There is a lot of money that can be had by running an online business. However, with today’s competitive landscape, it becomes harder and harder for entrepreneurs to earn a sizable revenue, given how many competitors they have to face.
Some businessmen would resort to affiliate marketing to help promote their products and services, what is it exactly and how did it come to be? Well, in this article, you will find out what it is and how it can be utilized to help promote your business.
How It All Began
Affiliate marketing has actually grown considerably since its inception that it has now become its very own dynamic industry. With the proliferation of new digital technologies and people becoming technology-savvy through the years, you can expect this medium to be longstanding and survive for many years to come.
So, how did it all begin? Well, affiliate marketing, as we know it today, actually started way back in 1994 when a startup company, PC Flowers & Gifts, started handing out small commissions to its affiliates in exchange for promoting their products and services.
In fact, the company has generated millions in affiliate sales and their affiliates have also gained a sizable income with minimal effort required. Affiliate Marketing was spearheaded by Prodigy Network, which is a company that was founded by William J. Tobin.
In 1996, Tobin actually patented the idea but many people have since changed the model somewhat. Also, in the same year, Amazon started doing the same and in 2003, Google followed suit by launching their own Adsense program.
How Does It Work?
The concept of affiliate marketing is actually quite simple. An online merchant will partner up with affiliate websites (or publishers) and these entities will help promote their products and services to their audiences.
There are actually a lot of different commission models being used under the affiliate marketing umbrella. The once-popular model was the PPC or Pay-Per-Click scheme wherein affiliates can get small commissions for every click an affiliate link receives.
This was useful for bloggers since they can use as many affiliate links as possible within their content to help generate more clicks. However, this has since been defunct as a commission model simply because it can be exploited by using a program that generates automatic clicks.
Another model that was used in affiliate marketing back in the day (and in some cases, in the present) is the pay-per-lead. This marketing structure pays a small commission to the merchants’ affiliates based on the referred visitors that take action in registering or acquiring a trial offer, among other things.
However, the most common structure that is used to this day is the pay-per-sale or PPS model. This is where the affiliate will only get commissions if the potential customer clicks on a link and purchases the products that are provided on that link.
How Companies Can Use This?
Business owners can tap into affiliate marketing resources by creating their own affiliate program. Publishers or affiliates will sign up to this program and they would then collaborate with the merchants to get everything started.
Transparency and constant communication are a must to make sure that everything is working smoothly. Failure to do so will result in plenty of errors and missed opportunities.
It is also important to note that the online merchant set the commission structure that is going to be used before the product even begins. This is so that the marketers know exactly when and how they are going to be paid.