Affiliate marketing 269
Affiliate marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or
customer brought about by the affiliate's own marketing efforts. The industry has four core players: the merchant
(also known as 'retailer' or 'brand'), the network (that contains offers for the affiliate to choose from and also takes
care of the payments), the publisher (also known as 'the affiliate'), and the customer. The market has grown in
complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and
specialized third party vendors.
Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use
regular advertising methods. Those methods include organic search engine optimization (SEO), paid search engine
marketing (PPC - Pay Per Click), e-mail marketing, and in some sense display advertising. On the other hand,
affiliates sometimes use less orthodox techniques, such as publishing fake reviews of products or services offered by
a partner.
Affiliate marketing is commonly confused with referral marketing, as both forms of marketing use third parties to
drive sales to the retailer.[1] However, both are distinct forms of marketing and the main difference between them is
that affiliate marketing relies purely on financial motivations to drive sales while referral marketing relies on trust
and personal relationships to drive sales.[1]
Affiliate marketing is frequently overlooked by advertisers.[2] While search engines, e-mail, and website syndication
capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates
continue to play a significant role in e-retailers' marketing strategies.History
Origin
The concept of affiliate marketing on the Internet was conceived of, put into practice and patented by William J.
Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts remained
on the service until 1996. By 1993, PC Flowers & Gifts generated sales in excess of $6 million dollars per year on
the Prodigy service. In 1998, PC Flowers and Gifts developed the business model of paying a commission on sales to
The Prodigy network (Reference-Chicago Tribune-Oct, 4, 1995).(Ref The Sunsentinal 1991 and
http://www.dankawaski.com).
In 1994, Mr. Tobin launched a beta version of PC Flowers & Gifts on the Internet in cooperation with IBM who
owned half of Prodigy (Reference-PC Week Article Jan 9, 1995). By 1995 PC Flowers & Gifts had launched a
commercial version of the website and had 2,600 affiliate marketing partners on the World Wide Web. Mr. Tobin
applied for a patent on tracking and affiliate marketing on January 22, 1996 and was issued U.S. Patent number
6,141,666 on Oct 31, 2000. Mr. Tobin also received Japanese Patent number 4021941 on Oct 5, 2007 and U.S.
Patent number 7,505,913 on Mar 17, 2009 for affiliate marketing and tracking (Reference-Business Wire-Jan, 24,
2000). In July 1998 PC Flowers and Gifts merged with Fingerhut and Federated Department Stores (Reference-
Business Wire- March 31, 1999).
On March 9, 2009 Mr. Tobin assigned his patents to the Tobin Family Education and Health Foundation. The
Foundation licenses the patents to many of the largest affiliate marketing companies in the US and Japan. Mr. Tobin
discusses the P.C Flowers & Gifts service on the Internet as well as the other nine companies he has founded in his
book entitled “Confessions of an Obsessive Entrepreneur”.
The concept of revenue sharing—paying commission for referred business—predates affiliate marketing and the
Internet. The translation of the revenue share principles to mainstream e-commerce happened in November 1994,[3]
almost four years after the origination of the World Wide Web.