The Origins of Affiliate Marketing and Its Place in the Market

9 December 2022
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Today, the affiliate marketing industry is growing and developing rapidly, and there are no plans to stop. According to SimilarWeb, this marketing niche has an estimated value of $12 billion globally, and affiliate marketing search results have increased more than twice during the last year. In addition, many companies see affiliate marketing skills as a necessity rather than a choice. 

Specialists do realize the profitability of this promotion type and are increasingly turning to affiliate marketing. But where did it come from? And why pay attention to this type of marketing now? Well, once upon a time…

Historical background

1989

The concept of affiliate marketing as we know it today was pioneered by William J. Tobin, founder of the online flower shop PC Flowers & Gifts. PC Flowers & Gifts is the seventh of Tobin’s ten start-ups and the world’s first one with an affiliate program.

The idea to promote products online with the help of partners was born in 1989. William J. Tobin launched an affiliate program on the Prodigy network and shared a commission on each sale. By 1993, it was already generating over 6 million dollars a year for the Prodigy network. It had over 2,500 affiliates from all around the web by 1995. After a failed attempt in 1996 to patent the first affiliate program, it was finally patented in 2000.

1993

Affiliate marketing has found its place in the review format. The online music marketplace CDNow launched BuyWeb. This service allowed sites with reviews of the music industry and artists’ albums to earn money by linking to CDNOW.com. The scheme is simple: a potential lead reads an album review on the site, sees a link in the text to buy the album from the online retailer CDNow, and the affiliate site receives a commission on the sale.

The Origins of Affiliate Marketing and Its Place in the Market

1996

This is where the big shot, Amazon, comes into play. It was in 1996 that they first launched Amazon Associates, a global affiliate program. The program allowed affiliates to sign up for the opportunity to put links on their website or publish custom banners that led back to Amazon or linked directly to it. In return, they received cash rewards. This model was later adopted by many affiliate networks, giving birth to many popular affiliate service providers such as LinkShare and Be Free. 

1998

In 1998, five students from the University of California, Santa Barbara created the Commission Junction network. That same year, Tim and Eileen Barber founded the Clickbank network. These two networks were the first to collaborate with other businesses, not just to promote their own product. Nowadays, they are one of the most popular networks in the history of the market.

2000

With the turn of the century, the world of digital services has also seen many changes. One of the key ones was the introduction of the e-Commerce Directive, which has become the main legal framework for the provision of digital services in the EU. This law affects the operation of any intermediaries of goods and services in the online environment, including the control of affiliate marketing mechanisms.

A lot has changed since the noughties and more recently European legislation has been enriched by another instrument to regulate online activities — the Digital Service Act. Read our article to find out the answer to why you should know more about this act.

The Origins of Affiliate Marketing and Its Place in the Market

Affiliate place under the sun

Online marketing has long been a part of our lives, but new trends and implementation mechanisms continue to emerge. Here are some of the most popular digital marketing channels:

  • Content marketing
  • Search engine marketing (SEM)
  • Email marketing
  • Social media marketing (SMM)
  • Video marketing
  • Pay-per-click advertising (PPC)
  • Affiliate marketing
  • Influencer marketing
  • Blogging
  • Referral marketing
  • Mobile marketing
  • Display advertising

So what is the place of affiliate marketing among them?

The Origins of Affiliate Marketing and Its Place in the Market

Worldwide statistics show that affiliate marketing is not even in the top 9 most popular digital marketing channels. Some marketers may be put off by this fact when choosing their area of development, while others may see it as an opportunity for growth. According to the Blue Ocean Strategy, it is better to target low-popularity markets in which you won’t have to spend too many resources to pull the plug on the competition. In addition, the features of affiliate marketing include a huge number of placements for advertising and an unlimited number of potential customers — you have to get it before it gets cold.

The Origins of Affiliate Marketing and Its Place in the Market

Summing Up

Although the field of affiliate marketing does not have a very large audience yet, many companies that are actively using this type of promotion are seeing an increase in profits. It is a very promising industry, which is not too difficult to enter because of the relatively low competition. Take the opportunity to gain experience and become a better affiliate before someone else does it for you.

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