Affiliate Marketing is one of the popular forms of Internet Marketing, in which a seller or service provider provides authority to its subordinate affiliates to provide services or sell products on seller’s or service provider’s behalf. Affiliates are paid a portion of original seller’s profits earned through them. Earlier, this concept was popular with porn websites or other adult content providers, but currently the approach is popular with several e-business website including Amazon.com.
Origin of Affiliate Marketing Concept
The origin of affiliate marketing programs is as old as the origin of Internet. Affiliate marketing concept was started by porn websites to increase traffic via other websites. Cybererotica was among the early trendsetters in affiliate marketing through cost-per-click program. The first popular public affiliate marketing plan 'BuyWeb' was launched by 'CDNow'. It was among one of the first social affiliate marketing program for general public. With 'BuyWeb' program, 'CDNow' introduced the concept of affiliate or associate program via click-through purchasing.
The pioneer of electronic commerce Amazon.com started its affiliate program in year 1996, Amazon allowed its affiliate websites to put advertisement, text links or banners for popular books and publications linking directly to Amazon's respective webpage. When users clicked through these associated websites and made a purchase after being redirected to Amazon's own website, the associates received a commission. Although Amazon was not the first merchant to provide such affiliate programs, but its affiliate marketing program was first to become widely popular, which later became an ideal for subsequent affiliate programs.
Compensation Methods in Affiliate Marketing
Compensation method in affiliate marketing programs differs based on the type of services being offered through affiliate websites. The concept of Cost-per-Sale (CPS), Cost-per-Action (CPA), Cost-per-Click (CPC) and Cost-per-Mile (CPM) originated from affiliate marketing only. According to an estimate approximately 80% of affiliate programs use revenue sharing process based on CPS, 19% uses CPA, and rest 1% programs uses other compensation methods like CPC or CPM.
Affiliate Marketing – Synopsis
In brief, Affiliate marketing is a way of driving traffic or sales of a website via affiliate’s website. According to a survey done in U.K., total revenue generated through affiliate networks in 2006 was £2.16 billion in U.K. itself. The survey estimated that, in 2006, various affiliates earned $6.5 billion of revenue in payments and commissions from diverse sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing and forms of lead generation other than contextual ad networks such as Google AdSense.
The prospects of revenue generation in such affiliate programs are an attraction behind popularity of all affiliate programs. Thus several new affiliate networks are coming into existence with attractive and more profitable revenue returns possibilities. The web is on the way of getting another bandwagon of paid services.
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