Although the overall digital asset market has grown significantly in recent years, reaching nearly $3 trillion during the last bull market, it is still relatively small compared to most markets. In fact, among traditional assets, he is worth $16 trillion in the gold market alone.
Apart from well-known issues such as fraud, hacking, and frequent boom-bust cycles, one of the main factors hindering the growth of cryptocurrencies is user acquisition. Estimates vary, but various sources say less than 100 million people, or just 1% of the world's population, use Web3 applications, which is a sign that cryptocurrencies are still woefully underdeveloped. It shows that it is a market of discovery.
As such, it is difficult to imagine cryptocurrencies or Web3 becoming widespread until scalable user acquisition channels are established to engage the masses. And, perhaps most importantly, these channels need to create value beyond bringing more token price speculators into the sector.
marketing barriers
Web3 offers benefits to many different types of users, from wealth-generating opportunities to improved data security, yet most people have never even heard of it.
This is especially so as Web3 marketers face a blanket ban on crypto-related advertising on major platforms such as Google, Facebook, and TikTok.
In the Web2 world, marketers rely heavily on advertising through these channels, with Google Ads reaching 80% of the world's internet users, or more than 5 billion people, every day. Additionally, affiliate marketing (where one company pays another company to host her web link to its product or service in exchange for a referral fee) is also a big source of income for Web2.
The global affiliate marketing sector, valued at over $17 billion, is another important advertising route inaccessible to emerging Web3 companies. Web2 affiliate marketing platforms charge very high commissions of 10% to 40% for their services, which doesn't make economic sense for Web3 startups. Also, the infrastructure is not suitable for an on-chain business model.
Leandro “Locha” Schlottchauer, founder of Kuyen Labs, said: In the advertising space they are prohibited, and in the affiliate space, which is one of the richest sources of referrals for most companies, prices are set by a model that is not particularly suitable in any case.
“This allows us to continue using the Web2 project and the Web2 Affiliate Network compared to large centralized cryptocurrency exchanges like Coinbase, which have been able to scale past Google and Meta’s ad bans. , they are at a disadvantage.
“Some of the most popular Web3 projects have had great success in their attempts to launch their own affiliate programs, but building these in-house is time-consuming and very expensive. That was the idea behind launching Fuul, the first Web3 native affiliate network.”
lack of transparency
Another big challenge for Web3 marketers is the need to establish individual partnerships with different influencers and publishers in this space. Perhaps even more so than in the Web2 world, influencers (or “key opinion leaders”) are the driving force behind user acquisition in Web3 and are essential to any marketing effort.
Sourcing, vetting, negotiating, and paying each influencer and publisher can be a time-consuming and daunting process. Many “KOLs” are notoriously opaque, making it nearly impossible to track the effectiveness of such marketing efforts.
Commenting on this challenge, Oleksiy Sidorov, CEO of on-chain advertising company Slise, said: “KOLs have a close relationship with their users, but there is no effective way to predict or optimize their performance. One post is visible to all users. Targeting and A/B testing are not an option. Because it is possible, it is possible in all regions and all Web3 profiles.”
In fact, it is generally difficult to track the effectiveness of Web3 marketing campaigns. Few strategies allow businesses to track how their marketing and advertising campaigns generate on-chain transactions to determine return on investment (ROI) metrics.
Web3 Marketers Need Web3 Solutions
To address this challenge, Schlotchauer believes that the Web3 project needs a way to connect directly with influencers and publishers to expand its reach due to the lack of user acquisition channels.
He said: “This is a very manual and time-consuming process, and it’s difficult to determine the impact of these partnerships without the right attribution software in place. It streamlines both and allows projects to partner with affiliates at scale and pay only for referred transactions.”
Schlottchauer argues that Web3-native affiliate marketing solutions are more than just a way to fill a gap for Web3 companies. He believes they can significantly improve the advertising and marketing landscape. In fact, you could probably even transform it.
In the Web2 world, advertisers perform transactions on their own private databases. This means that only the advertiser can verify the number of referred transactions. This leaves affiliates with no choice but to just trust, creating a serious power imbalance.
Daniel Fioravante, Director of Marketing and Communications for Web3 Software Development Community COZ said: “Blockchain reduces fraud and increases trust between clients, affiliates, and customers. The origin of a product can be determined and the number of affiliates can be tracked, ensuring fair compensation for each party. Masu.”
Why trust when you can verify it?
However, thanks to the natural immutability and transparency of blockchain transactions, Web3's advertising and marketing platform can track not only where visitors come from, but also exactly how they transact. can.
Sidorov explains: “Unlike traditional Web2 advertising, where ad impressions are loosely tied to ad performance, Web3 native advertising closes the attribution loop with the user's wallet ID. You can perform chain actions and then retarget to improve performance.
This principle is the same in affiliate marketing, but Sidorov argues that this is less successful because Web3 projects (already hungry for user attention) prefer to keep what they have once earned. But again, it's really a matter of scale. Currently, there is no affiliate super platform in the Web3 world that facilitates mutually beneficial relationships and increases profitability.
Things may change once we arrive at a platform that can effectively integrate disparate projects that can share and grow their user base. Schlochhauer says this is exactly what Fuhr is aiming for. However, he says blockchain's transparency is its real selling point for affiliate marketing, and it's the aspect that has the potential to make blockchain a true marketing superpower inside and outside of Web3. I'm adding.
He said: “Blockchain has the potential to be a real superpower for affiliate marketers. With web3, projects trade on a public decentralized database, allowing full transparency and verification at the transaction level, and with web3 It makes the case for affiliate marketing even stronger. You don't have to believe it if you can see it. And that's exactly the point of decentralization.”
