The translation of the revenue share principles to mainstream e-commerce happened in November 1994, almost four years after the origination of the World Wide Web.
[citation needed] 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.
In 1998, PC Flowers and Gifts developed the business model of paying a commission on sales to the Prodigy Network.
[3][4] In 1994, Tobin launched a beta version of PC Flowers & Gifts on the Internet in cooperation with IBM, which owned half of Prodigy.
[5] 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.
The idea for remote purchasing originally arose from conversations with the music label Geffen Records in the fall of 1994.
[14] MarketingSherpa's research team estimated that, in 2006, affiliates worldwide earned US$6.5 billion in bounty and commissions from a variety of sources in retail, personal finance, gaming and gambling, travel, telecom, education, publishing, and forms of lead generation other than contextual advertising programs.
[16]: 149–150 Websites and services based on Web 2.0 concepts—blogging and interactive online communities, for example—have impacted the affiliate marketing world as well.
Web 2.0 platforms have also opened affiliate marketing channels to personal bloggers, writers, and independent website owners.
Cost per mille requires only that the publisher make the advertising available on his or her website and display it to the page visitors in order to receive a commission.
This leaves the greater, and, in case of cost per mille, the full risk and loss (if the visitor cannot be converted) to the advertiser.
Cost per action/sale methods require that referred visitors do more than visit the advertiser's website before the affiliate receives a commission.
[19] 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.
[24] OPM companies perform affiliate program management for the merchants as a service, similar to the role an advertising agencies serves in offline marketing.
Vendors or existing customers can also become recruits if doing so makes sense and does not violate any laws or regulations (such as with pyramid schemes).
Unscrupulous affiliates have used spam, false advertising, forced clicks (to get tracking cookies set on users' computers), adware, and other methods to drive traffic to their sponsors.
Although many affiliate programs have terms of service that contain rules against spam, this marketing method has historically proven to attract abuse from spammers.
Websites end up paying for fake traffic numbers, and users are unwitting participants in these ad schemes.
As search engines have become more prominent, some affiliate marketers have shifted from sending e-mail spam to creating automatically generated web pages that often contain product data feeds provided by merchants.
The goal of such web pages is to manipulate the relevancy or prominence of resources indexed by a search engine, also known as spamdexing.
Each page can be targeted to a different niche market through the use of specific keywords, with the result being a skewed form of search engine optimization.
[28] Websites consisting mostly of affiliate links have previously held a negative reputation for underdelivering quality content.
Affiliate marketers became aware of the issue much more quickly, especially because they noticed that adware often overwrites tracking cookies, thus resulting in a decline of commissions.
Adware often has no valuable purpose and rarely provides any useful content to the user, who is typically unaware that such software is installed on his/her computer.
[32] Regardless of the progress made, adware continues to be an issue, as demonstrated by the class action lawsuit against ValueClick and its daughter company Commission Junction filed on April 20, 2007.
[33] Affiliates were among the earliest adopters of pay per click advertising when the first pay-per-click search engines emerged during the end of the 1990s.
An increasing number of merchants engaged in pay per click advertising, either directly or via a search marketing agency, and realized that this space was already occupied by their affiliates.
A code of conduct was released by affiliate networks Commission Junction/beFree and Performics in December 2002 to guide practices and adherence to ethical standards for online advertising.