An intern of ours just asked what affliate marketing was, so I decided I would make a really simplified guide to summarize some of the basic points:
In a nutshell:
One website rewards other “affiliates” for visitors or customer acquired through marketing efforts done by the affiliates. Sometimes called “performance marketing” for the way in which affiliates are paid.
Origins:
The adult industry appears to be at the origin of affiliate marketing (along with many other innovations). They used cost-per-click to pay affiliates. Then came Amazon, who had affiliates place banner ads on their websites in exchange for commission on sales. As expected, today the most active sectors of affiliate marketing are the adult, gambling, and retail industries.
Compensation for affiliates:
Cost per sale (CPS), cost per action (CPA): Risk is split between advertiser & affiliate. Affiliate is only compensated when a visitor takes an action or makes a purchase.
Cost per thousand (CPM): Risk lies mainly with advertiser who may or may not makes sales from traffic brought by affiliate.
Main types of affiliate marketing websites:
Price comparison – aggregator sites / Product review websites / Cashback rewards websites / Promocode websites / Big bloggers
How to succeed at affiliate marketing:
If you read just one blog, read SugarRae.com by Rae Hoffman, the original affiliate marketing badass. Especially read this from 2007. Read through the resources she provides and whatever you do, don’t piss her off.
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