Affiliate Marketing Explained

June 26, 2009  

Affiliate Marketing is an Internet-based marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s marketing efforts.

Amazon.com have been considered the pioneer of Affiliate Marketing when in July 1996 they launch the first affiliate program on the Internet.

As legend has it, Jeff Bezos, CEO and founder of Amazon.com, chatted with a woman at a cocktail party about how she wanted to sell books about divorce on her web site. After that exchange, Bezos pondered the idea and thought about having the woman link her site to Amazon.com and receive a commission on the book sales. This was the impetus for creating the “first on the Web” Amazon.com Associates Program.

Other sources claim affiliate programs were in place as early as 1994, only four years after the origination of the World Wide Web.

The Affiliate Marketing industry has four core players at its heart: the Merchant, the Network, the Publisher and the Consumer.

Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.

Affiliate Marketing involves using one website to drive traffic to another, its a form of online marketing, which is frequently overlooked by advertisers.

So What are the Compensation methods?

Eighty percent of affiliate programs today use revenue sharing or cost per sale (CPS) as a compensation method, nineteen percent use cost per action (CPA), and the remaining programs use other methods such as cost per click (CPC) or cost per thousand impressions(CPM).

Types of affiliate website can be found here.

Looking to sign up for an affiliate program? check out our comprehensive list here.

Question for readers – When did you first get involved with Affiliate Marketing? What was the first product you advertised?

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