BMJ Score: 3.5
Quick Summary24 Investors read this
CommentaryThe affiliate marketing industry is worth $13 billion and is the only pay-for-performance marketing model. While ecommerce is booming, only 16% of ecommerce revenue comes from affiliate marketing, largely due to problems including high affiliate network fees, tracking issues, underreported sales, inefficient payment process, and a lack of communication between publishers and merchants. Attrace wants to eliminate these problems by tracking every single click and referral of a prospect with its own blockchain called Golang, which aims to differentiate from other blockchains with a faster transaction speed. We are very impressed by the team and advisors, but worry about whether this idea will come to fruition. The market is incredibly competitive, and while the platform is unique, they are building their own blockchain from scratch, which could be problematic.. Attrace has definitely worked on the shortcomings of similar decentralized affiliate marketing platforms, but, without a working platform, it will be difficult to ensure mass adoption.
- How to invest: In order to participate in the pre-sale, you must first register at the following link.
- Discount: Bonus included in pre-sale price
- Eligibility: China and U.S. residents are excluded from exchanging tokens with Attrace during the crowdsale.
- Token Price: $0.025 USD
- Jurisdiction: Attrace is registered in the Netherlands (EU).
- Minimum investment: .02 ETH
- Problem addressed/solved: Affiliate marketing has faced a variety of problems over the past few years. The most pressing issues are the high fees, tracking attribution problems, fraud (Without transparency the affiliate networks could claim traffic did not land or result in a sale.), slow payment process, and cookie spamming by publishers.
- Target customers/customer/ segments/verticals: The target market for Attrace consists of merchants and publishers who use or are looking to try affiliate marketing. Affiliate marketing is not necessarily a niche in the marketing industry, but it’s definitely a smaller portion compared to other methods. Having said that, affiliate marketing has had long-standing issues that have deterred potential companies from utilizing it. Blockchain might be the antidote for these issues, which could draw more merchants and publishers to affiliate marketing.
- Value creation: The only way to create full transparency is to track and allocate every individual click/referral of a prospect, including those that in the end will not convert into a sale. This principle is what separates Attrace from other blockchain marketing solutions, thus creating their unique value proposition. The platform will enable fast payments and commission payouts, direct communication between publishers and merchants, and dramatically reduced fees. There will be no fraudulent sales information, no more restrictions to become a merchant, and no more cookie spamming, which should make the solution attractive to both publishers and merchants.
- Competition: It’s no secret that blockchain reigns supreme as the king of transparency, which means plenty of other blockchain projects are targeting the affiliate marketing industry as well. HOQU, AffChain, RefToken, and AdEx all offer similar value to Attrace. Having said that, Attrace has a “competitors” graphic in their white paper that shows the areas in which they excel against the competition.
- Market size/potential: At ~5% market share ($13 billion a year), affiliate marketing remains a small part of the total online advertising market ($260 billion a year). A major reason for this discrepancy could be the lack of transparency and trust in the affiliate marketing industry today. The introduction of the blockchain might institute a level of security and trust in a system that relies mostly on the honor code since it’s difficult to prove the click status stemming from an online ad.
- Regulatory risks: Regulatory risks in this space are incredibly high. Affiliate marketing is monitored by the FTC, with an entire section of the Federal Trade Commission Act devoted to regulations on affiliate marketing. Should anyone in the space fail to comply with FTC regulations, the FTC can freeze assets and pursue lawsuits against the non-compliant entity. All material needs to be disclosed to the consumer, which Attrace aims to do with smart contracts.
- Investor value: Similar to most blockchain projects with utility tokens, the Attrace token will amass value based on the overall usage of the platform. The more publishers/merchants on the platform, the higher the value of the coin will be due to the increase in demand. Offering low fees, payment automation powered by blockchain tech, messaging for publisher and merchant, the ability to distinguish between lead values and counteract publisher spam and fraud, and no restrictions to enter as a merchant, the platform may prove to be attractive to both publishers and merchants.
- Disclosures: At first glance, the Attrace website doesn’t appear to have a wealth of information for potential investors to sort through, but, upon further examination, you can find a 5-page memo, 42-page white paper, 2-page pitch, and dedicated blocks of space for each employee and his or her associated work/education history. Having said that, the white paper has thick paragraphs that take too much time to read. It would be more effective for the team to ditch the huge blocks of words and replace them with bullet points. The team has already set the technical foundations and initial network testing, and in 2018, they aim to provide UI demons and validate the network with a mainnet launch. In 2019, the plan is to build partnerships and expand beyond the Netherlands.
- Token distribution: 18% Founders; 4% Advisors; 3% Bounty and ICO Marketing; 5% Marketing and Sales; 13% Ecosystem support, Publishers and Merchants, Strategic traffic acquisition; 2% Marketing ATTR; 5% Angel investors; 20% pre-ICO (estimate) ($5,000000 hard cap with 50% bonus); and 30% ICO ($9,698,863.64 hard cap).
- Use of proceeds: 35% Attrace development, 25% business development and strategic traffic acquisition, 20% marketing, 12% operational, 5% contingency, 3% legal.
- Caps: Soft cap set at $2 million USD; Hard cap set at $14,698,864 USD
- Track record: The Attrace team formed in 2017 after a group of affiliate marketers (on both the publisher and merchant sides) got together to solve the most pressing issues that plagued the industry. The CEO, Errin Werring, has previous work experience at Deloitte, was a VP at Morgan Stanley, co-founded Tradelic Media and LinkBundle, and has extensive experience in online marketing, finance, entrepreneurship, and blockchain. The COO, Lennard Zwart, started his career at Morgan Stanley and eventually moved to Deutsche Bank as a VP in Credit Structuring. He also has a strong background in startups as the previous CEO to Lenhold BV and CloudVPS. The Attrace team has an irrefutable level of experience and prestige, and their track records are some of the best in terms of ICO startups.
- Integrity: Much of the Attrace team has worked for powerhouse companies like Morgan Stanley, Deutsche Bank, Deribit, Deloitte, McKinsey, and others. These firms require a certain degree of dignity and integrity from all their employees, no matter their status. Furthermore, a few members of upper management have started ventures in the past or at least co-founded them.
- Erwin Werring, CEO (LinkedIn)
- Lennard Zwart, COO (LinkedIn)
- Marius Jansen, Co-Founder (LinkedIn)
- John Jansen, Co-Founder: (LinkedIn)
- MVP: Attrace has a Beta version about to go live which will address fully all aforementioned affiliate marketing problems and immediately generate revenue. They have yet to launch this version, but will likely do so at the conclusion of the token sale.
- Token use case: ATTR tokens will function as the only means of transaction on the Attrace platform. They also represent voting rights for members based on how many tokens members own. Those who have voting rights will participate on network parameter decisions and changes. ATTR tokens will be used by merchants to pay network fees and by publishers to pay small fees to witnesses who maintain the blockchain.
- Value-added: The ATTR token functions as a basic utility token. It adds value to the project much like other utility tokens in that there are no bank fees, payments are instant, tokens can be used as rewards, and tokens are the basis for voting rights.
- Decentralization: Attrace is a fully decentralised affiliate marketing platform.
- Token Supply: The total number of issued tokens will be 1,000,000,000 ATTR. No new tokens will be issued.
- Technical difficulty/investment expertise needed: Affiliate marketing does not ring a bell for the average investor. It’s a specific, web-based marketing strategy that merchants and publishers utilize. Attrace has a simple, well-explained page on their website that walks you through the process of affiliate marketing and how Attrace will improve the process. The “How it Works” page can be found at the following link.
- Halo effect: Attrace lacks the major brand partnerships that investors like to see in the early stages of blockchain projects. Instead, Attrace has partnered with the likes of Amazix, Nauticus, Crypto Insiders, and four other advisory/service companies.
- Buzz: The buzz around Attrace appears mediocre at first glance as they’ve only amassed a combined 1,300 followers on their Facebook and Twitter pages. However, their Telegram account has over 23,000 members. When judging a pre-ICO, a more accurate indication of significant buzz will stem from the Telegram page because that’s where most knowledge is found and where accredited investors typically follow projects.