Affiliate marketing is a form of online marketing that has become increasingly popular over the past decades. It allows businesses to promote their products or services through a network of affiliates who are rewarded for every sale or lead generated through their efforts. The concept of affiliate marketing has been around for much longer than the internet, however. In this article, we'll explore the history of affiliate marketing, from its early beginnings to the present day.
The concept of affiliate marketing can be traced back to the late 19th century, when merchants would pay commission to salespeople for bringing in customers. The first recorded instance of this type of marketing occurred in the United States in 1887 when a company called Wanamaker’s Department Store began offering salespeople a commission for every sale they made. This practice became known as “commission-based” marketing and is the foundation of the industry as we know it today.
The origins of modern online affiliate marketing can be traced back to the concept of revenue sharing. In the early 1980s, William J. Tobin, the founder of PC Flowers & Gifts, came up with the idea of paying commissions to other websites that referred customers to his website. This concept was based on the principle of revenue sharing, where one party shares a portion of their revenue with another party that helps them generate business. This concept paved the way for affiliate marketing as we know it today.
However, it wasn't until the 1990s that affiliate marketing began to take shape as we know it today. In 1994, the first affiliate program was launched by CDNow, a website that sold music CDs. CDNow allowed its users to place links to their products on their own websites and receive a commission for every sale that was made as a result of those links. This was the birth of the modern-day affiliate marketing industry.
The Rise of Affiliate Networks
As the internet grew in popularity in the late 1990s and early 2000s, so did the affiliate marketing industry. New companies emerged that specialized in connecting merchants with affiliates, allowing them to reach a wider audience and increase their sales. These companies, known as affiliate networks, became the go-to source for merchants looking to expand their marketing efforts.
One of the earliest affiliate networks was Commission Junction, which was launched in 1998. Commission Junction connected merchants with affiliates and provided them with the tools they needed to track sales and manage their programs. Other affiliate networks that emerged around this time included Linkshare (1996), Be Free (1999), and Performics (1998).
The Affiliate Marketing Boom
In the early 2000s, affiliate marketing experienced a period of rapid growth as more merchants and affiliates began to see the benefits of this type of marketing. By 2006, it was estimated that the industry was worth $6.5 billion and that it would continue to grow at a rate of around 20% per year.
One of the reasons for this rapid growth was the increasing popularity of search engines like Google. Affiliates began to use search engine optimization (SEO) techniques to drive traffic to merchant websites and generate sales. This led to the development of new tools and technologies, such as pay-per-click (PPC) advertising and data feeds, which made it easier for affiliates to promote products and for merchants to manage their programs.
The Evolution of Affiliate Marketing
In the years since its inception, the industry has evolved in many ways. One of the most significant changes has been the rise of social media, which has allowed affiliates to reach a wider audience than ever before. Influencer marketing has become an increasingly popular form of affiliate marketing, with influencers using their social media platforms to promote products to their followers.
Another significant change has been the introduction of new payment models. While commission-based marketing remains the most popular payment model, other models, such as cost per action (CPL) have become increasingly popular in recent years. This payment model allow merchants to pay affiliates for specific actions, such as filling out a form or clicking on a link, rather than just for sales.
The Future of Affiliate Marketing
As the digital landscape continues to evolve, so too will affiliate marketing. One of the biggest trends in the industry is the use of tools like ChatGPT. 2023 will give a clearer idea of where this will lead.