While the entire digital asset market has grown significantly over recent years — grazing nearly $3 trillion in the last bull run — it remains relatively small compared to most. Indeed, within traditional assets, the gold market alone is valued at $16 trillion.
Aside from well-publicized issues like scams, hacks, and frequent boom and bust cycles, one of the main things holding crypto back from growth is user acquisition. Estimates vary, but various sources suggest that less than 100 million people use web3 applications — or just 1% of the global population — demonstrating that crypto remains a woefully undiscovered market.
As such, it is hard to imagine crypto or web3 taking off until there are scalable user acquisition channels to bring in the masses. And, perhaps most importantly, these channels need to generate value beyond bringing more token price speculators to the sector.
Marketing Barriers
While web3 offers benefits for many different types of users — from wealth creation opportunities to increased data security — most people have never heard of them.
This is not least because web3 marketers face a blanket ban on crypto-related advertisements on major platforms, including 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 — over 5 billion people — every day. Additionally, affiliate marketing — where one firm pays another to host web links to its products and services in return for referral fees — is another huge source of income in web2.
Valued at over $17 billion, the global affiliate marketing sector is another crucial advertising route that is not accessible to start-up web3 companies. Web2 affiliate marketing platforms charge sky-high commissions for their services — ranging from 10% to 40% — which doesn’t make economic sense for web3 start-ups, while the infrastructure isn’t suitable for their on-chain business models.
Leandro “Locha” Schlottchauer, founder of Kuyen Labs, says: “The playing field is seriously uneven for web3 marketers. In the advertising space they are banned, and in the affiliate space — which is one of the richest sources of referrals for most businesses — they are priced out by a model that is not particularly suitable for them anyway.
“This puts them on the back foot compared to web2 projects and giant centralized crypto exchanges like Coinbase, which have been able to scale past the Google and Meta ad bans because they can still use web2 affiliate networks.
“Some of the most reputable web3 projects have made very successful attempts to launch their own affiliate programs, but building these in-house takes time and is very expensive. This was the idea behind launching Fuul — the first web3-native affiliate network.”
Lack of Transparency
Another major challenge for web3 marketers is the need to individually establish partnerships with different influencers and publishers in the sector. Perhaps even more so than in the web2 world, influencers (or “Key Opinion Leaders”) are the driving engine of user acquisition in web3, making them essential to all marketing efforts.
Sourcing, vetting, negotiating, and compensating each influencer or publisher can be a time-consuming and daunting process. Many “KOLs” are also notoriously intransparent and tracking the effectiveness of such marketing efforts can be nigh on impossible.
Commenting on this challenge, Oleksii Sidorov, CEO of on-chain advertising firm Slise, says: “KOLs have closer relationships to users but they have no effective way to predict or optimize the performance—one post is going to be seen by all the users in all geographies and all web3-profiles, since no targeting or A/B testing is possible.”
Indeed, tracking the effectiveness of web3 marketing campaigns is, in general, challenging. Few strategies allow companies to track how their marketing or advertising campaigns are generating on-chain transactions to determine a Return on Investment (ROI) metric.
Web3 Marketers Need web3 Solutions
To tackle this challenge, Schlottchauer believes that — due to the lack of user acquisition channels — web3 projects require a means to connect directly with influencers and publishers to expand their reach.
He says: “It’s a very manual and lengthy process, and then it’s hard to determine what the impact of those partnerships is if the right attribution software is not in place. That’s why Fuul streamlines both onboarding and tracking, allowing projects to partner with affiliates at scale and just pay for referred transactions.”
Schlottchauer argues that web3-native affiliate marketing solutions are not just a way to fill the gap for web3 companies, either. He believes they can markedly improve the advertising and marketing landscape — indeed, perhaps even transform it.
In the web2 world, advertisers transact on top of their own private databases, which means they alone can validate how many referred transactions took place. This leaves affiliates with no other choice than just to trust, leading to a serious imbalance of power.
Daniel Fioravante, head of marketing and communications at web3 software development community COZ, says: “Blockchain reduces fraud and increases trust between clients, affiliates, and customers. It is possible to determine where the product is from and track the number of affiliates, ensuring fair compensation for each party.”
Why Trust When You Can Verify?
Thanks to the natural immutability and transparency of blockchain transactions, however, web3 advertising and marketing platforms can track not just where a visitor has come from but exactly how they transact.
Sidorov explains: “Unlike traditional web2 ads, where ad impressions are loosely tied to the ad performance, web3-native advertising allows us to close the attribution loop through the wallet IDs of the users. The same wallet which sees the ads then performs the on-chain action, and after that can be re-targeted for greater performance.”
This principle is the same for affiliate marketing, although Sidorov argues that this is less successful as web3 projects — already starved for user attention — prefer to hold onto it once they have it. Again, though, it is really a question of scale. Right now, the web3 world has no affiliate super platforms making mutually beneficial relationships easy and profitable.
Should we get to a place where a platform can effectively bring together disparate projects that can share and grow their user bases, this may change. This, says Schlottchauer, is exactly what Fuul is aiming at. He adds, though, that blockchain’s transparency is the real selling point for affiliate marketing — and the aspect that could truly make it a marketing superpower, both inside and outside of web3.
He says: “Blockchains can really become an affiliate marketer’s superpower. In web3, projects transact on top of public decentralized databases, which allow for full transparency and verification at the transactional level — making the case for affiliate marketing in web3 even more powerful. There’s no need to trust if you can verify. And that is really the whole point of decentralization.”
Source Affiliate Marketing, a $17bn Industry About to be Revolutionized by Blockchain – Block
