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What is affiliate marketing?

Today we are looking at the topic of affiliate marketing and asking ourselves the question: "What actually is affiliate marketing? What are the origins of affiliate marketing and who are the market participants in affiliate marketing?". This is the first part of the affiliate marketing series. In the following parts, I will deal with questions such as: "What advertising media are there in affiliate marketing? Which Tracking methods are there? Or which remuneration models are actually common?". But first things first - let's start with the origins and definition of affiliate marketing.

Origin of affiliate marketing

Affiliate marketing originated at a cocktail party in 1997, when Amazon founder Jeff Bezos was asked by a young woman who owned a divorce platform on the Internet whether it would be possible to market thematically appropriate books on her website in return for a commission. Amazon founder and CEO Jeff Bezos then decided to develop a commission-based sales model called the "Associates Program", which paid website operators a commission on successful referrals. The number of partners grew to 60,000 in the very first year. According to Amazon, there are now over one million registered partners.

Shortly after the successful launch of the Amazon affiliate program, a large number of similar models were launched, including in Germany. Affiliate marketing has since become an integral part of online marketing.

What does affiliate marketing mean?

Affiliate marketing is a marketing channel of online marketing and is an opportunity for commission business based on referral commissions. The idea of affiliate marketing is not a new one, but is based on sales structures of sales and network partnerships, which have been part of daily business in sales-oriented organizations for decades. The term "affiliate" comes from the English language and can be understood as "connected", "affiliated" or "associated". The term affiliate marketing can therefore be understood as an affiliation of partner networks or also as a merger of sales partnerships. Synonyms for the term "affiliate marketing" include partner program, affiliate program and associate programs.

How does affiliate marketing work?

In practice, an affiliate advertises products, services and other services of a company (merchant) on its website. For each successful referral of products, services or contact information generated via the affiliate's advertising measures, the affiliate receives either a commission or a standard remuneration, the type and amount of which is negotiated individually between the affiliate and merchant. However, affiliate marketing is not only part of online marketing, but also belongs to the category of performance marketing.

Affiliate marketing participants

For the rest of the blog series, it is essential to present the participants in affiliate marketing. The introduction of the various participants in affiliate marketing helps to better understand the tracking methods, commission models and advertising media.

Merchants

The merchant, also known as the advertiser or seller, acts as an advertiser in affiliate marketing. The merchant usually offers products and services for sale on its website. The merchant uses advertising material to promote its products, which are offered for sale on its website. In order to advertise its products in the best possible way, the merchant provides its affiliate partners with advertising material.

Affiliates

Affiliates, publishers or sales partners are website operators who link advertising material to their website in order to promote the merchant's products and services. The affiliate does this by linking the advertising material (e.g. banners) provided by the merchant to its website.

Affiliate networks

Affiliate networks are independent platforms that form an interface between merchants and affiliates in order to bring the two parties together. The use of affiliate networks facilitates the search for suitable cooperation partners for both parties. Affiliate networks also take on a variety of operational activities, such as billing, tracking measures and customer support. In Germany, there are various networks that differ in their range of affiliate programs. The two largest affiliate networks in German-speaking countries are Zanox and Affilinet, both of which have over 400,000 affiliates in their network.

Affiliate marketing agencies

In some cases of affiliate marketing, merchants decide to hand over affiliate marketing to a specialized affiliate marketing agency. In order for a merchant's affiliate program to be a success, it needs competent employees who take care of program maintenance and the recruitment of new affiliates. Furthermore, the advertising material offered must be updated at regular intervals. If a merchant cannot provide these skills and capacities through its own employees, then it is advisable to use an affiliate marketing agency.

 

I hope you enjoyed the first post in the "Affiliate Marketing" blog series and would be delighted if you would also take a look at the next posts. 

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Tobias Dziuba

My name is Tobias and I am the founder and managing director of the Amazon agency Adsmasters GmbH based in Düsseldorf.

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