Affiliate marketing 272
Multi-tier programs
Some advertisers offer multi-tier programs that distribute commission into a hierarchical referral network of sign-ups
and sub-partners. In practical terms, publisher "A" signs up to the program with an advertiser and gets rewarded for
the agreed activity conducted by a referred visitor. If publisher "A" attracts publishers "B" and "C" to sign up for the
same program using his sign-up code, all future activities performed by publishers "B" and "C" will result in
additional commission (at a lower rate) for publisher "A".
Two-tier programs exist in the minority of affiliate programs; most are simply one-tier. Referral programs beyond
two-tier resemble multi-level marketing (MLM) or network marketing but are different: Multi-level marketing
(MLM) or network marketing associations tend to have more complex commission requirements/qualifications than
standard affiliate programs.From the advertiser's perspective
Pros and cons
Merchants favor affiliate marketing because in most cases it uses a "pay for performance" model, meaning that the
merchant does not incur a marketing expense unless results are accrued (excluding any initial setup cost).[16] Some
businesses owe much of their success to this marketing technique, a notable example being Amazon.com. Unlike
display advertising, however, affiliate marketing is not easily scalable.[17]Implementation options
Some merchants run their own (in-house) affiliate programs using popular software while others use third-party
services provided by intermediaries to track traffic or sales that are referred from affiliates (see outsourced program
management). Merchants can choose from two different types of affiliate management solutions: standalone
software or hosted services, typically called affiliate networks. Payouts to affiliates or publishers are either made by
the networks on behalf of the merchant, by the network, consolidated across all merchants where the publisher has a
relationship with and earned commissions or directly by the merchant itself.Affiliate management and program management outsourcing
Successful affiliate programs require significant work and maintenance. Having a successful affiliate program is
more difficult than when such programs were just emerging. With the exception of some vertical markets, it is rare
for an affiliate program to generate considerable revenue with poor management or no management ("auto-drive").
Uncontrolled affiliate programs did still do aid rogue affiliates, who use spamming,[18] trademark infringement, false
advertising, "cookie cutting", typosquatting,[19] and other unethical methods that have given affiliate marketing a
negative reputation.
The increased number of Internet businesses and the increased number of people that trust the current technology
enough to shop and do business online allows further maturation of affiliate marketing.
The opportunity to generate a considerable amount of profit combined with a crowded marketplace filled with
competitors of equal quality and size makes it more difficult for merchants to be noticed. In this environment,
however, being noticed can yield greater rewards.
Recently, the Internet marketing industry has become more advanced. In some areas online media has been rising to
the sophistication of offline media, in which advertising has been largely professional and competitive. There are
significantly more requirements that merchants must meet to be successful, and those requirements are becoming too
burdensome for the merchant to manage successfully in-house.
An increasing number of merchants are seeking alternative options found in relatively new outsourced (affiliate)
program management (OPM) companies, which are often founded by veteran affiliate managers and network