To those ‘in the know’ affiliate marketing is a simple concept to grasp, but although it has been practiced since 1996 and now a multi-billion dollar industry, accounting for up to a third of online sales in various markets such as the UK, most people don’t have the foggiest idea what it is about.

As explained in earlier tutorials, it is essential to have the basics in place, so this week’s class will teach the origins and developments of affiliate marketing and attempt to elucidate on just what this hard-to-grasp form of advertising does and does not involve.

For The Weekly Q readers who think this is kindergarten stuff, don’t worry, we will become more advanced week by week and, before you know it, our classes will have developed to PhD level!

When did affiliate marketing start?

Although the term affiliate marketing has only been used in recent times, it has been carried out for centuries. Whenever anybody promotes somebody else’s product or service in exchange for a reward, that is in essence affiliate marketing, and it has obviously been happening since the dawn of civilization.

Forms of advertising similar to affiliate marketing, such as multi-level marketing and network marketing, came into their own in the twentieth century and, in many ways, affiliate marketing is very similar to its older siblings.

Joe Girard, who is listed is in the Guinness World of Records for being the World’s Greatest Salesperson, was writing in the 1970s about gaining hundreds of customers at his Chevrolet showroom by paying $50 lead fees to previous customers and other people in the automobile industry in Michigan. He writes in his seminal How to Sell Anything to Anybody about developing a sophisticated system which would involve sending a “bird dog” kit to people who bought vehicles from him to encourage them to refer other customers.

Of course, things are a lot easier with computers and affiliate marketing really started coming into its own with the advent of the internet. The myth is that Amazon.com started the world’s first affiliate program, but that is not the case. Epage.com’s affiliate program started in April 1996 and, as documented in The CDNow Story: Rags to Riches on the Internet, CDNow.com’s affiliate program predated Amazon’s by more than a year.

Shawn Collins’2001 book Successful Affiliate Marketing for Merchants, explains how it all began:

“CDNow had the idea that music-oriented web sites could review or list albums on their pages that their visitors might be interested in purchasing and offer a link that would take the visitor directly to CDNow to purchase them. The idea for this remote purchasing originally arose as a result of conversations with a music publisher called Geffen Records (www.geffen.com) in the fall of 1994. The management at Geffen Records wanted to sell its artists’ CDs directly from its site but didn’t want to do it itself. Geffen Records asked CDNow if it could design a program where CDNow would do the fulfillment.

Geffen Records realized that CDNow could link directly from the artist on its Web site to Geffen’s web site, bypassing the CDNow home page and going directly to an artist’s music page. By linking Geffen Records to CDNow, the affiliate marketing format was born.”

What exactly is affiliate marketing?

The term has yet to be discovered by the compilers of the Oxford English Dictionary and Merriam-Webster, so here are some definitions from the internet:

“Affiliate Marketing is a widespread method of promoting a website, in which an affiliate is rewarded for every visitor, subscriber and/or customer provided through his efforts. It is a modern variation of the practice of paying finder's-fees to individuals who introduce new clients to a business. Compensation may be made based on a certain value for each visit (Pay-per-click), registrant (Pay-per-lead), or a commission for each customer or sale (Pay-per-Sale).”
en.wikipedia.org/wiki/Affiliate_marketing

"Revenue sharing between online advertisers/merchants and online publishers/salespeople, whereby compensation is based on performance measures, typically in the form of sales, clicks, registrations, or a hybrid model."
www.marketingterms.com/dictionary/affiliate_marketing/

“This is a system of revenue sharing between one site (the affiliate merchant) which features an ad or content designed to drive traffic to another site (the advertiser). The affiliate will receive a fee based on the amount of traffic generated.”
InternetWorld365.com (website not operational)

“A system of advertising in which site A agrees to feature buttons from site B, and site A gets a percentage of any sales generated for site B. It can also be applied to situations in which an advertiser may be looking for marketing information, rather than a cash sale. Popular among startups with very small marketing budgets.”
www.expedite-email-marketing.com/internet_marketing_glossary
_internetmarketingtermsdefinition.htm

“Revenue sharing between two web sites. Affiliate site normally provide free advertising for an ecommerce site and compensation is based on performance i.e. sales, clicks, registrations, or a combination of all.”
www.positioning-search-engines.com/glossary.htm

“A risk-free form of advertising in which a company pays its Affiliate partners a commission for sales and/or leads generated through the Affiliates marketing activities.”
www.webbloom.com/Help_Centre/Glossary/

“A business relationship with a merchant or other service provider who allows you to link to that business. When a visitor clicks on the link at your site and subsequently makes a purchase from the merchant, you receive a commission based on the amount of the sale, a referral fee or a pay-for-click fee.”
www.showtheworld.com/glossary.htm

“A system of selling products or services in context over the Internet that allows online merchants to promote their goods or services within the content of tens of thousands of Web sites. Affiliate marketing allows merchants to pay their affiliates based on performance.”
www.getrichfree.com/glossary_of_terms.htm

“(Also partner, pay for performance, performance-based, referral-based or revenue-sharing marketing) a revenue sharing partnership between a merchant and one or more affiliates, where the affiliate is paid a commission for referring clicks, leads or sales to the merchant website.”
www.shareresults.com/about_us_glossary.php

The general consensus is that affiliate marketing involves “publishers” or “affiliates” referring customers to “merchants” or “publishers” in exchange for a CPA, CPL, CPS or hybrid referral fee. When the remuneration is on a CPC or CPM basis, the term affiliate marketing is not generally used.

Nadeem Azam, PrimeQ
Public Relations Manager
nazam@primeq.co.uk

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