In affiliate marketing, management companies, in-house affiliate managers and third party vendors are effectively utilized to use E-mail Marketing, Search Engine Marketing, RRS Capturing and Display Advertising for the success of the product. The web traffic can be traced with the help of a third party or the merchant's own affiliate programs. A lot of work is involved in this process. Originally, marketing by this method involved lots of spamming, false advertising, trademark infringement and other frowned-upon activities.
However, due to the creation of complex algorithms, advance security and FTC regulation ("CAN-SPAM Act", for example), a lot of the unwanted ("illegal") activities this has been greatly reduced to make it much safer for doing business and shopping online. This even led to the better scrutinizing of the terms and conditions by the merchants. Affiliate marketing became more profitable with the opening of more opportunities but at the same time it also increased the competition in marketing.
Due to the many pressures in-house affiliate programs put on merchants, many of these programs were replaced by out-sourced programs. The companies that offered this service have expert affiliate and network program managers who employed various affiliate program management techniques, many of which relied on the publishers associated with them who help them with promotions and advertising which further reduced the pressure that once created a problem for many merchants.
Affiliate marketing was believed to have started by cdnow.com who had music oriented websites. They placed list of music albums on their site and they paid others (website owners and publishers) if they put those links in their websites such that when a visitor bought their album through the third party site. The first company to link with cdnow.com was Geffen Records. Two months later, Amazon was offered by a woman that she would sell Amazon’s books on her website and she should be paid a certain percentage in return if she sold Amazon’s books through her site. They liked the idea and started the Amazon associates program. If you run a search on cdnow.com today, you'll most definitely find Amazon.com.
Since its invention, the affiliate marketing concept has been adopted by various industries and businesses. Among these, travel was - and still is - a recognized participant, and others like education, telecom, mobile, gaming, personal finance, retail, and subscription sites actively participate in the affiliate marketing business model. The adult and gambling sectors also found a way to promote and sell their products/services without having to be out front with it. Instead - by utilizing hungry affiliates and paying them rather handsomely - they were able to operate very profitable "adult" businesses. Affiliate marketing has grown to the point where it is now a multi-billion dollar method of doing business.
There are various types of compensation used in affiliate marketing which range from Cost per sale (CPS), Cost per action (CPA), Cost per-thousand-impressions (CPM) and Cost per click (CPC). The first two are the more famous methods today. This is because in CPM and CPC, the visitor which turns up on a particular website might not be from the targeted audience and a click would be enough to generate commission. CPS and CPA have a compulsion that the visitor not only clicks on the link but also buys something or signs up for some service after which proves that s/he is among the targeted audience.
Only upon the completion of an agreed-upon action will the affiliate gets paid; So affiliates work toward sending as many targeted traffic as possible to the advertisers' websites in order to increase their returns, and for this reason affiliate marketing has often been referred to as performance marketing because it depends to a great extent on the affiliate's performance. The affiliate team can be differentiated from a sales team based simply on the nature of their jobs. The job of the affiliate team is to drag targeted traffic to a point and from that point on it’s the job of the sales team to influence that visitor to buy the particular product or service.
What makes affiliate marketing a very effective, and preferred marketing method among many businesses, is the fact that money is being paid only when results have been produced. The publisher incurs all the cost except that of initial setup and development of the program, which is incurred by the merchant. Many businesses give credit to this method of marketing for their success because It is really a "win-win" for both parties, affiliate and affiliator (this is not a recognized word, it just seems to fit. Doesn't it?). The word should be merchant.
However, if you ever thought about starting your own Web business, affiliate marketing - where YOU are the affiliate - will most likely be the least expensive way to go. You need only have a computer (or mobile phone these days) and an internet connection. Assuming you already have both (if you're reading this from your own home), then all you need is a product or service (merchant) and that is not difficult to find on the Web, and you need not look too far or too long. Please contact me if you need additional information on affiliate marketing.