generation Z and the Millennials (ages 16–34), who are more apt to discover new products and brands through social media and vlogs. Well over half (69%) of marketers who use influencer marketing consider it effective, with 73% adding that it helps in lead generation and another 93% noting that it boosts brand awareness[1].
This trend will only become more pronounced going forward. Due to its effectiveness and relatively low cost compared to television advertising, marketers are turning to influencer marketing in ever-growing numbers. Most marketers spent between $25,000-$50,000 per influencer marketing program in 2016, with respondents stating that this figure will double in 2017. In the coming years, 67% of marketers plan to increase their influencer marketing budget[2]. However, there are certain issues with influencer marketing that still need to be addressed. This is where blockchain enters the picture.
One of the main hurdles facing influencer marketing today is the abundance of middlemen involved in the process. Current solutions rely on either a manager- or agency-based model. The result is that a manager or agency is in control of all interactions between the parties. This both increases the number of intermediaries and leads to an uncertain and chaotic situation in pricing for the services of influencers. It also translates into big bucks, as manager or agency fees can add up to 30% to the cost of an ad campaign. Blockchain offers an ideal way to eliminate the middleman — it allows digitized smart contracts to be created that openly and transparently set forth the terms of and prices for services. These contracts can be concluded between a marketer and an influencer, without any intermediaries. Since blockchain data is stored in multiple locations, the information can be distributed but not altered, making it completely public and quickly verifiable. According to David Meerman Scott, bestselling author of The New Rules of Marketing and PR, “blockchain technology shows promise to finally bring transparency for brands that work with social influencers.”
Blockchain-based smart contracts can also be used to set up a secure escrow system, which helps to alleviate two more problems of the current influencer marketing industry. These problems are two sides of the same coin. The first is the problem of delay or non-payment of compensation to content creators. The reason given for the delay or non-payment is often the client’s dissatisfaction with the content produced, which is the second problem. This is not necessarily always the content creator’s fault, as the tasks may change during the creation of content. The escrow payment system on the blockchain facilitates the fair exchange of value between the parties. Using this system, contract fees can be held in escrow until the obligations established in the smart contract are met. Any subsequent changes to the obligations will be automatically added to the smart contract. Once the project is complete, the funds are paid, thereby securing the interests of both parties. The platform currently being developed by one project, SocialMedia.Market, even envisages a decentralized dispute resolution component, where platform users vote to resolve disputes on controversial cases. “Influencer marketing provides a huge opportunity for brands to deliver their messages to a broader audience,” says Werner Geyser, founder of Influence Marketing Hub. “Blockchain technology in turn provides much needed regulation for transactions between brands and influencers, ensures transparency and ultimately provides security for everyone involved.”
In addition to the above, blockchain technology will reduce the time required to launch influencer marketing campaigns, help eliminate current difficulties in measuring their effectiveness, and tackle the problem of scammers and fraud, which many marketers cite as the most pressing problems in the industry today. It will do so by bringing influencers, advertisers and marketers together under one roof, providing tracking and analytical tools, and implementing know-your-customer procedures. For example, the SocialMedia.Market project mentioned above, which acts as a marketplace, plans to bring together an unlimited number of bloggers from all major social networks, brands, and businesses of any size on its competitive blockchain platform. All pricing will be transparent, and all participants treated equally. Users will be provided with the impression tracking and analytical instruments needed to efficiently collect data on the effectiveness of every marketing action taken on the platform. The identities of both advertisers and influencers will be based on their profiles in the blockchain, built based on KYC procedures performed on registration on the platform. This will make it easy to verify that influencers and customers are who they purport to be, making the machinations of scammers and fraud artists that much more difficult, if not impossible.
“As an entrepreneur and blockchain supporter, and from my experience with influencers, blockchain technology will tip the scales of the financial game in favor of influencers, as we all share the same path of reaching our goals without intermediaries who dictate the rules for their benefit,” comments Chafik Abdellaoui, founder of ACBMC, Bizzant and Xedyas IT Hybrid Solutions. “Blockchain is the bridge connecting influencers and their fans. Direct communication, fairness, and transparency — this is the true communication.”
[1] Stats from https://shanebarker.com/blog/influencer-marketing-future-marketing/
[2] Linqua.com. The State of Influencer Marketing 2017.
SocialMedia.Market is the first decentralized marketplace connecting social media bloggers and advertisers. A solution to the major influencer marketing problems, it creates new opportunities for content monetization, community engagement and audience exposure. The new ecosystem, driven by blockchain technology and social media token, will simplify marketing interaction between business and influencers.
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