Online affiliation was created in the United Kingdom in the mid-nineties. Cdnow.com, a music site started with a new idea, through a program called Buywebprogram, to stimulate sales. Other websites were able to place links to Cdnow.com, resulting in receiving a share of the revenue that they got from each album sold. The idea for this type of marketing emerged from conversations between music label Geffen Records and CDNow. Geffen initially wanted artists CDs to sell through their own websites. It was Geffen who asked Cdnow.com to develop a program in order to have the capabilities to fulfill an order. Also Amazon.com, which started in 1996 with affiliation capabilities, has become a success thanks to affiliate marketing.
Affiliate marketing in practice
Affiliate marketing is a form of performance-based online marketing. The advertiser (also known as merchant), the affiliate network and the publisher (also known as affiliate) enter into a partnership, where the publisher promotes the product of the advertiser. The affiliate network facilitates the advertiser and the publisher with tools to run the programs. The advertiser, network and ideally the publisher agree on what commission the advertiser will pay for a specific service. They agree on how much the advertiser pays to the network and publisher for the service provided. All activities shall be based on performance. No cure no pay. No win no fee. If there is no performance, then there is no transaction. And this is why affiliate marketing is such an interesting market. Globally all parties have the same goals and all can identify with one another. Furthermore, these three parties especially do business when each of them see sales potential.