What is Affiliate marketing?
Affiliate marketing is a business model whereby independent companies or individuals use their website, forum, blogs, e-mail lists or any other online communication as a means to promote or promote another website, product, service, or person.
Affiliate marketing has been known since the late 1990s.
The idea of affiliate marketing was brought to the forefront in 1998 when a single sex catalog company known as Go Brands developed the first affiliate program on the World Wide Web.
This project lead to the creation of other affiliate programs such as PayPal and Microsoft which led to the formation of both IFTF and Rhett and Link.
The basic structure of affiliate marketing allows for the creation of marketing campaigns and sales channels which extend through one or more sales channels (either owned or off-line) such as Web sites, e-mail, or direct mail.
In exchange for a commission on any sales made to the affiliate program, the affiliate will use their own website or webpage to promote the affiliate's products or services.
The objective of an affiliate program is to promote another brand or product which is of interest to the affiliate.
As there is no centralized body which makes or takes decisions regarding the structure, rules and regulations of affiliate marketing, the affiliates themselves are the ones who are responsible for determining their own fees and other rules.
Each affiliate is a self-employed person and they are required to keep a certain level of capital in their pockets.
The funds are used to pay for advertising space (cost) and to pay the commission to the third party provider of the promotions.
Affiliate marketing exists in all forms, shapes and forms.
Some affiliates include popular web hosting companies and affiliate marketers.
These sponsors often donate free space on their web host sites for a campaign (in exchange for a commission on all sales made through the campaign).
In addition to web hosting companies and affiliate marketers, there are others who are not exactly web hosts or affiliate marketers, but they still have a business model similar to that of the former.
For example, book publishers who publish books on the subject of internet marketing are in the business of promoting their books through a number of different channels.
However, their business model is very different from the typical affiliate marketing model as they work as a publisher and not as a vendor of products or services.
However, they still work with other companies, and through this they have created affiliate marketing companies or companies that provide assistance to companies that want to promote their books.
As the economy in the US has continued to decline in recent years, the number of US business have become very cautious about spending money and they tend to look to the internet for many of their marketing needs.
As a result, there is an increasing number of US businesses turning to affiliate marketing.
In addition, as internet users continue to increase in numbers, affiliate marketing continues to grow in both value and popularity.
As a result of the number of businesses turning to affiliate marketing, there has been a rapid increase in the number of companies that provide affiliate marketing services.
The next chart displays the annual affiliate marketing revenues for the three main Internet marketing categories in the United States: the "BI" (Business-to-Consumer) segment, the "B2B" segment and the "B2C" segment.
In many industries, affiliate marketing is very much a seasonal activity.
For example, during the holiday shopping season, many online shopping and shipping websites employ affiliate programs to provide discounted shipping, cashback or other incentives to promote products sold online.
In fact, the holiday season is the season with the highest level of affiliate marketing activity.
Affiliate marketers often use special traffic spikes, known as "holiday windows" and "holiday legs" to drive targeted traffic to their websites.
The term "Affiliate Marketing" first appeared in an online marketplace forum in August 1995, when Michael Randal (a former CTO of The Target Guide) said: "You can't make money doing affiliate marketing, but it is a nice side business."
Another early use of the term was in an online newsletter for the Whirlpool Corporation in 1998.
The relationship between a webmaster or "affiliate" and an affiliate marketing company or program is an informal one.
Affiliates typically do not directly contact the host sites and they make no commitments to the companies or programs they promote.
They usually find the offers by checking a specific affiliate network's list of products.
Affiliates are able to promote any products in any manner that they wish and they can promote to any group of people that they choose.
The affiliate is paid by the company or program to promote the product.
It does not matter if the affiliate chooses to display it to visitors, link to it in a search engine, or simply provide a link in a manual or blog post.
However, if the affiliate decides to display it to only one person at a time, that person will pay a higher commission.
The affiliate marketing model relies on advertisers and the advertisers' use of a broad set of web page targeting tools.
Users, referred to as "clients", who access websites through search engines may be referred to those websites which are sponsored by the advertiser.
Affiliates are often affiliated with numerous program entities, some of which are promoted by the program.
For example, many affiliate networks are promoted by the various affiliate networks themselves.
Hosts often require affiliates to mention the programs promoted by affiliates in their advertising and to link back to their respective websites to maintain their relationships with the affiliates.
Affiliates are often also required to provide visitors with information about the sponsor, and to place their affiliated links in the site navigation.
This information may vary by the network, but typically a brief description and a link to a website are the main elements.
In many cases the person viewing the web page will either enter the affiliate site on their own, or they will be directed to the site using an HTML navigational anchor link or hyperlink.
This is achieved by extracting the affiliate site's URL from the visible anchor text of the page.
To handle larger numbers of visitors the affiliate will add a small "Contact" button on their website's navigation bar, usually consisting of the following text:
which will direct visitors to the affiliate site's contact form.
However, linking to other sites from an affiliate site's site may be blocked under certain circumstances.
Some brands will require that a publisher make a minimum purchase amount, generally expressed as a percentage of the order value or as a minimum number of sign-ups, before they are allowed to link back to an affiliate website.
Such links can be used as advertisements; and/or are treated as content, in the manner of advertisements (such as offers to subscribe to newsletters, download e-books, or provide personal information).
In addition, content included on the website may infringe upon the rights of the publisher (for example, information may include copyrighted material or intellectual property rights) and a publisher or website owner may assert such rights against the website, which could restrict the affiliate's ability to link back to it.
Certain publishers will exclude affiliate links from their websites entirely, while others may allow them to link to certain parts of the site.
Additionally, some publishers may choose to allow specific affiliates to link to their websites.
These links can be used to promote that site, rather than a sponsor's site, without causing any issues with the site owner.
This is usually done to encourage affiliates to participate in the affiliate marketing program by providing a sense of exclusivity.
Some affiliate marketing programs will allow affiliates to link to pages within other affiliate marketing programs as well, without breaching any terms or conditions.
However, some affiliate programs disallow linking to affiliate links from other affiliate programs or sites.
When a user clicks a link on another site, the user is taken to the destination page, but the link will not direct the user to that destination from that particular destination.
Usually, the user is taken to the location of the advertised product, or a link to that product will be placed in the URL.
This "direct" link is often abbreviated as a DART (downloadable object) link.
When a DART link is displayed, the user can choose to be taken directly to the destination site, which is sometimes called a "lead magnet" or an "affiliate referral".
Many merchants will also provide a button allowing the user to take a picture of their product, or a button that will take a picture of the merchant, or both, and allow the user to download the image or save it as a file.
Most content-based affiliates refer a number of other sites to their site as well, in some cases a few at a time and in some cases all at once.
This is called product linking.
The affiliate generates revenue by receiving a commission for every click, sale or lead.
Each click, sale, lead or order generates revenue.
In most cases, affiliate products are available for purchase on the site at cost or by discount.
Affiliate programs can only provide commissions on sales that are made directly with the affiliate merchant, and not on affiliate products or services, or the merchant's site.
In addition to these revenue-generating opportunities, affiliates often are required to disclose affiliate product links to their own website.
Affiliate link disclosures allow customers to make an informed decision before they make an order, and thus serve to improve the merchant's website.
Affiliate programs have the advantage of offering affiliate marketing exposure for the merchants in a much higher volume than they otherwise could.
By taking advantage of affiliate marketing, merchants can generate leads and sales, without having to spend the time or money to provide those services.
Marketing exposure for affiliate merchants in this manner can be very valuable, especially when a website has low traffic, meaning a much lower chance of gaining visibility.
This exposure has led to a "gold rush" in affiliate marketing, in which many merchants now offer affiliate products in addition to their primary products, and sometimes in conjunction with their primary products.
This practice can confuse and disorient many merchants who enter the affiliate marketing arena, as this type of marketing is extremely broad, yet relatively unknown.
The use of affiliate links can mean either an affiliate must place a "dedicated" click-through affiliate link to a merchant's site or, as in many web 2.0 applications, an affiliate can link to a merchant's application by providing a direct link.
Other types of affiliate link include a content-based link and a software-based link.
Content-based affiliate links are links to materials that appear on the merchant's site.
Software-based affiliate links are links to forms and other Web 2.0 applications.
Search engines such as Google assign special keywords to such links.
If a click through affiliate link (or a search engine link) does not show up in search results when typed in the keyword, a click through affiliate link may be suspected of being manipulated by a search engine.
Search engines typically remove content-based affiliate links from search results in the event of such suspicion.
In contrast, content-based affiliate links do not have the keyword protection provided by software-based affiliate
