The history of affiliate marketing. What the heck is it?.. and.. Why should you care?
First of all, affiliate marketing is big business. The leading company and one of the first companies to use affiliate marketing, Amazon.com is now worth over 157 Billion dollars, that’s Billion with a B folks. They have over 117 thousand employees and sales of close to 75 Billion a year. They are one of the biggest companies in the world. I think that makes affiliate marketing pretty important on a business scale and to our economy as a whole.
What is affiliate marketing?
Affiliate marketing is performance based marketing where a website owner earns a commission by referring a client from their website to another company’s website using a link. There are different criteria as to how the affiliate or referrer gets paid. Usually there is no payment unless the person going to the website makes an actual purchase. (As in the case of Amazon and many other companies.) A percentage of the purchase is then earned by the affiliate.
Sometimes as in the case of Google Adsense, the affiliate marketer gets paid any time an advertising link is clicked. The advertiser pays Google a set fee per click and then Google takes their cut and pays the affiliate a smaller amount for each click.
Affiliate marketing is everywhere. If you read a book review with a link to purchase that book, chances are that you have taken part in an affiliate marketing transaction. You don’t pay extra for the book because the cost has already been determined by the seller with these commissions paid to the affiliate already factored in. It’s kind of a win win situation for everybody. You get the book you want. The affiliate marketer makes their commission and the seller sells a book that they probably wouldn’t have sold otherwise.
Whew! It actually sounds more complicated than it is. Technology makes it easy. More and more purchases are made online every year. Purchasers are becoming more comfortable with buying online, and why not? The process is being perfected each step of the way. Everything from security for your financial information right down to the time it takes you to receive your purchase are improving all the time. Amazon is even working on the technology of drones delivering your product. It just might happen, and sooner than you think.
Eventually, it won’t make any sense to go to a brick and mortar business to buy anything. Groceries and household items can now be ordered online and shipped by companies like Walmart without you needing to go anywhere. In a few years we might not even need the expense of a car. Who knows where this technology will take us?
The History of Affiliate Marketing
William J. Tobin was the first to introduce the concept of affiliate marketing on the internet in 1989. His company PC Flowers and Gifts in partnership with Prodigy Network (Partly owned by IBM.) applied for a patent in 1996 and was issued one on Oct. 31, 2000 for affiliate marketing and tracking. In 1996 the Amazon affiliate associates program was started along with companies like Linkshare and Commission Junction. The latter two companies run affiliate programs for companies that are too small or don’t want to run one themselves. They take care of all the links, applications, tracking and payouts to affiliate website owners. This allows companies to get their products and name out there on thousands of websites without paying for any advertising. It only costs them money if a sale is made. Pretty cool business plan if you ask me.
The whole business and concept of affiliate marketing is still in it’s early stages. With the explosion of mobile technology and the power of smartphones today it won’t be long before everything will be connected and you will coordinate all of your transactions and purchases while sitting on a bench in a park or at the beach. It’s happening now.
Life sure is great these days and it’s only going to get better.
If you are involved in affiliate marketing today you can find an affiliate program for any product or service. Skin care, books, music, music lessons, how to build a pirate ship playhouse for the kids, comedy performance, gambling, dating services……anything and everything. Some pay higher commission than others. Products that can be electronically sent like books or how to programs tend to pay a higher commission because no physical product needs to be shipped.
Although Amazon.com didn’t start the business of affiliate marketing, they sure perfected it.
The History of Amazon
I love the history of Amazon. It is one of those things that makes you realize that yes, we can do anything we want. It’s an American success story.
The founder of the company, Jeff Bezos started Amazon in a garage in 1994. After reading a report about the projected growth of web commerce, he put together a business plan to get in on the growing e-commerce action. The original name for the company was Cadabra but it was scrapped because it sounded too much like Cadaver, which is probably not a “killer” name for any company. Bezos eventually named the company Amazon after the largest river in the world and also because it started with an A so that it would appear early in alphabetical listings. He decided that books were the most promising product due to their low price point and high demand. Although books were a starting point, Amazon now does most of it’s online sales in electronics, including it’s own Kindle e-book readers and tablets. Amazon also allows third party sellers to use (at a cost) it’s online retail system making it a one stop shop for almost any product imaginable. Amazon is not just an internet retailer anymore. It is now a fortune 100 company with a Market Cap of over 157 billion dollars, making it #33 in the world’s most valuable brands. Since it started Amazon has purchased close to 50 companies and it doesn’t look like it’s going to slow down anytime soon. Wow!! E-commerce seems to be the business to be in and affiliate marketing is a large piece of that pie.
Oh, and I forgot to mention. Amazon moved out of the garage.
Affiliate marketing is a relatively new idea, as is the internet on the grand scheme of things. Nobody knows just how big a business it will become, but if I was a betting man, I’d bet on huge. I can’t wait to see what happens next in the internet world of business and technology.
Another great thing about online sales and affiliate marketing is that anybody can do it. E-commerce is reversing the effects of the big box stores. It seems funny to me that huge retail chains and big box stores who effectively put the small mom and pop brick and mortar stores out of business 30 years ago are now having to close their doors because of the success of large online retailers.
With affiliate marketing and the ability for smaller companies to offer their product for sale through companies like Amazon, Linkshare and Commission Junction, the smaller operations can live another day. It’s just different, that’s all.
Ha, ha the small guy wins one. Life is good.
If you would like to learn more about making money with affiliate marketing. Click Here