Affiliate marketing is a
web-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.
Affiliate marketing
overlaps with other internet marketing methods to some degree, because
affiliates often use regular advertising methods. Those methods include organic
search engine optimisation, paid search engine marketing, email marketing and
in some sense display advertising. On the other hand, affiliates sometimes use
less orthodox techniques like publishing reviews of products or services
offered by a partner.
Affiliate marketing — using
one site to drive traffic to another — is a form of online marketing, which is
frequently overlooked by advertisers. While search engines, e-mail and RSS
capture much of the attention of online retailers, affiliate marketing carries
a much lower profile. Still, affiliates are cheap and paid only on results and
as such they continue to play a significant role in professional e-retailers'
marketing strategies.
The very first pay per
click and pay per sign-up web based affiliate service ran in the US adult industry around 1982/3. Non
adult web based affiliate marketing scheme was set up in November 1994, when
CDNow launched its BuyWeb program they introduced the concept of an affiliate
or associate program with its idea of click-through purchasing from a third
party site.
However
affiliate marketing is unregulated and very hard to control, in early 1984
CDNow were inundated with emails from angry customers when some of their
affiliates started using the CDNow graphic to link to competitor sites or to
sites of adult content.
Very soon CDNow were followed by a host of other companies offering to payout
second incomes to people who ran affiliate schemes, many of these companies
were scams that never paid out and for a while affiliate marketing started to
lose its original lure.
Currently the most active
sectors for affiliate marketing (in order of payouts) 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
.
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.
The rise of blogging, interactive
online communities and other new technologies, web sites and services based on
the concepts that are now called Web 2.0 have impacted the affiliate marketing
world as well. The new media allowed merchants to get closer to their
affiliates and improved communication between each other. New developments have
made it harder for unscrupulous affiliates to make money. Emerging black sheep
are detected and made known to the affiliate marketing community with much
greater speed and efficiency.
80% of affiliate programs today use
revenue sharing or cost per sale (CPS, the affiliate receives a percentage of
the total sale) as compensation method, 19% use cost per action (CPA, the
action may be a form filled in or a customer signs up for information) and the
remaining 1% are other methods, such as cost per click (CPC) or cost per mille
(CPM cost per thousand).
Cost per sale is the most
popular because it directly links to the retailer making a direct sale. The
retailer not only gets the sale item but also the contact details of a new
customer giving them the opportunity to market direct for the next sale.
This means that the affiliate has to constantly search for new customers as
repeat business is not a credible option. It is this search for repeat business
that has seen the rise of price comparison sites where affiliates sell across
competitor markets in what they hope will be a win for them as the buyer can
supposedly check all prices in one location and will return to check for other
items in the future.
What is known is that no
one as yet has become extremely rich from direct affiliate marketing. The early
lessons learned make it imperative that if you want to sell as an affiliate you
sign up direct and never go through a third party. Most web based retailers,
Amazon for example have instructions on their web site about becoming an
affiliate, and if you sign up direct you will at least get paid.
After that, all you need is
a web site that brings in 1000+ unique hits per day to place your advert on.
[We would be very
interested to hear from any readers who have had experience of a good web based
affiliate scheme email [email protected]]