How Bitcoin is Changing Affiliate Marketing

From affiliate programs for exchanges and faucets, to advanced applications in performance marketing, bitcoin is changing the game.
Photo: Frank Ravanelli

Affiliate marketing will never be the same after Bitcoin. The key driver is that Bitcoin makes it possible to reward – in a cost effective manner –  virtually any kind of purchase, from items with a high price tag to micropayments. It also allows to pay rewards in real-time, because purchases are not reversible (unless there is a money-back guarantee in place).

This is going to affect, among other things, “traditional” affiliate networks as well, which may have to reconsider their minimum network fees for each commissionable transaction. Lead-gen Companies may receive the usual high payouts for top-tier leads and a fraction of that for less attractive leads.

Affiliate Programs for Bitcoin Exchanges and Faucets

The first examples we see are in the Bitcoin space itself: by referring active users to Bitcoin Exchanges. On one side of the spectrum we have, for example, – a UK based Bitcoin Exchange, which serves continental Europe as well and does not operate in North America – offers a 50% fee for referred users, for 6 months from date of registration. On the other side we have a leading exchange like Coinbase. It pays handsomely, $10 of free bitcoin to both the referring and the referred user. However, the minimum purchase is $100 of bitcoin, meaning lower purchases go unrewarded.

Considering Bitcoin makes it possible to reward almost any kind of transaction, the longer term trend will likely be a percentage approach, with the option to add some tiers with premium percentages for referring high-quality customers. For example, 25% in purchases, 30% for a higher purchase amount, etc. Also, the way the threshold is expressed (Bitcoin vs a fiat currency) sends a message to the market. The more stable Bitcoin becomes in terms of value, the more commission structures will be expressed in Bitcoin.

Faucets already use this approach, from MoonBitcoin – which offers a 50% base commission, with optional added bonus, to CoinAd – offering 10%.

Binary Options, Forex and Other Affiliate Programs

Bitcoin is great for binary options. It allows traders to keep trading even when the other markets are closed. Plus, accepting bitcoin from traders will have several implications on the product itself. For binary options brokers, Daily Fantasy Sports and eGaming operators, accepting Bitcoin and then converting it into a fiat-currency in the customer’s balance/cashier is a no brainer.

However, bearing the financial risk of accepting bitcoins on Day 1, and then having to pay a different amount of bitcoins on Day 2 to winners, requires a lot of careful planning, until their value becomes less volatile. Among other things, this will lower the minimum first deposit amount, affecting the related CPA for affiliates. Again, it will likely result in a sliding-scale, in this case a sliding-CPA, with more commissionable items and a lower reward for small deposits.

Bitcoin Impact on Traditional Affiliate Programs

First, Bitcoin impacts the pricing of what is marketed through the affiliate program. Merchants offering one-way (meaning with no payback to customers) payments, who offer intangible products (downloads, virtual goods, etc.) or automatic services (cloud-based website designing tools, etc.), may be able to bear the risk of Bitcoin’s variable value. Companies selling tangible products are likely to keep their prices in their main currency (let’s say USD) and then convert the Bitcoin price on the fly.

Second, merchants may give some additional incentives to affiliates who promote products/services priced in bitcoin, and also to affiliates accepting their commissions in bitcoins. Again, the more stable the bitcoin value becomes, the easier it is for merchants to edge potential changes.

Bitcoin for Incentivized-Traffic

Faucets are a cheap source of traffic. Of course, getting clicks from people who get rewards for visiting the site or completing specific actions does affect a lot the value of the traffic. Here, demographics are key.

If there is an overlapping between your customers and the target users of the Bitcoin faucet you decide to advertise on, there may be value for you. For example, affiliate programs promoting deals and other services (better if free) catering to bargain-seekers, may get good traction. If you are aiming for high-rollers, then look elsewhere.

The Future

The technology developed to make Bitcoin possible is the most disruptive aspect. It is giving rise to many different kinds of applications, especially in the Fintech arena. Expect many more disruptions on the horizon, with a need to get traction to their products and services using affiliate marketing and performance marketing in general.

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