Affiliate marketing has been around for many years and is still one of the most popular ways to make money online.
It is a business model in which companies pay individuals by promoting products and services for each sale they make or for every customer they refer.
Affiliate marketing has been around for quite some time, and it has evolved a lot over the years.
In this article, we will be discussing the history of affiliate marketing, its evolution, and how it works today.
The History of Affiliate Marketing
Many people are already familiar with the concept of affiliate marketing, but may not know how it all began.
The history of affiliate marketing can be traced back to the early days of the internet.
1989 – The Year Affiliate Marketing Was Introduced
In 1989, William J. Tobin, the founder of PC Flowers & Gifts and the world’s first affiliate marketer, launched his e-commerce website on the Prodigy Network. (Source: Easy Affiliate)
Tobin first introduced the concept of affiliate marketing to his business by giving the network commissions on every sale.
Four years later, the network was able to generate up to $6 million annually and had over 2,500 affiliates around the web.
Tobin’s online flower shop became a huge success that he decided to patent affiliate marketing in 1996 and was issued the patent in 2000.
1994 – The Birth of Browser Cookies and CDNow
In 1994, Lou Montulli, created the first browser cookie while he was working on a project at Netscape and noticed that websites lacked the ability to remember visitors.
He thought that if browsers had a unique identifier, this could help websites identify users easily so they don’t have to keep repeating the same process, especially when buying products online.
However, Montulli also realized that this could be harmful to users as it could be used to track their activity on every website, which is mainly caused by third-party cookies.
The existence of third-party cookies was fully unintentional that’s why Montulli immediately came up with a solution to prevent this from happening by giving users the option to disable third-party cookies.
Today, cookies are the most used way of keeping track of a website visitor’s preferences and behavior.
1994 was also the year when CDNow was founded by Jason and Matthew Olim, two siblings from Pennsylvania, who started a retail website selling CDs and other music-related products.
During that time, CDNow was operating as a drop shipping company and was able to sell more than 140,000 albums online.
To increase album sales on their website, they launched the BuyWeb program where the company would often ask music sites to review albums and link their users directly to CDNow. (Source: MoreNiche)
It eventually became the go-to website for people looking to buy albums online until the company ceased operations in 2013.
1996 – Amazon Associates and LinkShare Were Established
Amazon Associates is the company’s original affiliate marketing program that began in 1996.
It has been said that Jeff Bezos, the CEO, and founder of Amazon, originally came up with the idea after talking to a woman at a cocktail party when she mentioned she wanted to sell books on Amazon and give them a commission for every sale.
At that time, the company was primarily focused on selling a few products on its platform and its affiliate program was the first of its kind to attract global interest by making the program open to the public.
The company’s business model was based on commissions per sale, which eventually became the model for many affiliate networks.
Today, Amazon offers a wide range of products and services for sale through its online marketplace, making it an ideal platform for businesses to market their products.
In addition to its own products, Amazon also works with many other major brands and retailers, giving affiliates a wide range of products to promote.
This innovative approach has led to the growth of the company and its affiliate program, which eventually became the largest online retailer in the world.
Interestingly, during that same year, LinkShare, an affiliate marketing network, popularly known today as Rakuten Advertising, was founded by two siblings, Heidi and Stephen Messer.
The network has since become a major player in the affiliate marketing industry which continues to grow in popularity.
1997 – The First Affiliate Program Directory Was Created
Refer-It, the first affiliate program directory, was created by Wayne Marciano in 1997. (Source: MoreNiche)
The purpose of the directory was to help affiliates find reputable programs to join and promote by using its comprehensive search engine feature.
Marciano initially created the directory because he was having trouble finding affiliate programs to generate more revenue for his own website, TheSquare.com.
1998 – ClickBank and Commission Junction Were Founded
In 1998, two companies were founded that would go on to become two of the largest affiliate networks in the world.
ClickBank was founded by Tim and Eileen Barber, while Commission Junction, widely known today as CJ Affiliate, was founded by Todd Crawford, Lex Sisney, and Per Pettersen.
These two companies have both played an important role in shaping the affiliate network industry and remain strong contenders in the industry up until today.
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2000 – The “Dot Com Disclosures” Was Published
In May 2000, FTC published guidelines that outlined best practices for affiliate marketing.
The guidelines include a disclosure statement that must be included in all advertisements for affiliates to ensure transparency.
This means that if an affiliate gets compensated for promoting a product or service, they must place an affiliate disclosure statement in a conspicuous place on their website or posts.
2001 – The eBay Affiliate Program Was Founded
eBay, a popular global online marketplace founded in 1995, launched its very own affiliate program in 2001 called the eBay Partner Network (EPN).
Since then, eBay has grown into a diverse platform allowing merchants to sell products through eBay’s site.
Through its comprehensive affiliate program, eBay has helped drive traffic to many small businesses and helped increase overall revenue for many affiliates. (Source: Small Business Trends)
2003 – The Affiliate Summit by Shawn Collins and Missy Ward Was Founded
Shawn Collins and Missy Ward founded Affiliate Summit in 2003.
For almost 20 years, Affiliate Summit has been offering conferences on a variety of topics related to affiliate marketing.
It has since become one of the most popular resources for helping affiliates learn from the best since both Collins and Ward have a wealth of experience in the affiliate marketing industry.
They’ve been there and done that, so they’re able to offer advice that’s both practical and invaluable.
2005 – LinkShare Was Acquired by Rakuten Inc. for $425 Million
LinkShare, a global affiliate marketing network was acquired by Rakuten Inc. for $425 million in 2005. (Source: The Wall Street Journal)
The acquisition helped Rakuten reach a wider market and increase its advertising capabilities.
2007 – Google Bought Doubleclick Performics
Google has always been a leader in online marketing. In 2007, they bought Doubleclick Performics for $3.1B to create the Google Affiliate Network.
The goal was to connect businesses and affiliates together in order to improve their online performance.
However, this strategy changed in 2013 when the company closed down its affiliate program in order to focus on other products.
2008 – The Performance Marketing Association Was Founded
The Performance Marketing Association (PMA) was founded in 2008 as a non-profit trade association to address issues faced by the performance marketing industry.
PMA’s mission is to support and promote excellence in performance marketing, educate members and the public about the benefits of performance marketing, and advocate for best practices within the industry. (Source: PMA)
2009 – The PeerFly Affiliate Network Was Founded
PeerFly is a global affiliate network with more than 75,000 active affiliates in over 165 countries.
The company was founded in 2009 by Chad French and offers its advertisers an easy-to-use platform to create and manage their own affiliate programs.
2013 – Google Shut Down Its Affiliate Network
In 2013, Google shut down its Google Affiliate Network, which had been in operation since 2007.
This decision was made in order to focus on other products and services, such as Google AdSense.
2014 – Rakuten LinkShare was rebranded to Rakuten Affiliate Network
In 2014, Rakuten LinkShare was rebranded to Rakuten Affiliate Network.
The change occurred as part of a larger effort by the Japanese company to provide a better platform for its affiliate marketers.
The rebranding of Rakuten LinkShare was a key part of this initiative, as it signaled a new era for affiliate marketing. (Source: Crunchbase)
2016 – eBay Enterprise Marketing Solution Acquires AffiliateTraction
In 2016, eBay Enterprise Marketing Solution acquired AffiliateTraction which was then rebranded to Pepperjam during that same year.
This acquisition gave eBay a strong foothold in the affiliate marketing industry.
AffiliateTraction is a marketing agency that helps businesses manage and grow their own affiliate programs.
They use a variety of methods to help businesses succeed, such as creating an affiliate management system, providing resources and support, and more.
With this acquisition, eBay was able to strengthen its position in the affiliate marketing market. (Source: Digital Commerce 360)
2019 – The COVID-19 Pandemic Started
The COVID-19 pandemic started in 2019 and has caused a significant increase in eCommerce growth as consumers are looking for ways to purchase their needs without having to get out of their homes to avoid getting the disease.
Affiliate marketers are well placed to capitalize on this trend as they have an understanding of how people behave when looking for products and services online.
They are also able to tap into the growing trend of online shopping which is expected to grow rapidly over the next few years. (Source: ITCAN)
2020 – Rakuten Affiliate Network was rebranded to Rakuten Advertising and Pepperjam Was Acquired by Partnerize
The Rakuten affiliate network was rebranded to Rakuten Advertising in 2020.
The new name reflects the company’s broader focus on connecting publishers with brands.
This allows businesses to grow more effectively and provides a comprehensive solution for marketing needs.
In that same year, Pepperjam was also acquired by Partnerize, a platform that helps businesses grow their affiliate and partnership programs. (Source: Pepperjam)
This acquisition marked the entrance of Pepperjam into the larger affiliate marketing space and underscores the growing importance of affiliate networks in the digital advertising ecosystem.
2021 to Present
With the advent of the internet and social media, affiliate marketing has changed significantly.
Back in the day, affiliates would post links on their personal websites and wait for customers to click through and buy products.
Today, however, affiliates can post links on social media sites like Facebook and Twitter and reach a much wider audience very quickly.
The popularity of smartphones has also made it easier for affiliates to conduct their business from anywhere in the world.
As a result, affiliate marketing has become even more important than ever for businesses looking to reach a large audience online. (Source: Voluum)
The Rise of Affiliate Marketing Networks in the 21st Century
Affiliate marketing is an important part of the online advertising world.
According to Statista, the global affiliate marketing market will increase to $8.2 billion by 2022, from $5.4 billion in 2017.
This growth is due in part to the increasing number of people who shop online, and the continued popularity of affiliate programs.
When an advertiser opts to partner with an affiliate marketing program, they gain access to affiliate marketers who are always ready to promote their products and services.
Additionally, affiliate marketing networks often provide tracking tools and systems that help affiliates manage their campaigns more effectively.
How the internet has changed the way we shop and why this is good news to affiliate marketers
The internet has revolutionized the way we shop.
With the advent of online shopping, we now have access to a wide variety of products from all over the world and have them delivered to our doorstep.
We no longer need to visit physical stores to find what we want.
Instead, we can browse the web and purchase items directly from the comfort of our homes.
The COVID19 pandemic also forced people to shop online to buy their needs due to the increasing number of cases that lead to strict quarantine measures.
While this is good news for online merchants, it’s bad news for traditional brick-and-mortar stores that are struggling to keep up with the competition.
The good thing is that most businesses were able to adapt to this change.
This is also a good opportunity to get into affiliate marketing and start making money online since more and more people are much more likely to hit the check-out button without hesitation.
The parties involved in affiliate marketing
There are four parties involved in affiliate marketing: the affiliate network, the advertiser, the publisher, and the consumer.
1. Affiliate Network
The affiliate network is responsible for connecting advertisers and publishers together.
They provide a platform where advertisers can promote their products and publishers can advertise for them.
They also manage the flow of funds between advertisers and publishers as well as facilitate payments.
2. Advertiser
The advertiser, aka the merchant, is responsible for setting up the affiliate program in an affiliate network or on their own website.
They are the ones who create and sell products and give commissions to affiliates whenever a sale has been made through their affiliate links.
3. Publisher
The publisher, aka affiliate marketer, is responsible for creating content that is linked to the advertiser’s products or services.
They develop effective marketing strategies to drive traffic to the products they’re promoting to get commissions on sales they make.
4. Consumer
The consumer is the most important part of affiliate marketing.
Without them, the whole system would collapse since nobody will buy the product or service being promoted.
Types of Commission Structures
A variety of commission structures are available to those in the affiliate marketing industry.
Here’s a brief overview of the most common commission structures:
- Pay Per Click (PPC) – This commission structure pays affiliates for every unique click they generate. The website owner pays the affiliate a set fee for each ad or link that a visitor clicks on.
- Pay Per Lead (PPL) – In this commission structure, affiliates receive a set amount of money for every qualified lead they generate. The website owner pays the affiliate based on how many leads they generated.
- Pay Per Sale (PPS) – This is the most common commission structure, wherein affiliates earn a percentage of the sale price after the customer has completed their purchase.
The Benefits of Affiliate Marketing
Affiliate marketing has been around for decades and has grown into an incredibly powerful strategy to grow businesses.
In fact, it offers tremendous benefits for both affiliate marketers and advertisers.
For advertisers
Affiliate marketing has many benefits for businesses of all sizes as it can be a very effective strategy to increase sales and reach new customers.
Here are some key reasons why affiliate marketing is an excellent tool for advertisers:
Reduced ad spending costs
Affiliate marketing allows businesses to outsource their marketing efforts, without having to invest in large advertising campaigns. This is because affiliates are very much willing to keep promoting the advertiser’s products in order to receive commissions on sales.
Increased traffic and revenue
Affiliate marketing can help businesses attract new customers to their sites and generate more revenue from their existing customers. Since affiliate marketers are responsible for spreading the word about the advertiser’s products and services, they’re also more likely to drive traffic to the advertiser’s website.
Reach the target market easily
Affiliate marketing is a great way for advertisers to reach their target market easily. It allows them to share their message with a wider audience, through affiliates.
Cost-effective marketing
Affiliate marketing is a cost-effective marketing strategy for many types of businesses. It gives them the opportunity to tap into an already-existing network of affiliates who are passionate about their products and will be more likely to promote them.
Higher ROI
Affiliate marketing allows advertisers to see an immediate ROI. It has also been seen that in the long run, affiliate marketing can be more beneficial than traditional forms of marketing.
It’s easy to get started
Business owners don’t need to be technical experts to set up an affiliate account and start selling products. Many affiliate networks provide easy-to-use tools for launching campaigns quickly and easily.
Improved brand awareness and recognition
Affiliate marketing allows advertisers to connect with potential customers who might not have otherwise seen their product or service. This builds brand awareness, which can result in increased sales down the line.
For affiliate marketers
Affiliate marketing is a great way to earn money while helping businesses increase sales by promoting their products or services.
With a little effort, you can start earning commissions on sales you make through your affiliate links.
Here are some of the key benefits of joining an affiliate program:
You can get started right away
You don’t have to be an expert in any particular product or service to become an affiliate marketer. All you need is some knowledge about the product or service and the ability to promote it.
You can choose from a wide range of products and services.
With so many products available online, affiliates have the opportunity to promote any product they choose. This gives them broad exposure and the potential to reach a large audience.
There are no upfront costs.
Affiliate marketing is a great way to make money without any upfront costs. You simply sign up as an affiliate for an affiliate program and then receive a commission on the sales that your affiliates generate.
It helps establish your brand
Affiliate marketing can be a great way to build your personal brand and reach new customers. By promoting products that are relevant to your niche, you can attract customers who are likely to be interested in what you have to offer.
You can make money by promoting products you love and trust
Affiliate marketing is also an excellent way to monetize the content you create. By linking to products or services that you believe will benefit your readers, you can help them find solutions to problems they may be facing.
You can work anywhere
Affiliate marketing can also be done from anywhere – so you can choose to work from home if you want. In fact, affiliates often make more money than people who work for traditional companies because they get a cut of the profits each time someone clicks on their links and buys something.
Who is Pat Flynn?
Pat Flynn is the world’s richest affiliate marketer and the founder of Smart Passive Income, a company that helps people generate extra income through affiliate marketing.
Flynn has also written several books on the subject, and his teachings have helped thousands of people earn passive income from selling products they don’t even have to touch.
What makes affiliate marketing different from influencer marketing and referral marketing?
There are many similarities between affiliate marketing and influencer marketing, but there are also key differences.
Affiliate marketing refers to businesses that sell products or services through affiliates.
An affiliate is a business partner who receives a commission (a percentage of the sale) for directing traffic to the advertiser’s website.
Influencer marketing refers to businesses that hire people (called influencers) with large followings on social media platforms like Instagram, Twitter, and Facebook, to promote their brands.
Influencers are usually paid to promote the advertiser’s product or service since the advertiser’s main goal is to utilize the influencer’s audience to increase brand awareness.
Lastly, referral marketing refers to businesses that give rewards to customers that refer a friend or acquaintance as a customer
Is affiliate marketing a pyramid scheme?
Affiliate marketing is not a pyramid scheme, as many people believe.
Pyramid schemes are illegal and involve participants recruiting new members who pay them fees to get into the scheme.
In contrast, affiliate marketing involves partnering with legitimate businesses and earning a commission for referring customers.
This means that affiliates are actually helping these businesses grow by promoting their products and services to their target market.
Cookies in affiliate marketing
Cookies are small files that a website sends to a user’s browser.
They help the website remember things like their login information, what pages they have visited, and how long they stayed on those pages.
Cookies don’t generally harm the computer, and most websites use them anyway.
However, some people object to cookies because they think they track their web activities.
But the cookies that websites use aren’t usually tracking cookies.
Most tracking cookies are created by third-party advertisers, and they track user activity on the websites where they appear.
The advertiser then uses that information (like which ads were clicked on) to create more targeted ads for the user.
The good thing is that most browsers allow their users to choose whether or not to accept cookies if they want to protect their privacy.
How are cookies used in affiliate marketing?
Cookies play an important role in affiliate marketing because they allow websites to track the behavior of their visitors and collect information about which pages are being visited and how often.
They are also used to track the number of clicks on an affiliate link, the number of conversions made, and the amount of money that the affiliate receives.
Website owners use this information to see what marketing methods are most effective in getting traffic or sales.
Tips to Maximize Your Affiliate Marketing Efforts
A few years ago, affiliate marketing was a small niche with few opportunities for affiliates.
However, the internet has dramatically changed this landscape, and today, affiliates have access to an unprecedented number of opportunities.
Here are some tips to maximize your affiliate marketing efforts:
1. Choose a niche that is interesting to you.
It is important to choose a niche that you are passionate about so that your efforts will be focused on promoting products and services that are relevant to your interests.
This will help you create a loyal customer base and increase your chances of earning commissions from your affiliate marketing campaign.
2. Do your research.
Before you even start promoting a product or service, be sure to do your research and understand what it is.
This will help you identify which products or services are best suited for your audience and which ones will generate the most revenue for you.
3. Keep track of your progress.
Not only will this help you stay motivated, but it will also help you identify any areas in which you need to improve.
Tracking your progress will also give you a good indication of whether or not your efforts are yielding results – if not, there might be a reason for that!
4. Do keyword research.
Use relevant keywords in all of your content promotion efforts.
Not only will this help you rank higher in search engine results pages (SERPs), but it will also attract more visitors to your website.
5. Use social media platforms effectively.
Social media platforms are a great way to get your message out to a large audience quickly and easily.
Be sure to use social media platforms like Facebook, Twitter, and TikTok effectively to gain exposure to your content and the products you’re promoting.
6. Create engaging content.
The best way to convert website visitors into customers is by creating engaging content that speaks to them on an individual level.
It is important to create unique, informative, and useful content for your site.
7. Always read the rules.
Always read the rules of the affiliate program you are working with.
This will help you know what is and is not allowed, as well as ensure that your efforts are compliant with the program’s terms and conditions.
8. Be persistent.
You should keep promoting your campaigns even when there are no immediate signs of success.
The long-term benefits of affiliate marketing are worth the effort, and eventually, you will see results!
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