This is chapter 1, What is Affiliate Marketing?, of Successful Affiliate Marketing for Merchants.
In brief, I usually describe affiliate marketing as the online equivalent of Avon.
Back when I was growing up, we had the Avon lady in the neighborhood. She would sell cosmetics door to door, and if she made a sale, she earned a commission.
It's as simple as that - when applied online, people have Web sites where they can display advertisements, and if they refer a transaction from their ads, they earn a commission.
Affiliate marketing is a fairly simple concept, but people complicate it sometimes.
As far as a quick history of affiliate marketing, it's a little over ten years old in it's online form. A lot of people attribute the concept to Jeff Bezos an Amazon.com, but CDNow actually launched a primitive version of an affiliate program a year or so before Amazon.com.
So CDNow were innovators, but Amazon.com certainly popularized affiliate marketing, and they deserve recognition there.
In terms of defining an affiliate, it used to be simply a content site. But affiliates have evolved greatly over the years, and these days an affiliate can be essentially any method used to market online. For instance, affiliates are using data feeds, SEO, blogs, video, pay per click search engines, etc.
The affiliate program model is generally applied to one of three types: pay per sale (revenue share), pay per lead, or pay per click. Some affiliate programs combine these models to form a hybrid affiliate program.
People often wonder what sort of companies have affiliate programs. Well, the top retail Web sites, ranked by dollars spent (excluding auction sites, large corporate purchases and travel) for the 2006 holiday season (Nov. 1 – Dec. 26) were as follows, according to comScore Networks:
Affiliate programs are all over the list of top retail sites. But they are also just a common among Mom and Pop stores online.
That said, affiliate marketing is not easy. It's not something where you can simply throw money at it and see great results. Rather a successful affiliate program requires a number of things, including creativity, focus, effort, and money.
