Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought on by their own affiliate marketing efforts.
Video Affiliate marketing
Structure
The industry has four core players:
- merchants (also known as 'retailers' or 'brands')
- networks (which contain bids for affiliates to choose from and also take care of payments)
- publisher (also known as 'affiliate')
- subscribers
The market has grown in complexity, resulting in the emergence of secondary levels of players, including affiliate management agents, super-affiliates, and specialized third-party vendors.
Affiliate marketing overlaps with other Internet marketing methods to some extent, because affiliates often use regular advertising methods. These methods include organic search engine optimization (SEO), paid search engine marketing (PPC - Pay Per Click), email marketing, content marketing, and (in some ways) display ads. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing product or service reviews offered by partners.
Affiliate marketing is often confused with referral marketing, because both forms of marketing use third parties to drive sales to retailers. The two forms of marketing are differentiated, however, in the way they drive sales, where affiliate marketing depends entirely on financial motivation, whereas referral marketing relies more on trust and personal relationships.
Affiliate marketing is often ignored by advertisers. While search engines, e-mail, and website syndication attract much attention from online retailers, affiliate marketing brings a much lower profile. However, affiliates still play an important role in e-retailer marketing strategy.
Maps Affiliate marketing
History
Origin
The concept of revenue sharing - paying commissions for referrals - precedes affiliate marketing and the Internet. The principle translation of revenue sharing into major e-commerce occurred in November 1994, almost four years after the origin of the World Wide Web.
The concept of affiliate marketing on the Internet is understood, practiced and patented by William J. Tobin, founder of PC Flowers & amp; Gift. Launched in Prodigy Network in 1989, PC Flowers & amp; The prize remained in service until 1996. In 1993, PC Flowers & amp; The prize earns more than $ 6 million annually on Prodigy's services. In 1998, PC Flowers and Gifts developed a business model of commission sales payments to Prodigy Network.
In 1994, Tobin launched a beta version of PC Flowers & amp; Prizes on the Internet in collaboration with IBM, which has half of Prodigy. In 1995 PC Flowers & amp; The Prize has launched a commercial version of the website and has 2,600 affiliate marketing partners on the World Wide Web. Tobin filed a patent application on tracking and affiliate marketing on January 22, 1996, and issued US Patent number 6141.666 on October 31, 2000. Tobin also received Japanese Patent number 4021941 on October 5, 2007, and US Patent 7,505,913 on March 17, 2009 , for affiliate marketing and tracking. In July 1998, Flowers and Gifts PC merged with Fingerhut and Department Store Federation.
Cybererotica is one of the earliest innovators in affiliate marketing with a cost per click program.
In November 1994, CDNow launched the BuyWeb program. CDNow has the idea that music-oriented websites can review or post an album on their page that their visitors might want to buy. This website may also offer links that will take visitors directly to CDNow to purchase the album. The idea for long-distance purchases originally emerged from a conversation with the music label Geffen Records in the fall of 1994. Management at Geffen wanted to sell artist CDs directly from its website but did not want to apply this capability on its own. Geffen asks CDNow if it can design a program where CDNow will handle order fulfillment. Geffen realizes that CDNow can link directly from the artist on his website to Geffen's website, past the CDNow home page and go directly to the artist's music page.
Amazon.com (Amazon) launched its associate program in July 1996: Amazon colleagues can place banners or text links on their sites for each book, or link directly to the Amazon homepage.
When a visitor clicks a partner's website to go to Amazon and buy a book, the partner receives a commission. Amazon is not the first merchant to offer an affiliate program, but its program is the first widely known and serves as a model for the next program.
In February 2000, Amazon announced that it has been granted patents on the affiliate program component. The patent application was filed in June 1997, which preceded most affiliate programs, but not the PC & amp; Gifts.com (October 1994), AutoWeb.com (October 1995), Kbkids.com/BrainPlay.com (January 1996), EPage (April 1996), and several others.
Historical development
Affiliate marketing has grown quickly from the beginning. The e-commerce website, seen as a marketing toy in the early days of the Internet, became an integral part of the overall business plan and in some cases grew into a larger business than the existing offline business. According to one report, the total number of sales generated through affiliate networks in 2006 was Ã,  £ 2.16 billion in the UK alone. The estimate was  £ 1.35 billion in sales in 2005. MarketingSherpa's research team estimates that, in 2006, affiliates worldwide earned US $ 6.5 billion in prizes and commissions from various sources in retail, personal finance, gambling and gambling, travel, telecommunications, education, publishing, and lead generation forms aside from contextual advertising programs.
In 2006, the most active sectors for affiliate marketing were adult gambling, the retail industry, and file-sharing services. The three sectors that are expected to experience the largest growth are the cellular, financial, and travel sectors. As soon as these sectors emerged the entertainment sector (especially gambling) and Internet related services (especially broadband). Also some affiliate solution providers expect to see increased interest from business-to-business marketers and advertisers in using affiliate marketing as part of their mix.
Web 2.0
Web sites and services based on the concept of Web 2.0 - blogging and an interactive online community, for example - have an impact on the world of affiliate marketing as well. This platform allows for increased communication between merchants and affiliates. The Web 2.0 platform has also opened an affiliate marketing channel for personal bloggers, authors, and independent website owners. Contextual advertising allows publishers with a lower level of web traffic to place affiliate ads on websites.
New media forms have also diversified how companies, brands, and ad networks serve ads to visitors. For example, YouTube allows video creators to embed ads through Google's affiliate network. New developments have made it harder for unscrupulous affiliates to make money. The emerging black sheep is detected and known to the affiliate marketing community with much greater speed and efficiency.
Compensation method
Dominant compensation method
Eighty percent of affiliate programs currently use revenue sharing or pay-per-sale (PPS) as a compensation method, 19 percent use cost-per-action (CPA), and other programs using other methods such as cost-per-click (CPC) or cost-per-thousand (CPM) , cost per approximate 1000 views).
The reduced compensation method
In a more mature market, less than one percent of traditional affiliate marketing programs today use cost per click and cost per mille. However, this compensation method is heavily used in display and paid search advertising.
Cost per thousand only requires that publishers make the ad available on their website and display it to the page's visitors to receive commissions. Pay per click requires an additional step in the conversion process to generate revenue for publishers: A visitor should not only be aware of the ad but also must click on the ad to visit the advertiser's website.
Cost per click is more common in the early days of affiliate marketing but has been reduced in use over time because click fraud issues are very similar to click fraud problems facing modern day search engines. Contextual ad programs are not considered in statistics relating to reduced cost per click, because it is uncertain whether contextual advertising can be considered as affiliate marketing.
While these models have diminished in mature e-commerce and online markets, they are still prevalent in some of the newer industries. China is one example where Affiliate Marketing does not openly resemble the same model in the West. With many affiliates being paid a flat "Per Day Cost" with multiple networks offering Cost Per Click or CPM.
Performance/Affiliate marketing
In terms of cost per mille/click, the publisher does not care whether the visitor is an interesting audience member and can be converted by the advertiser, because at this time the publisher has earned a commission. This leaves the greater, and, in terms of cost per mille, the full risk and loss (if the visitor can not be converted) to the advertiser.
The cost per action/sales method requires that the referenced visitor do more than visit the advertiser's website before the affiliate receives a commission. The advertiser must convert that visitor first. It is in the best interests of the affiliate to send the closest traffic targeted to the advertiser as possible to increase the chances of a conversion. Risks and losses are shared between affiliates and advertisers.
Affiliate marketing is also called "performance marketing", referring to how sales employees are usually compensated. Such employees typically pay commissions for each sale they cover, and sometimes pay performance incentives to exceed the goal. Affiliates are not hired by advertisers whose products or services they promote, but the compensation models applied to affiliate marketing are very similar to those used for people in the advertiser's internal sales department.
The phrase, "Affiliate is an extended sales force for your business", which is often used to describe affiliate marketing, is not entirely accurate. The main difference between the two is that affiliate marketers have little effect on prospects that are likely to be in the conversion process once the lead is directed to the advertiser's website. The sales team of the advertiser, however, does have control and influence to the point where the prospect either a) signs a contract, or b) completes the purchase.
Multi-tier program
Some advertisers offer multi-tier programs that distribute commissions into a hierarchical referral network of signups and sub-partners. In practical terms, publisher "A" signs into the program with the advertiser and is rewarded for the activity agreed upon by the referred visitor. If the publisher "A" withdraws the publisher "B" and "C" to register for the same program using its registration code, all future activities performed by publisher "B" and "C" will result in additional commissions (at a lower rate) for publishers "A".
The two-tier program exists in a minority of affiliate programs; mostly just one level. Referral programs outside two levels resemble multi-level marketing (MLM) or network marketing but different: Multi-level marketing (MLM) or network marketing associations tend to have more complex commission requirements/qualifications than standard affiliate programs.
From an advertiser's perspective
Benefits for merchants
Merchants love affiliate marketing because in many cases use the "pay for performance" model, which means that the merchant does not incur any marketing costs unless the results are accrued (excluding the initial setup fee).
Implementation options
Some merchants run their own affiliate programs (in-house) using specialized software, while others use third-party intermediaries to track traffic or referral sales from affiliates. There are two types of affiliate management methods used by merchants: standalone software or hosted services, usually called affiliate networks. Payments to affiliates or publishers may be made by the network on behalf of the merchant, by the network, consolidated on all merchants where the publisher has a relationship with and receives the commission or directly by the merchant itself.
Affiliate management and outsourced program management
Uncontrolled affiliate programs help naughty affiliates, who use spam, trademark infringement, fake ads, cake stuffing, tiposquatting, and other unethical methods that have given affiliate marketing a negative reputation.
Some merchants use an outsourced program management company (OPM), which is often run by affiliate managers and network program managers. The OPM company manages affiliate programs for merchants as a service, similar to the role that advertising agencies provide in offline marketing.
Affiliate website type
Affiliate sites are often categorized by merchants (advertisers) and affiliate networks. There is currently no industry standard for categorization. The following types of websites are general, but are generally understood and used by affiliate marketers.
- Find affiliates using pay per click search engines to promote advertiser offerings (i.e., arbitrage search)
- Website and service comparison comparison directory
- Loyalty websites, typically characterized by reward or incentive systems for purchases through points, miles, money back
- Causes Associated marketing sites offering charitable donations
- Coupon and rebate websites that focus on sales promotion
- Content and niche market websites, including product review sites
- Private website
- Website trailer and website syndication
- List of e-mail marketing affiliates (i.e., owner of a large opt-in mail list that normally uses drip e-mail marketing) and newsletter bulletin affiliates, which are usually more content-heavy
- A sign-up or affiliate enrollment path that includes offers from other merchants during the registration process on their own website
- Shopping directories that list merchants by category without providing coupons, price comparisons, or other features based on frequently changing information, thus requiring continuous updates
- Cost-per-action network (i.e., top-level affiliates) that expose offers from advertisers affiliated with their own affiliate networks
- Websites use adbars (such as AdSense) to show context-sensitive ads for products on the site
- Virtual currency that offers the display of ads in exchange for virtual currency flyers in games or other virtual platforms.
- File Sharing: Websites that host music, movies, games and other software directories. Users upload content to a file hosting site and then post their material descriptions and download links on the directory's site. Uploaders are paid by file hosting sites based on the number of times their files have been downloaded. File hosting sites sell premium download accesses to files to the general public. Websites that host directory services sell ads and do not host the files themselves.
- Video sharing websites: YouTube videos are often used by affiliates to engage in affiliate marketing. Someone will create a video and place a link to the affiliate product they are promoting in the video itself and in the description.
Publisher recruitment
Affiliate networks that already have multiple advertisers usually also have many publishers. These publishers could potentially be recruited, and there is also an increased likelihood that publishers on the network apply to the program itself, without the need for advertiser recruitment efforts.
Relevant websites that attract the same target audience as advertisers but without competing with it are potential affiliate partners as well. Vendors or existing customers can also become recruits if they make sense and do not violate any laws or regulations (such as pyramid schemes).
Almost all websites can be hired as an affiliate publisher, but high traffic websites are more likely to be interested (for their benefit) low-cost per mille or medium-risk per click transaction than higher cost-per-action or higher revenue-sharing deals.
Find affiliate programs
There are three main ways to find affiliate programs for target websites:
- Affiliate program directory,
- Large affiliate networks that provide platforms for dozens or even hundreds of advertisers, and
- The target website itself. (Websites that offer affiliate programs often have links titled "affiliate programs", "affiliates", "referral programs" or "webmasters" - usually in the footer or "About" section of the website.)
If the above location does not generate information related to the affiliate, there may be a case that there is a non-public affiliate program. Utilizing one of the public website correlation methods can provide clues about the affiliate network. The most definitive method for finding this information is to contact the website owner directly if a contact method can be found.
Previous and current issues
Since the advent of affiliate marketing, there has been little control over affiliate activity. Unscrupulous affiliates have used spam, fraudulent advertising, forced clicks (to get tracking cookies set on user computers), adware, and other methods to drive traffic to their sponsors. Although many affiliate programs have a service requirement that contains rules against spam, this marketing method has historically proven to attract abuse from spammers.
Spam e-mail
In the affiliate marketing period, many Internet users have negative opinions because of the tendency of affiliates to use spam to promote the programs in which they are registered. When affiliate marketing matures, many affiliate merchants have perfected their terms and conditions to prohibit affiliates from spam.
Malicious browser extensions
Browser extensions are plug-ins that extend web browser functionality. Some extensions are written using web technologies like HTML, JavaScript, and CSS. Most modern web browsers have many third-party extensions available for download. In the last few years, there has been a constant increase in the number of malicious browser extensions that are flooding the web. Malicious browser extensions often seem legitimate because they appear to come from vendor websites and are accompanied by brilliant customer reviews. In the case of affiliate marketing, these malicious extensions are often used to redirect a user's browser to send fake clicks to websites that are supposed to be part of a legitimate affiliate marketing program. Usually, users are completely unaware that this is happening other than their slow browser performance. The website ends up paying for a fake traffic number, and the user does not know the participants in this ad scheme.
Search engine spam
Since search engines have become more prominent, some affiliate marketers have shifted from sending spam e-mail to automatically generated webpage creation that often contains product data feeds provided by merchants. The purpose of the webpage is to manipulate the relevance or superiority of resources indexed by search engines, also known as spamdexing . Each page can be targeted to different niche markets through the use of specific keywords, with the result of 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 PageRank ("BigDaddy") update algorithm in February 2006 - the last stage of Google's main update ("Jagger") that began in mid-summer 2005 - specifically targeted spamdexing with great success. This update allows Google to remove most of the computer-generated duplicate content from its index.
Websites that consist mostly of previous affiliate links already have a negative reputation because of poor quality content. In 2005 there was an active change made by Google, where certain websites were labeled as "thin affiliates". Such websites are removed from the Google index or relocated within the results page (i.e., moved from top to lower position). To avoid this categorization, affiliate marketer webmasters must create quality content on their website that distinguishes their work from the work of spammers or banners, which contains only links pointing to merchant sites.
Some commentators initially suggested that affiliate links work best in the context of the information contained within the website itself. For example, if a website contains information related to website publishing, an affiliate link pointing to a merchant internet provider (ISP) within the content of that website would be appropriate. If the website contains sports-related information, affiliate links pointing to sporting goods websites may work well in the context of articles and information about sports. The goal, in this case, is to publish quality information on websites and provide context-oriented links to related merchant websites.
However, the latest example is the "thin" affiliate website that uses the affiliate marketing model to create value for the Customer by offering services to them. These thin content affiliate services fall into three categories:
- Price comparison
- Marketing related causes
- Save time
Consumer handling
The implementation of affiliate marketing on the internet relies heavily on the various techniques built into the design of many web pages and websites, and the use of calls to external domains to track user actions (click tracking, Ad Sense) and to serve content (advertising) to users. Most of these activities increase the time and generally interfere with regular web surfers and are seen as visual clutter. Various countermeasures have evolved over time to prevent or eliminate the appearance of ads when web pages are rendered. Third party programs (Ad-Aware, Adblock Plus, Spybot, pop-up blocker, etc.) And in particular, the use of comprehensive HOSTS files effectively eliminates the visual clutter and the extra time and bandwidth required to render many web pages. The use of specific entries in HOSTS files to block these well-known and persistent marketing and click-tracking domains can also help reduce system exposure to malware by preventing the content of infected ads or tracking servers to reach the user's web browser.
Adware
Although different from spyware, adware often uses the same methods and technologies. Traders initially did not know about adware, what the impact was, and how it could damage their brand. Affiliate marketers become aware of this issue much more quickly, especially since they notice that adware often overrides tracking cookies, resulting in a decrease in commissions. Affiliates who do not use adware feel that they are stealing commissions from them. Adware often has no valuable purpose and rarely provides useful content to users, who usually do not realize that the software is installed on their computers.
Affiliates discuss the issues on internet forums and begin to organize their efforts. They believe that the best way to solve this problem is to prevent merchants from advertising through adware. Individuals who are indifferent or supportive of adware are exposed by affiliates, thus damaging the reputation of merchants and tarnishing their affiliate marketing efforts. Many affiliates stop using the merchant or switch to a competitor's affiliate program. Finally, affiliate networks are also forced by merchants and affiliates to take a stand and ban certain adware publishers from their networks. The result is a Code of Conduct by Commission Junction/beFree and Performics, LinkShare's Anti-Predatory Advertising Addendum, and a complete ban of the ShareASale software application as a medium for affiliates to promote advertiser offerings. Regardless of the progress made, adware continues to be a problem, as shown by the class action lawsuit against ValueClick and its daughter Commission Junction company filed on April 20, 2007.
Trademark offer
Affiliates were one of the earliest pay-per-click ad users when the first pay-per-click search engines appeared during the late 1990s. Then in 2000, Google launched its pay per click service, Google AdWords, which is responsible for extensive usage and pay per click acceptance as an advertising channel. More and more merchants are involved in pay-per-click advertising, either directly or through search marketing agencies, and realize that this space is already occupied by their affiliates. While this situation alone creates an advertising channel conflict and debate between advertisers and affiliates, the biggest affiliate-related issue bids on advertisers' names, brands and trademarks. Some advertisers begin to adjust their affiliate program requirements to prohibit their affiliates from bidding on those types of keywords. However, some advertisers do and still embrace this behavior, to the extent possible, or even encourage, affiliates to bid on any term, including advertiser trademarks.
Disclosure of compensation
Bloggers and other publishers may not be aware of the disclosure guidelines set by the FTC. Guidelines affect celebrity endorsement, ad language, and blogger compensation.
Industry deficiency
Certification and training
Affiliate marketing does not currently have industry standards for training and certification. There are several training courses and seminars that produce certification; however, acceptance of such certification is largely due to the reputation of the individual or company issuing the certification. Affiliate marketing is not commonly taught at universities, and only some college instructors work with Internet marketers to introduce subjects to marketing majors students.
Education occurs most often in "real life" by engaging and learning details over time. While there are some books on this topic, some so-called "how-to" or "silver bullets" instruct the reader to manipulate holes in Google's algorithm, which can quickly become obsolete, or suggest strategies no longer supported or allowed by advertisers.
Extra-Accessible Program Management Companies typically incorporate formal and informal training, delivering much of their training through group collaboration and brainstorming. Such companies also try to send every marketing employee to an industry conference of their choice.
Other training resources used include online forums, weblogs, podcasts, video seminars, and specialized websites.
Code of ethics
Code of Ethics was released by Commission Junction/beFree and Performics affiliate networks in December 2002 to guide the practice and compliance with ethical standards for online advertising.
Marketing terms
Members of the marketing industry recommend that "affiliate marketing" be replaced by an alternate name. Affiliate marketing is often confused with network marketing or multi-level marketing. Performance marketing is a common alternative, but other recommendations have been made as well.
Sales tax vulnerabilities
In April 2008, the State of New York inserted an item in the state budget stating the sales tax jurisdiction over the sale of Amazon.com to New Yorkers, based on the existence of an affiliate link from a New York-based website to Amazon. The state insists that even one of these affiliates is Amazon has a business presence in the state, and enough to allow New York to impose a tax on all Amazon sales to its citizens. Amazon challenged the amendment and lost at the trial level in January 2009. The case is now passing a New York appellate court.
Filling cookies
Cookie stuffing involves placing an affiliate tracking cookie on a website visitor's computer without their knowledge, which then generates revenue for the person doing the cake stuffing. It not only generates fake affiliate sales but also has the potential to override other affiliate cookies, basically stealing legally-obtained commissions.
Click to open
Many website voucher codes use a click to express format, which requires website users to click to reveal voucher codes. The clicking action puts the cookie on the website visitor's computer. In the UK, the IAB Affiliate Council under the leadership of Matt Bailey announced a law stating that "Affiliates should not use mechanisms in which users are encouraged to click to interact with content that is unclear or confusing what the outcome will be."
See also
- Affiliate tracking software
- Internet advertising: Spam e-mail, email marketing, post-click marketing, Website earnings
- Ad method: Ad filtering, ad serving, central ad server, pop-up ads, contextual ads, web banners
- Marketing tactics: Guerilla marketing, marketing strategy, evangelistic marketing, viral marketing, word of mouth marketing
- Search engines: Search engine marketing (SEM), search engine optimization (SEO), pay-per-click, click fraud, paid inclusion
- Industry calculations: Clickthrough rate (CTR), cost-per-action (CPA), cost-per-click (CPC), cost-per-impression (CPI), cost per thousand (CPM), per mile effective cost (eCPM)
References
External links
- Affiliate marketing on Curlie (based on DMOZ)
- Affiliate Program in BOTW Directory
Source of the article : Wikipedia
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