In this post, we will trace the history of affiliate marketing, explain exactly what it is and how it works. By the end of this post, you will want to know how to benefit from affiliate marketing.
Whether you are the affiliate or the merchant. What is affiliate online marketing is the targeted question here. I am here to help answer this question for you.
If you have done research on marketing on the internet. The chances are that you have come across the term affiliate marketing at least once.
You may not have explored the term or understood what it is. The following post will help you gain a good understanding of this term.
What Is Affiliate Marketing
Affiliate marketing is a type of performance-based advertising. That pays for performance in advertising. In this type of advertising or marketing. The purchaser pays the advertiser. Only when the result of the advertising is measurable.
This type of advertising is becoming more prominent with the spread of the internet. Now Google analytics and many other apps. Make it possible for a company to know the user response to its advertisements.
In affiliate marketing, the company hires one or more affiliates. These affiliates do the marketing for the company on the net. Based on the number of visitors or customers. They bring in through their marketing efforts.
The company pays the affiliates. Put simply; you can make money online when you are paid by a business. For promoting their service, product, or website.
From the perspective of a company. You can hire someone else to market whatever it is that you are selling and pay them based on the results. The number of customers they can attract through their marketing.
Affiliate marketing works through four players. The merchant is also known as the brand or retailer.
The network that contains the offers an affiliate can select from. And that also takes care of the payments to the affiliate.
The affiliates themselves are also known as the publishers. And of course, the customers.
As it has expanded, affiliate marketing has become increasingly complex. With another tier of players, such as super-affiliates. And affiliate management agencies, coming in.
Many people often confuse affiliate marketing with referral marketing. It is a common enough mistake to make.
Especially when you consider both types of marketing. Use third parties to attract visitors and customers for the retailers.
But the key difference between the two. Is that in affiliate marketing sales driven by financial motivations.
In referral marketing, personal relationships. And the trust therein used to drive sales.
Now, compared to other marketing strategies. Affiliate marketing still holds a low profile.
Advertisers overlook this marketing strategy. Their attention is captured by other strategies. Such as search engine optimization and website syndication.
Yet, many e-retailers still do not consider affiliate marketing. A major part of their marketing strategies.
The History Of Affiliate Marketing
Revenue sharing or paying commissions for a business that you have referred to is not a new concept. In fact, this concept came into being. Way before the advent of the internet and affiliate marketing.
The transition of revenue share principles to mainstream e-commerce. Began in November 1994. Approximately four years after the implementation of the world wide web.
The concept of affiliate marketing on the internet. Conceived by, implemented, and patented by a man named William J Tobin.
The man who created PC Flowers and Gifts. PC Flowers and Gifts launched in 1989. On the Prodigy Network and operated in that service for seven years until 1996.
By 1993, PC Flowers & Gifts had generated a sales amount that exceeded $6million per year. On the service of Prodigy Network.
In 1998, PC Flowers & Gifts created a business model of paying a commission on sales to the Prodigy Network.
In conjunction with IBM. Because it owned half of Prodigy. Tobin ventured onto the internet with a PS Flowers and Gifts beta version in 1994.
Within a year, a commercial version of the PC Flowers and Gifts website had launched. The company also had 2600 affiliate marketing partners on the internet.
Realizing the value of the business model he started. Tobin sent in an application for patents. On tracking and affiliate marketing on January 22, 1996. And issued U.S. Patent number 6,141,666 on Oct 31, 2000.
Tobin took it even further to receive a Japanese Patent (number 4021941) in 2007. And US patent 7,505,913 in 2009 for his part in affiliate marketing and tracking.
In 1998 PC Flowers and Gifts conducted a merger with Fingerhut. Along with Federated Department Stores.
One of the first innovators in the field of affiliate marketing was cyber erotica. Which had a cost-per-click program.
The innovation continued with CDNOW which started the BuyWeb program in November 1994.
The idea came to CDNOW that websites with music could list or review albums. That they felt that the visitors to the website might be interested in buying.
What the websites could do was offer a link. That would take prospective buyers to the CDNOW website. Where they could make their purchases.
This whole idea first came into being thanks to conversations with Geffen Records. A music label. What Geffen wanted was to be able to sell their artist’s music directly on their website.
However, they did not want to have to create this feature themselves. Instead, they talked to CDNOW about a program that would let CDNOW take care of the orders.
They discovered that CDNOW had the capability to link from the artist. On its own website to Geffen’s official website. This would bypass the homepage for CDNOW and go straight to the music page of the artist.
In July 1996, Amazon, via Amazon.com. Started an associate program. Which allowed the associates to place text links or banners. For individual books on their site.
The program also allowed them to link to the Amazon home page. When people who visited the associate’s site. Clicked through to Amazon and bought a book, Amazon gave a commission to the associate.
Amazon was by no means the first company to offer such incentives in the form of an affiliate program. But its program was the first to catch on. Eventually, they served as a business model for the other programs.
February 2000 Amazon made the announcement that a patent was granted to them. On certain parts of an affiliate program. The application had submitted in June 1997.
This was before most affiliate programs came into being. But not before certain programs such as PC Flowers & Gifts.com. which submitted its application in October 1994.
AutoWeb.com did the same in October 1995. BrainPlay.com/KBkids.com in January 1996, EPage in April 1996, and quite a few others.
Affiliate Marketing has grown quickly since its start. At the beginning of the internet era. E-commerce websites were looked at more as a fun marketing toy.
But soon played a prominent role in businesses marketing plans. For some business-savvy professionals. It grew to a bigger business than the existing offline business.
One report indicated that affiliate networks. Generated a total sales amount of 2.16 billion in the United Kingdom in 2006.
In 2005, the estimates had hovered around the 1.35 billion mark. The research team at Marketing Sherpa.
Produced the estimate around the world, in 2006. The earnings of affiliates came to around $6.5 billion in commissions and bounty.
The sources ranged from retail to gambling. From telecom to education to travel and methods of lead generation. Apart from the contextual advertising programs.
Affiliate marketing was most popular in sectors such as gambling. File sharing services, retail industries, and adult entertainment in 2006.
The three divisions experienced the highest level of growth. Were the cellular phone, financial, and travel sectors.
Following behind these sectors were the entertainment/gaming sector. And service sectors that were internet-related (ISPs).
Several of the affiliate solution providers anticipated receiving increased interest from marketers. Related to business and advertisers. Wanting to use affiliate marketing as a part of their marketing mix.
Websites and/or services that are based on Web 2.0 concepts. Such as blogging and interactive communities. Have had a significant impact on the affiliate marketing world as well.
These platforms allowed improved communication between merchants and affiliates.
Affiliate marketing channels have also been opened to writers. Independent website owners, and bloggers, thanks to Web 2.0 platforms.
Publishers who do not have exceedingly high levels of web traffic. Use contextual ads to place affiliate ads on websites.
The way ads are presented to visitors by brands, ad networks, and companies. Has also changed because of the advent of new types of media. Let us take YouTube for example.
Video makers on YouTube are permitted to embed ads. Through the affiliate network that google has.
Deceitful affiliates have begun to find it more difficult. To make money thanks to new advancements.
However, the art of deceit has never ceased to exist. So be careful out here in the world of the internet. And do your research.
Web 3.0 represents the next iteration or phase of the evolution of the web/Internet and potentially could be as disruptive and represent as big a change in basic assumptions as Web 2.0.
Web 3.0 is built upon the core concepts of decentralization, openness, and greater user utility.
It is an idea for a new iteration of the World Wide Web-based on digital concepts covering blockchain technology, which incorporates concepts including decentralization and token-based economics. Such as NFTs, crypto, and the metaverse.
Some technologists and journalists have contrasted it with Web 2.0, wherein they say data and content are centralized in a small group of companies sometimes referred to as “Big Tech”.
The term was coined in 2014 by Ethereum co-founder Gavin Wood, and the idea gained interest in 2021 from cryptocurrency enthusiasts, large technology companies, and venture capital firms.
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