Affiliate marketing is a performance-based marketing strategy in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network (that contains offers for the affiliate to choose from and also takes care of the payments), the publisher (also known as ‘the affiliate’), and the customer. Retailers set up affiliate programs to enable publishers to promote their products. When a customer clicks on one of the publisher’s links and makes a purchase, the retailer pays the commission to the publisher.
Affiliate marketing has grown rapidly since its inception. The e-commerce website, Amazon.com, launched its Associates Program in July 1996: Amazon members could place banner ads on their websites for individual books, or links to Amazon product pages. The associates received a commission on every sale they generated. Amazon claims that, as of 2010, it has more than 900,000 active “affiliates” and is one of the top five e-commerce websites in terms of gross merchandise sales.
Affiliate marketing has also been used as a strategy for building loyalty among customers of online stores. One example of this strategy is the Amazon Associates program. In this program, website owners and bloggers include links to products on Amazon.com, and when customers click through these links and purchase products from Amazon, the website owners earn a commission. Amazon claims that up to one-third of all purchases made through Amazon Associates go to the website owner.
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) 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 on the website and provide context-oriented links to related merchant’s websites. Affiliate marketing has grown quickly since its inception. The e-commerce website, Amazon.com, launched its Associates Program in July 1996: Amazon members could place banner ads on their websites for individual books, or links to Amazon product pages. The associates received a commission on every sale they generated. Amazon claims that, as of 2010, it has more than 900,000 active “affiliates” and is one of the top five e-commerce websites in terms of gross merchandise sales.