2017 was a historic year in online advertising. Over the year, digital ad spending took a global market share of 41%, or $210 billion. This was the first time it outstripped spend on TV advertising, which took only 35% of the market ($178 billion). Moreover, online advertising is growing at a rate more than five times that of TV advertising.
Despite that there are numerous ways of advertising online, the market is dominated by only a few major players, the biggest ones being Google and Facebook. The way that online advertising is controlled by the giants is worth considering.
For example, Facebook announced in January this year that it would block ads that promote ICOs, on the grounds that they are “frequently associated with misleading or deceptive promotional practices”. Ironically, this came only a few months after the company admitted that during the 2016 US Presidential Election, it had been selling ad space to Russian companies linked to the Kremlin.
The companies that dominate the online advertising space also collect all of the revenues from the digital ads served on their networks. Social media provides the perfect platforms for individuals to make referrals to their friends, family, and other contacts. But there is no real incentive for them to do so. Now, one blockchain startup is aiming to change this–by creating the world’s first global referral network.
Meet 2Key
2Key is establishing a blockchain-based platform that will allow its users to take advantage of the oldest and best-trusted form of advertising: word of mouth. People still tend to put more faith in information that comes to them via a recommendation from others.
It is the same principle that has made online review sites like TripAdvisor so successful. However, while TripAdvisor deals in only one vertical (travel), 2Key is aiming to operate across all verticals. Unlike TripAdvisor, where users leave their reviews for free, users of 2Key will be actively rewarded for providing referrals that are shared further, thereby proving their usefulness to other users.
The 2Key methodology deploys multi-stage tracking technology to track referrals through to conversion. To illustrate how this works, let’s consider that Alice the contractor is looking for new clients. She puts her goal on the 2Key platform–e.g. to gain 3 new clients. She also agrees with how much she is willing to pay to achieve her goal. Bob sees Alice’s goal and shares it with his network. Carl sees what Bob has shared, and in turn, shares it with his network. David sees Carl’s share, and David decides he wants to buy the services Alice is contracting.
The achievement of the goal won’t just reward Alice with winning David as her client. Using the funds Alice agreed to stake at the start, the 2Key network will also reward Bob and Carl for having successfully referred David to Alice through their own networks.
Game theory to combat spam
2Key will make use of algorithmic game theory to ensure that the incentive to share doesn’t result in its users sharing spam or useless content. Essentially, this puts a reputation score on individuals sharing within the network. Those who participate in sharing which results in a successful referral will enhance their reputation on the platform. Conversely, someone who repeatedly shares without contributing to referral success will lose reputation.
What is fairly ground-breaking about this is the ability of 2Key to automatically track the link clicks through each individual in the network. This is enabled through something called the Action Referral Contract (ARC), that embeds blockchain-based smart contracts, together with tracking capabilities, directly into the link. The smart contracts then play out to allocate rewards to referrers as the link is shared across the network.
Automatically tracking and recording links in this way will also allow 2Key to conduct analysis and gain insights into how particular campaigns can go viral. For those wishing to advertise on the platform, these types of insights can be invaluable in working out how to put together a successful campaign.
2Key is being built as a dApp on the Ethereum blockchain. It will run on its own 2KEY tokens, which will be used as the currency for purchasing referral services and for rewarding network participants.
Use cases for 2Key
With a low barrier to entry, 2Key foresees that the platform will be accessible to individuals, freelancers, and small to medium-sized businesses in any industry looking to achieve a wide variety of advertising goals. Goals could be anything from lead generation to product purchases to software installs. Given the heavy advertising restrictions on ICOs that have been put in place by Google, Facebook, and other networks, the 2Key platform could prove attractive to blockchain startups.
2Key ICO details
The company is currently conducting a private sale, with details of the token presale and airdrop soon to be released. You can find out more information in the full white paper or lite paper. You can also join the 2Key group on Telegram.