Affiliate Marketing is an
InternetThe Internet is a global system of interconnected computer networks that use the standardized Internet Protocol Suite to serve billions of users worldwide...
-based
marketingMarketing is an integrated communications-based process through which individuals and communities are informed or persuaded that existing and newly-identified needs and wants may be satisfied by the products and services of others....
practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's marketing efforts. It is an application of
crowdsourcingCrowdsourcing is a neologism for the act of taking tasks traditionally performed by an employee or contractor, and outsourcing it to a group of people or community in the form of an open call...
.
The Affiliate Marketing industry has four core players at its heart: the Merchant (also known informally as 'Retailer' or 'Brand'), the Network, the Publisher (also known informally as 'the Affiliate') and the Customer. The market has grown sufficiently in complexity to warrant a secondary tier of players, including Affiliate Management Agencies, Super-Affiliates and Specialized Third Parties
vendorsA vendor, or a supplier, is a supply chain management term meaning anyone who provides goods or services to a company. A vendor often manufactures inventoriable items, and sells those items to a customer.-History:...
.
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular
advertisingAdvertising is a form of communication used to influence individuals to purchase products or services or support political candidates or ideas. Frequently it communicates a message that includes the name of the product or service and how that product or service could potentially benefit the consumer...
methods. Those methods include organic
search engine optimizationSearch engine optimization is the process of improving the volume or quality of traffic to a web site from search engines via "natural" or un-paid search results as opposed to search engine marketing which deals with paid inclusion...
, paid
search engine marketingSearch engine marketing, or SEM, is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages through the use of paid placement, contextual advertising, and paid inclusion....
,
e-mail marketingE-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing...
, and in some sense
display advertisingis a type of advertising that typically contains text , logos, photographs or other images, location maps, and similar items. In periodicals, display advertising can appear on the same page as, or on the page adjacent to, general editorial content...
. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.
Affiliate marketing—using one website to drive
trafficInternet traffic is the flow of data in the Internet. It includes web traffic, which is the amount of that data that is related to the World Wide Web, along with the traffic from other major uses of the Internet, such as electronic mail and peer-to-peer networks.-Amount of traffic:The following...
to another—is a form of online marketing, which is frequently overlooked by advertisers. While search engines, e-mail, and
website syndicationRSS is a three-letter abbreviation that can stand for a wide variety of terms:-Mathematics:* Root-sum-square, the square root of the sum of the squares of the elements of a data set* Residual sum of squares in statistics-Technology:...
capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in
e-retailers'An e-tailer is a retailer that primarily uses the Internet as a medium for customers to shop for the goods or services provided.-Etymology:The word e-tailer is a portmanteau word derived from 'electronic' and 'retailer', in a similar way to 'e-mail'...
marketing strategiesMarketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage...
.
Origin
The concept of
revenue sharingRevenue sharing has multiple, related meanings depending on context.In business, revenue sharing refers to the sharing of profits and losses among different groups. One form shares between the general partner and limited partners in a limited partnership...
—paying
commissionThe payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
for referred business—predates affiliate marketing and the Internet. The translation of the revenue share principles to mainstream
e-commerceElectronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage...
happened almost four years after the origination of the
World Wide WebThe World Wide Web is a system of interlinked hypertext documents accessed via the Internet. With a web browser, one can view Web pages that may contain text, images, videos, and other multimedia and navigate between them using hyperlinks...
in November 1994.
The consensus of marketers and adult industry insiders is that Cybererotica was either the first or among the early innovators in affiliate marketing with a cost per click program.
During November 1994,
CDNOWCDNOW.com was an online retailer. The company was founded in February 1994 by twin brothers Jason Olim and Matthew Olim of Ambler, Pennsylvania...
launched its BuyWeb program. With this program CDNOW was the first non-adult website to introduce the concept of an affiliate or associate program with its idea of click-through purchasing. CDNOW had the idea that music-oriented websites could review or list albums on their pages that their visitors may be interested in purchasing. These websites could also offer a link that would take the visitor directly to CDNOW to purchase the albums. The idea for remote purchasing originally arose because of conversations with music label
Geffen RecordsGeffen Records is an American record label, owned by Universal Music Group, and operated as one third of UMG's Interscope-Geffen-A&M label group.-Beginnings:...
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 the
order fulfillmentOrder fulfillment is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer...
. 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 an artist's music page.
Amazon.comAmazon.com, Inc. is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc....
(Amazon) launched its associate program in July 1996. Amazon associates could place
bannerA web banner or banner ad is a form of advertising on the World Wide Web. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking to the website of the advertiser...
or text links on their site for individual books, or link directly to the Amazon home page.
When visitors clicked from the associate's website through to Amazon and purchased 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
patentA patent is a set of exclusive rights granted by a state to an inventor or their assignee for a limited period of time in exchange for a public disclosure of an invention....
(6,029,141) on all the essential 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.
Historic development
Affiliate marketing has grown quickly since its inception. The
e-commerceElectronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage...
website, viewed as a marketing toy in the early days of the Internet, became an integrated part of the overall business plan and in some cases grew to a bigger business than the existing offline business. According to one report, the total sales amount generated through affiliate networks in 2006 was £2.16 billion in the
United KingdomThe United Kingdom of Great Britain and Northern Ireland is a sovereign state located off the northwestern coast of continental Europe. It is an island country, spanning an archipelago including Great Britain, the northeastern part of Ireland, and many small islands...
alone. The estimates were £1.35 billion in sales in 2005. MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing, and forms of
leadA sales lead is the identity of a person or entity potentially interested in purchasing a product or service, and represents the first stage of a sales process. The lead may have a corporation or business associated with the person...
generation other than
contextual advertisingContextual advertising is a form of targeted advertising for advertisements appearing on websites or other media, such as content displayed in mobile browsers...
programs such as Google AdSense.
Currently the most active sectors for affiliate marketing are the adult, gambling, and retail industries. The three sectors expected to experience the greatest growth are the
mobile phoneA mobile phone or mobile is a long-range, electronic device used for mobile telecommunications...
, finance, and travel sectors. Soon after these sectors came the entertainment (particularly gaming) and Internet-related services (particularly
broadbandThe term broadband can have different meanings in different contexts. The term's meaning has undergone substantial shifts.-In telecommunication:...
) sectors. Also several of the affiliate solution providers expect to see increased interest from
business-to-businessB2B can mean:* Business-to-business, as in intra-organisational communication, collaboration, and commerce - normally electronic, normally using websites and/or web services...
marketers and advertisers in using affiliate marketing as part of their mix.
Web 2.0
Websites and services based on
Web 2.0The term "Web 2.0" is commonly associated with web applications which facilitate interactive information sharing, interoperability, user-centered design and collaboration on the World Wide Web. Examples of Web 2.0 include web-based communities, hosted services, web applications, social-networking...
concepts—blogging and
interactive online communitiesA virtual community, e-community or online community is a group of people that primarily interact via communication media such as newsletters, telephone, email, internet social network service or instant messages rather than face to face, for social, professional, educational or other purposes. If...
, for example—have impacted the affiliate marketing world as well. The new media allowed merchants to become closer to their affiliates and improved the communication between them.
New developments have made it more difficult for unscrupulous affiliates to make money. Emerging black sheep are detected and made known to the affiliate marketing community with much greater speed and efficiency.
Predominant compensation methods
Eighty percent of affiliate programs today use revenue sharing or cost per sale (CPS) as a compensation method, nineteen percent use
cost per actionCost Per Action or CPA is an online advertising pricing model, where the advertiser pays for each specified action linked to the advertisement....
(CPA), and the remaining programs use other methods such as cost per click (CPC) or
cost per milleCost per mille , also called cost ‰ and cost per thousand , is a commonly used measurement in advertising. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers...
(CPM).
Diminished compensation methods
Less than one percent of traditional affiliate marketing programs today use cost per click and cost per mille. However, these compensation methods are used heavily in
display advertisingis a type of advertising that typically contains text , logos, photographs or other images, location maps, and similar items. In periodicals, display advertising can appear on the same page as, or on the page adjacent to, general editorial content...
and paid search.
Cost per mille requires only that the publisher make the advertising available on his website and display it to his visitors in order to receive a commission. Pay per click requires one additional step in the
conversionIn marketing, a conversion occurs when a prospective customer takes the marketer's intended action. If the prospect has visited a marketer's web site, the conversion action might be making an online purchase, or submitting a form to request additional information. The conversion rate is the...
process to generate revenue for the publisher: A visitor must not only be made aware of the advertisement, but must also click on the advertisement to visit the advertiser's website.
Cost per click was more common in the early days of affiliate marketing, but has diminished in use over time due to
click fraudClick fraud is a type of Internet crime that occurs in pay per click online advertising when a person, automated script or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click without having actual interest in the target...
issues very similar to the click fraud issues modern search engines are facing today. Contextual advertising programs such as Google AdSense are not considered in the statistic pertaining to diminished use of cost per click, as it is uncertain if contextual advertising can be considered affiliate marketing.
Performance marketing
In the case of cost per mille/click, the publisher is not concerned about a visitor being a member of the audience that the advertiser tries to attract and is able to
convertIn marketing, a conversion occurs when a prospective customer takes the marketer's intended action. If the prospect has visited a marketer's web site, the conversion action might be making an online purchase, or submitting a form to request additional information. The conversion rate is the...
, because at this point the publisher has already earned his commission. This leaves the greater, and, in case of cost per mille, the full risk and loss (if the visitor can not be converted) to the advertiser.
Cost per action/sale methods require that referred visitors do more than visit the advertiser's website before the affiliate receives commission. The advertiser must convert that visitor first. It is in the best interest for the affiliate to send the most closely-targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser.
Affiliate marketing is also called "performance marketing", in reference to how sales employees are typically being compensated. Such employees are typically paid a commission for each sale they close, and sometimes are paid performance incentives for exceeding targeted baselines. Affiliates are not employed by the advertiser whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers' internal sales department.
The phrase, "Affiliates are an extended sales force for your business", which is often used to explain affiliate marketing, is not completely accurate. The primary difference between the two is that affiliate marketers provide little if any influence on a possible prospect in the conversion process once that prospect is directed to the advertiser's website. The sales team of the advertiser, however, does have the control and influence up to the point where the prospect signs the contract or completes the purchase.
Multi-tier programs
Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups and sub-partners. In practical terms, publisher "A" signs up to the program with an advertiser and gets rewarded for the agreed activity conducted by a referred visitor. If publisher "A" attracts publishers "B" and "C" to sign up for the same program using his sign-up code, all future activities performed by publishers "B" and "C" will result in additional commission (at a lower rate) for publisher "A".
Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Referral programs beyond two-tier resemble
multi-level marketingMulti-level marketing , is a term that describes a marketing structure used by some companies as part of their overall marketing strategy....
(MLM) or network marketing but are different.
Multi-level marketingMulti-level marketing , is a term that describes a marketing structure used by some companies as part of their overall marketing strategy....
(MLM) or network marketing have more requirements/qualifications to get paid a commission. Whereas affiliate programs do not.
Pros and cons
Merchants favor affiliate marketing because in most cases it uses a "pay for performance" model, meaning that the merchant does not incur a marketing expense unless results are accrued (excluding any initial setup cost). Some businesses owe much of their success to this marketing technique, a notable example being Amazon.com. Unlike
display advertisingis a type of advertising that typically contains text , logos, photographs or other images, location maps, and similar items. In periodicals, display advertising can appear on the same page as, or on the page adjacent to, general editorial content...
, however, affiliate marketing is not easily
scalableThe concept of scalability applies to technology and business settings. Regardless of the setting, the base concept is consistent - The ability for a business or technology to accept increased volume without impacting the contribution margin...
.
Implementation options
Some merchants run their own (i.e., in-house) affiliate programs using popular software while others use third-party services provided by intermediaries to track traffic or sales that are referred from affiliates (
see outsourced program managementAn affiliate manager manages affiliate programs by helping affiliates generate sales, track purchases and send commission, among other activities.-See also:* Affiliate* Affiliate marketing* Affiliate Networks* Internet marketing...
). Merchants can choose from two different types of affiliate management solutions: standalone software or
hosted servicesAn application service provider is a business that provides computer-based services to customers over a network. Software offered using an ASP model is also sometimes called On-demand software or software as a service ....
, typically called affiliate networks. Payouts to affiliates or publishers are either made by the networks on behalf of the merchant, by the network, consolidated across all merchants where the publisher has a relationship with and earned commissions or directly by the merchant itself.
Affiliate management and program management outsourcing
Successful affiliate programs require significant work and maintenance. Having a successful affiliate program is more difficult than when such programs were just emerging. With the exception of some vertical markets, it is rare for an affiliate program to generate considerable revenue with poor management or no management (i.e., "auto-drive").
Uncontrolled affiliate programs did—and continue to do so today—aid rogue affiliates, who use spamming,
trademark infringementTrademark infringement is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees...
,
false advertisingFalse advertising or deceptive advertising is the use of false or misleading statements in advertising. As advertising has the potential to persuade people into commercial transactions that they might otherwise avoid, many governments around the world use regulations to control false, deceptive or...
, "cookie cutting",
typosquattingTyposquatting, also called URL hijacking, is a form of cybersquatting which relies on mistakes such as typographical errors made by Internet users when inputting a website address into a web browser...
, and other unethical methods that have given affiliate marketing a negative reputation.
The increased number of Internet businesses and the increased number of people that trust the current technology enough to shop and do business online allows further maturation of affiliate marketing.
The opportunity to generate a considerable amount of profit combined with a crowded marketplace filled with competitors of equal quality and size makes it more difficult for merchants to be noticed. In this environment, however, being noticed can yield greater rewards.
Recently, the Internet marketing industry has become more advanced. In some areas online media has been rising to the sophistication of offline media, in which advertising has been largely professional and competitive. There are significantly more requirements that merchants must meet to be successful, and those requirements are becoming too burdensome for the merchant to manage successfully in-house. An increasing number of merchants are seeking alternative options found in relatively new outsourced (affiliate) program management (OPM) companies, which are often founded by veteran affiliate managers and
network program managersAn affiliate network acts as an intermediary between publishers and merchant affiliate programs. It allows website publishers to more easily find and participate in affiliate programs which are suitable for their website , and allows websites offering affiliate programs to reach a larger audience...
. OPM companies perform affiliate program management for the merchants as a service, similar to advertising agencies promoting a brand or product as done in offline marketing.
Types of affiliate websites
Affiliate websites are often categorized by merchants (i.e., advertisers) and affiliate networks. There are currently no industry-wide accepted standards for the categorization. The following types of websites are generic, yet are commonly understood and used by affiliate marketers.
- Search affiliates that utilize pay per click
Pay per click is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
search engines to promote the advertisers' offers (i.e., search arbitrageIn economics and finance, arbitrage is the practice of taking advantage of a price differential between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...
)
- Comparison shopping
On the internet, a price comparison service allows individuals to see different lists of prices for specific products. Most price comparison services do not sell products themselves, but source prices from retailers from whom users can buy...
websites and directories
- Loyalty
Loyalty is faithfulness or a devotion to a person or cause.-Loyalty and Marketing:The practice of providing discounts, prizes, or other incentives to encourage continued patronage of a business. Generally, loyalty programs are considered less expensive to maintain than allowing customer defection...
websites, typically characterized by providing a reward system for purchases via points back, cash back
- CRM sites that offer charitable donations
- Coupon
In marketing a coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions...
and rebateRebate can refer to:* Rebate or rabbet, a woodworking term for a groove* Film rebate, the term for the border around photographic film- Money :* Rebate , a type of sales promotion used in marketing...
websites that focus on sales promotionSales promotion is one of the four aspects of promotional mix. Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability...
s
- Content and niche market
A niche market is the subset of the market on which a specific product is focusing on; Therefore the market niche defines the specific product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact.Every...
websites, including product review sites
- Personal websites (This type of website was the reason for the birth of affiliate marketing; however, such websites are almost reduced to complete irrelevance compared to the other types of affiliate websites.)
- Weblogs
A blog is a type of website, usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in reverse-chronological order...
and website syndicationRSS is a three-letter abbreviation that can stand for a wide variety of terms:-Mathematics:* Root-sum-square, the square root of the sum of the squares of the elements of a data set* Residual sum of squares in statistics-Technology:...
feeds
- E-mail
E-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing...
list affiliates (i.e., owners of large opt-in -mail lists that typically employ e-mail drip marketingE-mail drip marketing is a form of e-mail marketing where a company sends e-mail messages to subscribers on a scheduled basis established using e-mail marketing software....
) and newsletterA newsletter is a regularly distributed publication generally about one main topic that is of interest to its subscribers. Newspapers and leaflets are types of newsletters...
list affiliates, which are typically more content-heavy
- Registration path or co-registration affiliates who include offers from other merchants during the registration process on their own website
- Shopping directories
A Shopping Directory is a "Yellow Pages Directory Style" a shopping directory is different then a shopping search engine or shopping comparison site...
that list merchants by categories without providing coupons, price comparisons, or other features based on information that changes frequently, thus requiring continual updates
- Cost per action networks (i.e., top-tier affiliates) that expose offers from the advertiser with which they are affiliated to their own network of affiliates
- Websites using adbars (e.g. Adsense
AdSense is an ad serving application run by Google Inc. Website owners can enroll in this program to enable text, image, and more recently, video advertisements on their websites. These advertisements are administered by Google and generate revenue on either a per-click or per-impression basis...
) to display context-sensitive, highly-relevant ads for products on the site
Publisher recruitment
Affiliate networks that already have several advertisers typically also have a large pool of publishers. These publishers could be potentially recruited, and there is also an increased chance that publishers in the network apply to the program on their own, without the need for recruitment efforts by the advertiser.
Relevant websites that attract the same target audiences as the advertiser but without competing with it are potential affiliate partners as well. Vendors or existing customers can also become recruits if doing so makes sense and does not violate any laws or regulations.
Almost any website could be recruited as an affiliate publisher, although high-traffic websites are more likely interested in (for their own sake) low-risk cost per mille or medium-risk cost per click deals rather than higher-risk cost per action or revenue share deals.
Locating affiliate programs
There are three primary ways to locate affiliate programs for a target website:
- Affiliate program directories
Affiliate program directories are niche web directories that are very like the large and broad web directories like the Yahoo! Directory or the Open Directory Project...
,
- Large affiliate networks that provide the platform for dozens or even hundreds of advertisers, and
- The target website itself. (Websites that offer an affiliate program often have a link titled "affiliate program", "affiliates", "referral program", or "webmasters"—usually in the footer or "About" section of the website.)
If the above locations do not yield information pertaining to affiliates, it may be the case that there exists a non-public affiliate program. The most definitive method for finding this information is to contact the website owner directly.
Past and current issues
Since the emergence of affiliate marketing, there has been little control over affiliate activity. Unscrupulous affiliates have used
spamSpam is the abuse of electronic messaging systems to send unsolicited bulk messages indiscriminately...
, false advertising, forced clicks (to get tracking
cookiesIn computing, a cookie is a small piece of text stored on a user's computer by a web browser...
set on users' computers),
adwareAdware or advertising-supported software is any software package which automatically plays, displays, or downloads advertisements to a computer after the software is installed on it or while the application is being used...
, and other methods to drive traffic to their sponsors. Although many affiliate programs have
terms of serviceTerms of service are rules by which one must agree to abide by in order to use a service. Usually, such terms are legally binding....
that contain rules against spam, this marketing method has historically proven to attract abuse from spammers.
E-mail spam
In the infancy of affiliate marketing, many Internet users held negative opinions due to the tendency of affiliates to use spam to promote the programs in which they were enrolled. As affiliate marketing matured, many affiliate merchants have refined their terms and conditions to prohibit affiliates from spamming.
Search engine spam
As search engines have become more prominent, some affiliate marketers have shifted from sending e-mail spam to creating automatically-generated webpages that often contain product
data feedData feed is a mechanism for users to receive updated data from data sources. It is commonly used by real-time applications in point-to-point settings as well as on the world-wide web. The latter is also called Web feed. News feed is a popular form of Web feed. RSS feed makes dissemination of blogs...
s provided by merchants. The goal of such webpages is to manipulate the relevancy or prominence of resources indexed by a search engine, also known as
spamdexingSpamdexing involves a number of methods, such as repeating unrelated phrases, to manipulate the relevancy or prominence of resources indexed by a search engine, in a manner inconsistent with the purpose of the indexing system.Some consider it to be a part of search engine optimization, though...
. Each page can be targeted to a different niche market through the use of specific keywords, with the result being a skewed form of search engine optimization.
Spam is the biggest threat to organic search engines, whose goal is to provide quality search results for keywords or phrases entered by their users. Google's
PageRankPageRank is a link analysis algorithm, named after Larry Page, used by the Google Internet search engine that assigns a numerical weighting to each element of a hyperlinked set of documents, such as the World Wide Web, with the purpose of "measuring" its relative importance within the set...
algorithm update ("BigDaddy") in February 2006—the final stage of Google's major update ("Jagger") that began in mid-summer 2005—specifically targeted spamdexing with great success. This update thus enabled Google to remove a large amount of mostly computer-generated duplicate content from its index.
Websites consisting mostly of affiliate links have previously held a negative reputation for underdelivering quality content. In 2005 there were active changes made by Google, where certain websites were labeled as "thin affiliates". Such websites were either removed from Google's index or were relocated within the results page (i.e., moved from the top-most results to a lower position). To avoid this categorization, affiliate marketer webmasters must create quality content on their websites that distinguishes their work from the work of spammers or
bannerA web banner or banner ad is a form of advertising on the World Wide Web. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking to the website of the advertiser...
farms, which only contain links leading to merchant sites.
Some commentators originally suggested that Affiliate links work best in the context of the information contained within the website itself. For instance, if a website contains information pertaining to publishing a website, an affiliate link leading to a merchant's
Internet service provider (ISP)An Internet service provider is a company that offers its customers access to the Internet...
within that website's content would be appropriate. If a website contains information pertaining to sports, an affiliate link leading to a sporting goods website may work well within the context of the articles and information about sports. The goal in this case is to publish quality information within the website and provide context-oriented links to related merchant's websites.
However, more recent examples exist of "thin" Affiliate sites which are using the Affiliate Marketing model to create value for Consumers by offering them a service. These thin content service Affiliate fall into three categories:
- Price comparison
- Cause related marketing
- Time saving
Adware
Although it differs from
spywareSpyware is a type of malware that is installed on computers and that collects information about users without their knowledge. The presence of spyware is typically hidden from the user. Typically, spyware is secretly installed on the user's personal computer...
,
adwareAdware or advertising-supported software is any software package which automatically plays, displays, or downloads advertisements to a computer after the software is installed on it or while the application is being used...
often uses the same methods and technologies. Merchants initially were uninformed about adware, what impact it had, and how it could damage their brands. Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites tracking cookies, thus resulting in a decline of commissions. Affiliates not employing adware felt that it was stealing commission from them. Adware often has no valuable purpose and rarely provides any useful content to the user, who is typically unaware that such software is installed on his/her computer.
Affiliates discussed the issues in Internet forums and began to organize their efforts. They believed that the best way to address the problem was to discourage merchants from advertising via adware. Merchants that were either indifferent to or supportive of adware were exposed by affiliates, thus damaging those merchants' reputations and tarnishing their affiliate marketing efforts. Many affiliates either terminated the use of such merchants or switched to a competitor's affiliate program. Eventually, affiliate networks were also forced by merchants and affiliates to take a stand and ban certain adware publishers from their network. The result was Code of Conduct by
Commission JunctionCommission Junction is an online advertising company owned by ValueClick. It is specifically in the affiliate marketing industry.Commission Junction is the largest affiliate network in North America, powering 53% of the top 500 web retailers affiliate marketing programs and operates worldwide...
/beFree and
PerformicsPerformics is a search engine marketing, data feed marketing, and online lead generation company owned by the French advertising holding company Publicis Groupe ....
,
LinkShareLinkShare Corporation provides ecommerce businesses with a range of online marketing services including Search Marketing , Lead Generation and Affiliate Marketing....
's Anti-Predatory Advertising Addendum, and
ShareASaleShareASale is an affiliate marketing network based in Chicago, IL USA. ShareASale services two customer sets in affiliate marketing: the affiliate, and the merchant....
's complete ban of software applications as a medium for affiliates to promote advertiser offers. Regardless of the progress made, adware continues to be an issue, as demonstrated by the class action lawsuit against
ValueClickValueClick is a Westlake Village, CA-based online advertising company, which provides online advertising campaigns and programs for advertisers and advertising agency customers in the United States and internationally. It operates in four segments: Media, Affiliate Marketing, Comparison Shopping,...
and its daughter company Commission Junction filed on April 20, 2007.
Trademark bidding
Affiliates were among the earliest adopters of pay per click advertising when the first pay per click search engines such as Goto.com (which later became Overture.com after being acquired by
Yahoo!Yahoo! Inc. is an American public corporation headquartered in Sunnyvale, California, , that provides Internet services worldwide...
in 2003) emerged during the end of the 1990s. Later in 2000
GoogleGoogle Inc. is an American public corporation, earning revenue from advertising related to its Internet search, e-mail, online mapping, office productivity, social networking, and video sharing services as well as selling advertising-free versions of the same technologies. Google has also...
launched its pay per click service, Google AdWords, which is responsible for the widespread use and acceptance of pay per click as an advertising channel. An increasing number of merchants engaged in pay per click advertising, either directly or via a search marketing agency, and realized that this space was already well-occupied by their affiliates. Although this situation alone created advertising channel conflicts and debates between advertisers and affiliates, the largest issue concerned affiliates bidding on advertisers names, brands, and trademarks. Several advertisers began to adjust their affiliate program terms to prohibit their affiliates from bidding on those type of keywords. Some advertisers, however, did and still do embrace this behavior, going so far as to allow, or even encourage, affiliates to bid on any term, including the advertiser's trademarks.
Lack of self-regulation and collaboration
Affiliate marketing is driven by entrepreneurs who are working at the edge of Internet marketing. Affiliates are often the first to take advantage of emerging trends and technologies. The "trial and error" approach is probably the best way to describe the operation methods for affiliate marketers. This risky approach is one of the reasons why most affiliates fail or give up before they become successful "super affiliates", capable of generating US$10,000 or more per month in commission. This "frontier" life combined with the attitude found in such communities is likely the main reason why the affiliate marketing industry is unable to self-regulate beyond individual contracts between advertisers and affiliates. Affiliate marketing has experienced numerous failed attempts to create an industry organization or association of some kind that could be the initiator of regulations, standards, and guidelines for the industry. Some examples of failed regulation efforts are the Affiliate Union and iAfma.
Online forums and industry trade shows are the only means for the different members from the industry—affiliates/publishers, merchants/advertisers, affiliate networks, third-party vendors, and service providers such as outsourced program managers—to congregate at one location. Online forums are free, enable small affiliates to have a larger say, and provide anonymity. Trade shows are cost-prohibitive to small affiliates because of the high price for event passes. Larger affiliates may even be sponsored by an advertiser they promote.
Because of the anonymity of online forums, the quantitative majority of industry members are unable to create any form of legally binding rule or regulation that must be followed throughout the industry. Online forums have had very few successes as representing the majority of the affiliate marketing industry. The most recent example of such a success was the halt of the
"Commission Junction Link Management Initiative" (CJ LMI) in June/July 2006, when a single network tried to impose the use of a
JavascriptJavaScript is an object-oriented scripting language used to enable programmatic access to objects within both the client application and other applications. It is primarily used in the form of client-side JavaScript, implemented as an integrated component of the web browser, allowing the...
tracking code as a replacement for common
HTMLHTML, which stands for Hyper Text Markup Language, is the predominant markup language for web pages. It provides a means to create structured documents by denoting structural semantics for text such as headings, paragraphs, lists etc as well as for links, quotes, and other items. It allows images...
links on its affiliates.
Certification and training
Affiliate marketing currently lacks industry standards for training and certification. There are some training courses and seminars that result in certifications; however, the acceptance of such certifications is mostly due to the reputation of the individual or company issuing the certification. Affiliate marketing is not commonly taught in universities, and only a few college instructors work with Internet marketers to introduce the subject to students majoring in marketing.
Education occurs most often in "real life" by becoming involved and learning the details as time progresses. Although there are several books on the topic, some so-called "how-to" or "
silver bulletTraditionally, the silver bullet is the only kind of bullet for firearms that is effective against a Werewolf, witch, or some monsters.-In folklore:...
" books instruct readers to manipulate holes in the Google
algorithmIn mathematics, computing, linguistics, and related subjects, an algorithm is an effective method for solving a problem using a finite sequence of instructions. Algorithms are used for calculation, data processing, and many other fields....
, which can quickly become out of date, or suggest strategies no longer endorsed or permitted by advertisers.
Outsourced Program Management companies typically combine formal and informal training, providing much of their training through group collaboration and
brainstormingBrainstorming is a group creativity technique designed to generate a large number of ideas for the solution of a problem. In 1953 the method was popularized by Alex Faickney Osborn in a book called Applied Imagination. Osborn proposed that groups could double their creative output with...
. Such companies also try to send each marketing employee to the industry conference of their choice.
Other training resources used include online forums, weblogs, podcasts, video seminars, and specialty websites.
Affiliate SummitThe Affiliate Summit conference was founded by Affiliate marketing industry veterans Shawn Collins and Missy Ward and serves the affiliate marketing professional community...
is the largest conference in the industry, and many other affiliate networks host their own annual events.
Code of conduct
A code of conduct was released by affiliate networks
Commission JunctionCommission Junction is an online advertising company owned by ValueClick. It is specifically in the affiliate marketing industry.Commission Junction is the largest affiliate network in North America, powering 53% of the top 500 web retailers affiliate marketing programs and operates worldwide...
/beFree and
PerformicsPerformics is a search engine marketing, data feed marketing, and online lead generation company owned by the French advertising holding company Publicis Groupe ....
in
December 2002December 2002 : January - February - March - April - May - June - July - August - September - October - November - December - →-December 1, 2002:...
to guide practices and adherence to ethical standards for online advertising.
Threat to traditional affiliate networks
Cost per action networks can be viewed as a threat to "classic" affiliate marketing networks. Traditional affiliate marketing is resource-intensive and requires continual maintenance. Most of the maintenance includes managing, monitoring, and supporting affiliates. The goal of affiliate marketing is directed toward long-term and mutual beneficial partnerships between advertisers and affiliates. Cost per action networks, however, eliminate the need for the advertiser to build and maintain relationships to affiliates, as that task is performed for the advertiser by the cost per action network. The advertiser makes an offer, almost always CPA-based, and the cost per action networks handle the remainder of the process by mobilizing their affiliates to promote that offer. Cost per sale and revenue sharing are the primary compensation models for classic affiliate marketing, and are rarely found in cost per action networks. Affiliate marketers typically avoid the topic of cost per action networks; however, if it is being discussed, the debates can become heated and explosive.
Marketing term
Members of the marketing industry are recommending that "affiliate marketing" be substituted with an alternative name. Affiliate marketing is often confused with either network marketing or multi-level marketing.
Performance marketing is a common alternative, but other recommendations have been made as well.
Sales tax vulnerability
In April 2008 the State of
New YorkNew York is a state in the Mid-Atlantic and Northeastern regions of the United States and is the nation's third most populous. The state is bordered by New Jersey and Pennsylvania to the south, and Connecticut, Massachusetts and Vermont to the east...
inserted an item in the state budget asserting
sales taxA sales tax is a consumption tax charged at the point of purchase for certain goods and services. The tax is usually set as a percentage by the government charging the tax. There is usually a list of exemptions...
jurisdiction over
Amazon.comAmazon.com, Inc. is an American-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is America's largest online retailer, with nearly three times the Internet sales revenue of the runner up, Staples, Inc....
sales to residents of New York, based on the existence of affiliate links from New York–based websites to Amazon. The state asserts that even one such affiliate constitutes Amazon having a business presence in the state, and is sufficient to allow New York to tax all Amazon sales to state residents. Amazon challenged the amendment and lost at the trial level in January, 2009. The case is currently making its way through the New York appeals courts.
Cookie stuffing
Cookie stuffingCookie stuffing or cookie dropping is when a user visits a website, and in turn from that visit receives a third-party cookie from an entirely different website. In this sense, Google AdSense and other internet ad networks cookie stuff visitors who view a web page that is serving their ads...
involves placing an affiliate tracking
cookieIn computing, a cookie is a small piece of text stored on a user's computer by a web browser...
on a website visitor's computer without their knowledge, which will then generate revenue for the person doing the cookie stuffing. This not only generates fraudulent affiliate sales, but also has the potential to overwrite other affiliates' cookies, essentially stealing their legitimately earned commissions.
Affiliate services
- Affiliate programs directories
Affiliate program directories are niche web directories that are very like the large and broad web directories like the Yahoo! Directory or the Open Directory Project...
- Affiliate networks
An affiliate network acts as an intermediary between publishers and merchant affiliate programs. It allows website publishers to more easily find and participate in affiliate programs which are suitable for their website , and allows websites offering affiliate programs to reach a larger audience...
(see also :Category:Internet advertising services and affiliate networks)
- Affiliate manager
An affiliate manager manages affiliate programs by helping affiliates generate sales, track purchases and send commission, among other activities.-See also:* Affiliate* Affiliate marketing* Affiliate Networks* Internet marketing...
and Outsourced Program Management (OPM or APM) (manages affiliates)
- :Category:Internet marketing trade shows
See also
- Broad: Internet marketing
Internet marketing, also referred to as i-marketing, web marketing, online marketing, or eMarketing, is the marketing of products, or, services over the Internet.The Internet has brought media to a global audience...
, online marketing, online advertisingOnline advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers...
, Website monetizingWebsite monetization is the process of converting existing traffic being sent to a particular website into revenue. Pay per click is one of the most popular ways of monetizing a website...
- Advertising methods: Web banner
A web banner or banner ad is a form of advertising on the World Wide Web. This form of online advertising entails embedding an advertisement into a web page. It is intended to attract traffic to a website by linking to the website of the advertiser...
, ad filteringAd filtering or ad blocking is removing or altering advertising content in a Web page. Advertising can exist in a variety of forms including pictures, animations, text, or pop-up windows. More advanced filters allow fine-grained control of advertisements through features such as blacklists,...
, ad servingAd serving describes the technology and service that places advertisements on web sites. Ad serving technology companies provide software to web sites and advertisers to serve ads, count them, choose the ads that will make the website or advertiser most money, and monitor progress of different...
,central ad server, pop-up adPop-up ads or pop-ups are a form of online advertising on the World Wide Web intended to attract web traffic or capture email addresses. It works when certain web sites open a new web browser window to display advertisements...
, contextual advertisingContextual advertising is a form of targeted advertising for advertisements appearing on websites or other media, such as content displayed in mobile browsers...
- E-Mail advertising: E-mail spam
E-mail spam, also known as junk e-mail, is a subset of spam that involves nearly identical messages sent to numerous recipients by e-mail. A common synonym for spam is unsolicited bulk e-mail . Definitions of spam usually include the aspects that email is unsolicited and sent in bulk...
, e-mail marketingE-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing...
, spammingSpam is the abuse of electronic messaging systems to send unsolicited bulk messages indiscriminately...
- Marketing tactics: Guerilla marketing, marketing strategy
Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage...
and guerrilla marketing warfare strategiesIn marketing and strategic management, marketing warfare strategies are a type of marketing strategy that uses military strategy to form a marketing and advertising campaign...
, evangelism marketingEvangelism marketing is an advanced form of word of mouth marketing in which companies develop customers who believe so strongly in a particular product or service that they freely try to convince others to buy and use it...
, word of mouth marketing
- Search engines: Search engine marketing
Search engine marketing, or SEM, is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages through the use of paid placement, contextual advertising, and paid inclusion....
(SEM), search engine optimizationSearch engine optimization is the process of improving the volume or quality of traffic to a web site from search engines via "natural" or un-paid search results as opposed to search engine marketing which deals with paid inclusion...
(SEO), pay per clickPay per click is an Internet advertising model used on websites, in which advertisers pay their host only when their ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market...
, click fraudClick fraud is a type of Internet crime that occurs in pay per click online advertising when a person, automated script or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click without having actual interest in the target...
, paid inclusionPaid inclusion is a search engine marketing product where the search engine company charges fees related to inclusion of websites in their search index. Paid inclusion products are provided by most search engine companies, the most notable exception being Google.The fee structure is both a filter...
- Industry calculations: Click through rate (CTR), cost per action (CPA)
Cost Per Action or CPA is an online advertising pricing model, where the advertiser pays for each specified action linked to the advertisement....
, cost per click (CPC), cost per impression (CPI)Cost per impression, often abbreviated to CPI or CPM for Cost per thousand impressions, is a phrase often used in online advertising and marketing related to web traffic. It is used for measuring the worth and cost of a specific e-marketing campaign...
, cost per mille (CPM)Cost per mille , also called cost ‰ and cost per thousand , is a commonly used measurement in advertising. Radio, television, newspaper, magazine, out-of-home advertising, and online advertising can be purchased on the basis of what it costs to show the ad to one thousand viewers...
, effective cost per mille (eCPM)
- Compensation/Pricing: Compensation methods
Compensation methods , Pricing models and business models used for the different types of internet marketing, including affiliate marketing, contextual advertising, search engine marketing and display advertising.-Predominant compensation methods in affiliate marketing:The following models...
, :Category:Compensation, :Category:Pricing
External links
- Website Affiliate Programs at the Yahoo! Directory
The Yahoo! Directory is a web directory which rivals the Open Directory Project in size. The directory was Yahoo!'s first offering. When Yahoo! changed to crawler-based listings for its main results in October 2002, the human-edited directory's significance dropped, but it is still being updated...
- Affiliate Programs at the BOTW Directory
Best of the Web Directory is a commercial web directory providing websites categorized topically and regionally. Headquartered in Uniondale, New York, BOTW also maintains offices in Orange, Texas, Rocklin, California, Studio City, California and Highland Beach, Florida.Founded in 1994 at the...