What is Affiliate marketing
Affiliate marketing is a marketing arrangement in which affiliates receive a commission for each visit, signup or sale they generate for a merchant. This arrangement allows businesses to outsource part of the sales process. It is a form of performance-based marketing where the commission acts as an incentive for the affiliate; this commission is usually a percentage of the price of the product being sold, but can also be a flat rate per referral.
Affiliate marketers may use a variety of methods to generate these sales, including organic search engine optimization, paid search engine marketing, e-mail marketing, content marketing, display advertising, organic social media marketing, and more.
Though the largest companies run their own affiliate networks (for example Amazon), most merchants join affiliate networks which provide reporting tools and payment processing.
Origin
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 e-commerce happened in November 1994, almost four years after the origination of the World Wide Web.[citation needed]
The concept of affiliate marketing on the Internet was conceived of, put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts remained on the service until 1996. By 1993, PC Flowers & Gifts had generated sales more than $6 million per year on the Prodigy service. In 1998, PC Flowers and Gifts developed the business model of paying a commission on sales to the Prodigy Network.
In 1994, Tobin launched a beta version of PC Flowers & Gifts on the Internet in cooperation with IBM, which owned half of Prodigy.By 1995 PC Flowers & Gifts had launched a commercial version of the website and had 2,600 affiliate marketing partners on the World Wide Web. Tobin applied for a patent on tracking and affiliate marketing on January 22, 1996, and was issued U.S. Patent number 6,141,666 on Oct 31, 2000. Tobin also received Japanese Patent number 4021941 on Oct 5, 2007, and U.S. Patent number 7,505,913 on Mar 17, 2009, for affiliate marketing and tracking.In July 1998 PC Flowers and Gifts merged with Fingerhut and Federated Department Stores.
In November 1994, CDNow launched its BuyWeb program. CDNow had the idea that music-oriented websites could review or list albums on their pages that their visitors might be interested in purchasing. These websites could also offer a link that would take visitors directly to CDNow to purchase the albums. The idea for remote purchasing originally arose from conversations with the music label Geffen Records in the fall of 1994. The management at Geffen wanted to sell its artists' CDs directly from its website but did not want to implement this capability itself. Geffen asked CDNow if it could design a program where CDNow would handle order fulfillment. Geffen realized that CDNow could link directly from the artist on its website to Geffen's website, bypassing the CDNow home page and going directly to the artist's music page.
Amazon.com (Amazon) launched its associate program in July 1996: Amazon associates could place banner or text links on their site for individual books, or link directly to the Amazon home page.
When visitors clicked on the associate's website to go to Amazon and purchase a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely known and serve as a model for subsequent programs.
In February 2000, Amazon announced that it had been granted a patent[12] on components of an affiliate program. The patent application was submitted in June 1997, which predates most affiliate programs, but not PC Flowers & Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and several others.
