Affiliate marketing is basically talent-based marketing where one gets rewarded for every customer brought in by the affiliate’s own marketing efforts. Affiliate marketing is usually considered to be an industry with four major players: The merchant, the network, the publisher and the customer.
MERCHANT
The merchant is also known as the retailer or the brand.
NETWORK
The network is where the affiliate chooses the offer from and it also deals with the payments.
PUBLISHER
The publisher is also known as the affiliate.
CUSTOMER
The customer is the one who finally buys the product.
This affiliate marketing has grown complex over the years and it has resulted in a secondary level of players derived from the affiliate marketing field such as super-affiliates, affiliate management firms, and third party vendors.
Internet marketing methods get overlapped by affiliate marketing to some degree because regular advertising methods are used by the affiliate which includes SEO which is also known as search engine optimization, e-mail marketing, paid search engine marketing, content marketing and also displaying advertisements in hoardings which is very common these days. Whereas affiliates also use some other less orthodox techniques, such as review publication of the final product or services offered by a partner.
Difference Between Referral and Affiliate
Referral marketing is commonly confused with affiliate marketing as both the industries use third parties to drive sales to the retailer. However, both are very distinct, different forms of marketing and the main difference is that trust and personal relationship is paramount to drive sales in referral marketing whereas affiliate marketing purely relies on financial motivation to drive sales. Advertisers usually overlook affiliate marketing. While search engines, website syndication and electronic mail is used to attract and capture attention of the online vendors, affiliate marketing has a lower profile compared. Still, a significant role is played by the affiliates in e-retailer’s marketing strategies.
Inception of Affiliate Marketing
The concept of affiliate marketing was brought to the Internet by William J. Tobin who put this into practice. Affiliate marketing has grown very quickly since its inception. The e-commerce website which in the early days was thought of as a marketing toy later started to become a more integral part of the overall business plan than the offline business which was already in existence. The sectors like adult gambling, retail industries and file sharing services became the most active sectors of affiliate marketing. Several affiliate solution providers anticipate a hike in interest from the b2b marketers and also a rise in the advertisers in using affiliate marketing as part of their mix.
The later developments in the Internet such as blogging and other interactive online communities have helped to improve communication between affiliates and merchants. Web 2.0 also started many new online business platforms to improve and enhance the quality of communication between the merchants and the affiliates. Affiliate marketing is also very popularly known as “performance marketing”, in reference to how sales employees are typically being compensated. Advertisers don’t employ the affiliates. Affiliates are usually known as the extended sales for the business that is very often used to describe affiliate marketing. Network program managers and affiliate managers are used to run outsourced program management companies that are being used by the merchants. The role of an advertising agency server and the affiliate program management performed by the OPM companies are similar.
Brief History
Affiliate marketing is an industry which is basically a type of performance based marketing, where people who influence others get rewarded by the retailers for every new customer acquired through the marketing efforts of the influencer. Affiliate marketing has changed very much over the years, i.e. before Internet and after Internet. The birth of the Internet made things easy for the retailers and the customers.
The concept of affiliate marketing has changed much after the World Wide Web came into existence. For instance, offline affiliate marketing is when a hairdresser offers you a discount for referring a friend of yours to that hairdresser. However, this was considered as very old method and the tracking also was difficult. Tracking was difficult because tracking of referrals should be in such a way that it allows the affiliate to be paid, which was a difficult task. Rise of the Internet not only helped in advertisement but also helped in revolutionizing almost everything.
People started looking on the Internet for information, reviews, and recommendations even before buying products and these became a key element in a brand’s marketing strategies. Technological developments like the advent of web 2.0 and the introduction of cookies made way to track the impact of advertising on the purchase funnel. With the big entry of ecommerce in the end of 1990s, blogging in the early 2000s and of content developed by the users soon after, the field was set for affiliate marketing. Affiliate marketing was patented by William J. Tobin. He was the one who set up the first affiliate marketing program for PC Flowers and Gifts, his very own company in 1989.
Amazon was one of the foremost companies to use affiliate marketing with its associates program in 1996. This introduction of the associate program attracted many people all over the world and was widely considered, as the model retailers needed the most. Commission Junction and ClickBank were the two affiliate companies that were launched in July 1998. The launch of these two companies made the network of affiliate marketing a lot more accessible to online retailers smaller than Amazon. This was achieved by offering solutions for payment and facilitating exchanges between the affiliates and the merchant. Very soon in 2000, the federal trade commission of the United States introduced guidelines for the sector, which helped in making affiliate networks cement its legitimacy in the online marketing world. In the same year, Amazon declared that it had been granted a patent on components of the programs of affiliate.
Whenever visitors clicked on the website to purchase a book, the associate would receive some commission. Though it was not the first merchant website to offer an affiliate program, the model of Amazon began to become very popular and thereby served as a model for the subsequent programs. The patent application that was submitted by Amazon in June 1997 predated most of the affiliate programs.
Nearly after eight years, in 2008, more legislation was introduced across the US to further enhance and regulate the field. Since its inception, affiliate marketing has grown very quickly. The big secret of the Internet is that the adult site started coming up with many of the best concepts in market that was used in the mainstream. The UK’s Internet Advertising Bureau offers even more insight into the practice.
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