How the Token Economy Helps Scale Influencer Marketing
From Serguei Popov, professor of mathematics at the University of Campinas, Sao Paulo, Brazil and AdHive’s scientific advisor:
Influencer marketing is growing at full speed. According to eMarketer, in 2017 in the U.S. alone, native display ad spend will increase by over 36 percent to more than $22 billion, while Adyoulike data shows that native advertising will reach 30 percent of total global ad spend by 2020.
While being less intrusive and more engaging, native ad campaigns are often less scalable, harder to manage, and tricky in terms of motivation and quality control. Advising AdHive, an AI-driven platform for native video advertising, on creating a mathematical model of tokenization, I faced a challenge: how to create a model benefiting brands, bloggers and community members?
AI Meets Community
The idea of AdHive platform is that advertisers offer a key message and let bloggers come up with creative concepts. Then, an AI algorithm kicks in to monitor influencer feeds for videos, pictures, or livestreams containing keywords and product images.
However, artificial intelligence is not yet advanced enough. For example, a blogger can place the ad almost out of the viewer’s sight, but the algorithm still will catch the brand mention. In order to prevent AI abuse, the algorithm is complemented by community assessment.
Community members evaluate and rank bloggers based on how their video or photo improves the brand perception. The algorithm learns on that data to detect the most suitable influencers with relevant target audience for each product.
The key role of community-based ranks is to define each blogger’s income. That way, the influencers are motivated to create high-quality content and compete for viewers and advertisers. As a result, brands benefit from engaging campaigns, bloggers–from creating better content, and community members–from their actions in the ecosystem.
The Role of Token
A number of industries ranging from banking and real estate to education and healthcare already benefit from blockchain-based transactions in financial settlements. Token as a digital currency simplifies transactions and enables their security. Previously working on token model for WINGS, I have witnessed the advantages of token-based interaction between the project and their community.
Advertising is not an exception—a transparent, verifiable register of transaction data is an attractive business approach for brands. In AdHive model, token works as a payment method between the advertisers, the influencers, and the community. To ensure the balanced utilisation of tokens, a number of use scenarios were designed:
- Rewards for participants. Influencers earn tokens for their creative work and are motivated not to skive, as the amount of tokens they get depends on the quality. Community members get tokens for an accurate evaluation of campaigns. Looking through the game theory, if users put an effort, they will get higher incentives. If they try to cheat or guess, their remuneration drops.
- Security deposit. To apply for ad placement, influencers use tokens in order to be motivated to execute tasks properly.
- Daily transactions. Smart-contract payments make financial management more flexible.
- Complementary services. Advertisers can spend ADH tokens for analysis of all video channels to detect usage of keywords and brands they are interested in.
- Network growth. Participants get rewards for activities in the ecosystem, including referrals.
- Anti-spam prevention. Bloggers pay a small commission for applying to ad task.
- Sybil-attack protection. To prevent the situation of a Sybil attack during video assessment from affecting the rewards, the calculation of the rewards for community members depends of the amount of tokens held in the wallet.
- Payment for platform services. Advertisers can use tokens to launch and monitor campaigns.
- Peer-to-peer payments.
- Listing on cryptocurrency exchanges.
Risks and Benefits
Being a relatively new phenomenon, token economy in native advertising still needs to gain trust from advertisers. Although the benefits, including the near-instant launch of international campaigns, reduced operational expenses and accounting costs, increased quality and relevancy of native advertising might tip the scales.
Token-based motivation for influencers and community members is largely dependent on token adoption and demand. At the same time, tokens rewards do not depend on fiat currency rates as well as reduce transactional and conversion fees of cross-border and micropayments. Perhaps even more importantly, smart contracts in advertising ensure that both sides stick to the verifiable conditions.