Affiliate marketing is a fantastic way to earn an income from the comfort of your own home. Just combine a computer with access to the internet, mix with a generous amount of time and patience and add a dash of willingness to learn. But have you ever wondered how affiliate marketing actually came about? Wonder no more with our brief history of affiliate marketing.
In the beginning…
It’s a common misconception that Amazon invented affiliate marketing. Actually, affiliate marketing began in 1989 with a man named William J. Tobin, who holds the proud title of the world’s first internet marketer. The founder of PC Flowers & Gifts, Tobin conceptualised the idea of affiliate marketing and launched his program on the Prodigy Network. This model involved paying the Prodigy network a commission on every sale. By 1993, it was generating more than $6 million dollars yearly for Prodigy. This success encouraged Tobin to patent the idea in 1996, although this wasn’t issued until 2000.
Meanwhile, in 1994, CDNOW launched their BuyWeb program. The idea was that music sites could review albums and link their visitors directly to CDNOW where they could purchase the albums.
Then there was Amazon
Amazon were latecomers to the party, arriving in 1996 with their associates program. Although not the first to start an affiliate program, they were the first to attract global interest. Their model involved paying a commission as a percentage of the sold product, and this became the model for many affiliate networks that followed.
In the same year, Johnson and Samuel Gerace established BeFree, and Linkshare (now Rakuten Affiliate Network) was founded by Stephen and Heidi Messer.
These were followed in 1998 by Commission Junction, set up by some students from the University of California Santa Barbara and now the world’s biggest affiliate marketing provider, and the Clickbank Network, founded by Tim and Eileen Barber.
These networks, which offered payment solutions and facilitated exchanges between affiliates and merchants, enabled smaller retailers outside of Amazon to get involved with affiliate marketing too.
The first affiliate directory
With affiliate networks springing up all over the place, in 1997 Refer-it.com was launched by Wayne Marciano. Providing an overview the main affiliate networks to both affiliates and merchants, this became the first Affiliate Program Directory.
This was followed a year later by AssociatePrograms.com, AffiliateGuide.com, ReveNews.com and more, which also shared information and articles alongside affiliate directories.
Rules and regulations
In 2000, the U.S. Federal Trade Commission published guidelines for affiliate marketing in regard to disclosures. The “Dot Com Disclosures: Information about Online Advertising” regulations helped strengthen affiliate marketing’s legitimacy in the world of online marketing.
The legislation was updated in 2008, requiring bloggers to disclose their relationship with the companies they are promoting.
The dot.com burst and onwards
The dot.com bubble burst of 2001 spelled significant changes for affiliate marketing. The frenzy of online business ventures that had been built (many on very shaky foundations by blind, inexperienced and unprepared investors) during the commercial rise of the internet (labelled the dot com boom) came crashing down in early 2000 when business fundamentals reasserted themselves, causing technology stocks to lose 60% of their value in just one year and bringing many back down to reality.
Online riches were no longer a sure thing. Internet marketers realised that to succeed in the industry they would need to understand, study and become knowledgeable in their field. Online bookshops began to overflow with affiliate marketing guides and the ‘secrets’ of affiliate marketing were offered to anyone willing to pay for them.
In 2003, Missy Ward and Shawn Collins founded Affiliate Summit, which aimed to educate those involved with affiliate marketing on the latest industry updates and issues and foster a productive networking environment for affiliate marketers. The first Affiliate Summit was attended by 200 people in New York and is still going strong today.
The future of affiliate marketing
By 2006, affiliate networks were reported to be turning in approximately £2.16 billion in the UK alone, with worldwide revenues estimated to have reached $6.5 billion. This revenue came mainly from gambling, travel, personal finance, telecommunications, gaming, retail and lead generation.
By 2012, affiliate marketing represented 6% of the UKs whole online economy and was generating £9 billion in sales, according to a study by the Internet Advisory Bureau (IAB).
Affiliate marketing is wildly popular and continues to offer huge potential, especially with more and more online stores now outperforming their offline counterparts. It’s highly unlikely that consumers will ever stop wanting information and doing research before purchasing a product or service – one of the main reasons why affiliate marketing is still going stronger than ever.