How It Began

It Started With Amazon...When it comes to the web, Amazon.com really started the affiliate ball rolling. In July 1996, it launched its "associates" program and now counts over 450,000 sites in its network.The basic model works something like this: A small website owner registers with Amazon (or any other affiliate program), she then puts various links, banners, and products on her web site.

When her visitors click through on these links and purchase a book or other product, the small web site owner is paid a commission for generating the sale.But Others Have FollowedWhile Amazon remains the most visible pioneer, the concept really isn't new.

In fact, one of its oldest practitioners, Amway, has even taken to the web and affiliate marketing with its Quixtar site.Looking a bit farther afield, consider merchants that dont even have formal affiliate programs: auction buying clubs like Mercata and MobShop (formerly Accompany, which I thought was an equally descriptive name).

These sites work on the premise of variable volume discounts as demand for an item increases, the price goes down. Both sites encourage buyers to get their friends to buy too. Instead of earning a commission, the "affiliate" is rewarded with a lower purchase price.

It's Pay for PerformanceIn all cases, the goal is for marketers to only spend money when their particular performance objective is met.While Amazon only pays when a sale is made, merchants selling big ticket items like cars, or marketing services like credit cards, have modified the model paying instead for clicks or qualified leads.In fact, compensation schemes are as varied as the merchants themselves from a 15 percent commission on Amazon books, to 1 percent on Dell PCs. On the financial services side, LendingTree offers up to $14 per qualified application and NextCard offers $20 per enrolled cardholder.

Consumer retailers like FogDog offer a fairly typical 5 percent.Consider a Third PartyAs merchants have rushed to build programs, an entirely new category has been born: affiliate networks. Running a network of affiliates is not rocket science, but it does require quite a bit of time and commitment.

For that reason, many merchants are finding that outsourced providers offer a compelling solution.Some vendors like LinkShare provide tracking, reporting, and affiliate recruiting.Other programs like Dynamic Trade and Commission Junction offer additional services: cutting checks, sending out end-of-year tax forms, and responding to webmaster queries. Complete do-it-yourselfers should check out the listing of affiliate scripts at the CGI Resource Index.

Several dozen scripts are listed, ranging from freeware and shareware to scripts costing a few hundred dollars.In a few short years, affiliate marketing has become a significant force in how commerce on the web occurs.Thousands of merchants now use affiliate marketing to get business done.

The model is now being flexed to drive behavior beyond mere commerce transactions.And yet for all the jargon and hype, affiliate marketing is about connecting buyers and sellers and rewarding those that facilitate the connections. After all, the value isn't in the transaction, it's in the relationship...