Affiliate marketing is a method of promoting web businesses (merchants/advertisers) in which an
affiliate (publisher) is rewarded for every visitor, subscriber, customer, and/or sale provided through
Affiliate marketing is also the name of the industry where a number of different types of companies and
individuals are performing this form of internet marketing, including affiliate networks, affiliate
management companies and in-house affiliate managers, specialized 3rd party vendors and various types of
affiliates/publishers who utilize a number of different methods to advertise the products and services
of their merchant/advertiser partners.
Affiliate marketing overlaps with other internet marketing methods to some degree, because affiliates
are using the same methods as most of the merchants themselves do. Those methods include organic search
engine optimization, paid search engine marketing, email marketing and to some degree display
Affiliate marketing - using one site to drive traffic to another - is the stepchild of online marketing.
While search engines, e-mail and RSS capture much of the attention of online retailers, affiliate
marketing, despite lineage that goes back almost to the beginning of online retailing, carries a much
lower profile. Yet affiliates continue to play a fundamental role in e-retailers' marketing strategies.
The concept of revenue sharing, paying commission for referred business, predates affiliate marketing
and the internet. The translation of the revenue share principles to mainstream electronic commerce on
the internet happened almost four years after the World Wide Web was born in November 1994 when CDNow
launched its BuyWeb program.
With its BuyWeb program, CDNow was the first to introduce the concept of an affiliate or associate
program with its idea of click-through purchasing through independent, online storefronts.
CDNow.com 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 because of conversations
with a music publisher called Geffen Records in the fall of 1994. The management at Geffen Records
wanted to sell its artists’ CDs directly from its site but did not 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.
Affiliate marketing was used on the internet by the adult industry before CDNow launched their BuyWeb
program. The consensus of marketers and adult industry insiders is that Cybererotica was either the
first or among the early innovators in affiliate marketing with a cost-per-click program.
Amazon.com launched its associate program in July 1996. Amazon associates would place banner or text
links on their site for individual books or link directly to the Amazon’s home page.
When visitors clicked from the associate’s site through to Amazon.com and purchased a book, the
associate received a commission. Amazon.com was not the first merchant to offer an affiliate program,
but its program was the first to became widely known and served as a model for subsequent programs.
In February 2000, Amazon.com announced that it had been granted a patent (6,029,141) on all the
essential components of an affiliate program. The patent application was submitted in June 1997, which
was before most affiliate programs but not before PC Flowers & Gifts.com (October 1994), AutoWeb.com
(October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage(April 1996), and a handful of others.
Affiliate marketing has grown quickly since its inception. The e-commerce website, viewed as a marketing
toy in the early days of the web, became an integrated part of the overall business plan and in some
cases grew to a bigger business than the existing offline business. According to one report, total sales
generated through affiliate networks in 2006 was £2.16 billion in the UK alone. The estimates were £1.35
billion in sales in 2005. MarketingSherpa's research team estimated that, in 2006, affiliates
worldwide earned $6.5 billion in bounty and commissions from a variety of 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.
Currently the most active sectors for affiliate marketing are the adult, gambling and retail sectors.
The three sectors expected to experience the greatest growth are the mobile phone, finance and travel
sectors. Hot on the heels of these are the entertainment (particularly gaming) and internet-related
services (particularly broadband) sectors. Also several of the affiliate solution providers expect to
see increased interest from B2B marketers and advertisers in using affiliate marketing as part of their
mix. Of course, this is constantly subject to change.