The affiliate marketing system has been around for a long time. By acting as a third party to connect web based merchants and service providers with customers, affiliates have worked for years to drive traffic to their client’s sites by using sites of their own. The history of affiliate marketing is rich and full of ethical, helpful entrepreneurs and spammers who were merely out to make a buck regardless of the outcome.

Affiliate Marketing Defined

Affiliate marketing, or performance marketing, is a type of advertising that aims to direct visitors to a web site that are most likely to be looking for the types of goods or services offered on the site. The compensation for the affiliate reflects the aim of the strategy.

Just as many sales people are paid based on the results of their efforts, affiliates are often paid if and when they drive clientele to a site and they take some kind of action resulting in a sale, signing up for a newsletter, or some other goal of the web based business.

Methods of Payment

The vast majority of affiliate marketing systems are paid using revenue sharing. In this case, the affiliate is paid according to cost per sale. When the hiring web site makes a sale based on a visitor driven to the site by the affiliate, the affiliate receives payment. A smaller group pays by cost per action. This would be a good choice for paying an affiliate if you want an action such as signing up visitors to enroll to read articles, blogs, or newsletters.

The last option is the ‘cost per click’ or ‘pay per click’ method of payment. Every time someone clicks on your site, the affiliate receives payment. This method does not hold the affiliate as accountable for the quality of traffic driven to the site since it is not paying for the amount of time spent on the site or any action taken.

A Brief History

The first affiliate programs offered a link through independent, online businesses to a separate business for remote purchasing. Amazon.com is an example of one of the first affiliate programs to take off with amazing success. Affiliate marketing has grown rapidly and has encompassed many types of retail and service businesses. Retail continues to be one of the big areas where affiliate marketing is used to provide web traffic and sales.

A Turn To Regulation

There was little to no regulation of affiliate programs in the beginning. As a consequence, some problems arose because of the lack of oversight. Some affiliates used methods like spam, email spam, spamdexing, among other things to push web traffic. Many law suits arose over trademarks and the use of one company’s trademark to drive people to a competitor’s web site. Eventually there was a backlash. Search engines began removing sites that did not use legitimate methods to promote themselves. Regulations began to form to counter this trend in advertising, allowing ethical and talented affiliates to do their jobs better.

An affiliate marketing system, whether in house or from an experienced affiliate, can not only increase web site traffic, but it can draw the target audience that will take action on your site.