A History on the Affiliate Marketing Model

17 December 2010

The model of affiliate marketing is pretty straightforward and simple to understand. In essence, if you make it your business to promote someone else's business, then you'll receive a percentage of everything you help that business sell. Offline, this model has certainly been used before. Online, its still in its infancy and has dozens of different stories about how it came to be.

No matter which story you read, the characters and time line and even certain aspects of the model are going to be different. However, the exact specifics of affiliate marketing's history do not matter nearly as much as knowing relatively where and how it started and how quickly it took off to become a billion-dollar industry.

The most accurate summation of affiliate marketing details: In the mid 1990s, as the Internet was first introduced to the mainstream market, cdnow.com, a music site, decided to try a new venture to increase their sales. If other websites would place links to cdnow.com, then that site would receive a portion of the proceeds for every album sold.

Only a few months later, Amazon.com decided that this brand of marketing would be good for business also. Whether or not they came up with the same idea coincidentally or borrowed the idea from cdnow.com is up for debate.

Amazon got in touch with a woman and explained to her that if she promoted their books on her website, she would be a paid a certain percentage for every customer that purchased a book by way of her site. This commission-based program gave rise to what we know of as affiliate marketing today.

In the early days, there weren't necessarily campaigns to get people involved. The revenue sharing program simply reached across the market and shared traffic instead of working to promote it.

Soon after, however, many more sites began offering start-up affiliate programs, offering commissions on sales, and that began the spam age of affiliate marketing.

When it was still so young, affiliate marketing was extremely lucrative in the short-term for spammers. After all, in 1995, not everyone knew that the Internet was so full of scammers and spammers. So when someone received an email or a pop-up ad making claims, there was a higher probability that the recipient of the ad would visit the site and/or purchase a product.

Although a lot of the affiliates were on the shady site, there were still plenty of legitimate sites out there offering services and these sites helped to pioneer new software and tactics for the model.

Affiliate marketing was being used by gaming sites, mobile, telecom, educational, travel, retail, subscription sites, and many, many more types of websites. Four different types of commission methods surfaced: Cost per action (CPA), cost per mile (CPM), cost per click (CPC), and cost per sale (CPS).

Eventually, the little guy was out and other big businesses sharing their traffic and revenue were in. That's not to say that start-up marketers cant make a good career out of being an affiliate, but the landscape is dominated by huge names now that all run a very tight ship.