What is affiliate marketing?
One of the most effective ways of marketing in today’s connected world is affiliate marketing. This is a performance based rewards programme where the company gives an incentive to the affiliate who drives traffic to their website and hence enhances business. The affiliates have to ensure that all customers who visit their website click on a link that directs them to the website of the company they are affiliated to. For every click, they receive a payout. Some affiliates are paid by a pay per view method. Whatever, the form, the affiliate programme is now a complex market phenomenon and there are many tiers to this programme with individual affiliates, affiliate marketing companies, affiliate networks and super affiliates.
- Let’s delve into history
Contrary to popular belief, Affiliate marketing companies have been around much longer than one would think. Right from mechanics to pharmacists, customers who referred new customers would get a discount or the doctor who prescribed a certain medicine would get an incentive. Also known as the referral system, business increased because it was beneficial for people to recommend a service or product. This was of course scattered and unorganized.
- Enter the internet era
All this changed with the internet which opened up the world and transformed the way people did everything. Advertising was the most benefitted as it was easy for people to garner information from the internet about available products, detailed information, reviews and recommendations and it soon took hold of customers’ thoughts and became a great influencer in purchases made by people. Along with the internet, other developments in the field of technology like Web 2.0 and cookies made tracking the impact of advertising on purchase possible. This helped affiliate marketing companies to grow their network.
Affiliate Marketing Companies really took off with the advent of the internet and have now become an integral part of all marketing activity and account for a considerable share of the marketing budget. Now we associate affiliate marketing with online activity. Links that are clicked redirect you to the website of the company that has engaged the affiliate marketing companies. Every click earns the affiliate revenue. From those fledgling steps, affiliate marketing has grown in magnitude and has become an integral part of market strategy and has overtaken offline businesses. Today, this marketing activity is a source of income to many people the world over in a variety of fields like travel, education, retail shopping, personal finance, publishing, gambling and many such areas. It is a well-known fact how e commerce has become a way of life in the current age.
- The early clients
William Tobin is credited with the patent for affiliate marketing in its current form in the late 1980’s. He started it off with his own flower company, PC Flowers and Gifts on the Prodigy Network and it soon became very popular grossing over $ 6 million a year. Heartened by this success, many contemporaries of his introduced it to their products and markets. The rapid spread was possible because the internet connected the whole world in a way never before possible. Markets did not need to be in a physical location and customers didn’t need to step out of their homes. This opened up a highly competitive arena and affiliate marketing companies swung into action with new techniques and strategies to capture markets.
One of the earliest clients of affiliate marketing companies was Amazon. Users who shared links to the Amazon website were paid an incentive when customers clicked and visited the website. Amazon made use of these companies to grow their business to the current magnitude. Online shopping is an ideal ground for affiliate marketing companies to thrive. They created affiliate networks where people who did not have access to contacts could also, through the network, become affiliates and profit.
Another of the early clients of the affiliate marketing companies was Cybererotica and they made a success of the cost per click programme. CDNow , a music marketing agency, also took the services of these affiliate marketing companies to promote their CD sales through affiliate marketing.
Individual affiliate marketing companies tied up with affiliate networks to widen their net and increase contacts and possibilities. In 1997 Refer-it.com was launched by Wayne Marciano and they became the pioneers in this area. Next to follow were AssociatePrograms.com, AffiliateGuide.com and ReveNews.com which shared information regarding affiliate programmes. The affiliate programme had a slight slowdown during the early 2000s when the dot.com bubble burst. The concept went through a lot of changes and a consolidation took place making it a more structured and informed. The Affiliate Summit organized by Ward and Collins in 2003 was a gathering of all affiliates where they discussed the latest industry updates to strengthen the networking environment.
- The journey forward
The nascent industry took a concrete shape and consolidated its business and by 2006, affiliate networks in the UK were purported to be earning in excess of 2.6 Billion Pounds. The world over, it was estimated that the revenue was in excess of 6.5 Billion Pounds. The Internet Advisory Bureau conducted a study in 2012 which showed that the online affiliate marketing endeavor was raking in 6% of all sales and was likely to grow exponentially in the future. Affiliate marketing companies are becoming financially viable business options and more and more people are joining the network. This is in part because online purchasing has become the norm in the current day and ecommerce has taken over business in physical locations. People are now comfortable making payments online and there are a number of secure payment portals which they can choose from. Another prevalent phenomenon is the disappearance of geographical borders and now people want to and are able to access sites around the world. This is a great playing ground for affiliate marketing companies to influence customers through various marketing strategies and options like referral bonus, pay per click, cost per view, SEO, email marketing, adwords and the like. Market experts predict that affiliate marketing is on the upswing and will play an even larger role in the years to come.