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One concept of paying commission for referred business is Revenue sharing this predates affiliate marketing and the Internet. Translated, the revenue share principles to mainstream e-commerce happened after the World Wide Web started in November'94.The consensus of marketers and adult industry insiders is that Cybererotica was either the first or among the early innovators in affiliate marketing with a cost per click program.

In November of 94', CDNOW launched the BuyWeb program and was the first non-adult website to introduce the concept of an affiliate or associate program with click-through purchasing. The idea that music-oriented websites could review or list albums on their pages that their visitors may purchase. These websites also offer a link that takes the visitor directly to CDNOW to purchase the albums. The idea for remote purchasing originally arose because of conversations with music label Geffen Records in the fall of'94. The management at Geffen wanted to sell its artists' CDs directly from its website, but did not want to implement this capability itself. Geffen asked CDNOW if it could design a program where CDNOW would handle the order fulfillment. Geffen realized that CDNOW could link directly from the artist on its website to Geffen's website, bypassing the CDNOW home page and going directly to an artist's music page. launched an associate program in July 96'. An associate could place a banner or text links on their site for individual books, or link directly to the Amazon home page.When visitors clicked from the associate's website through to Amazon and purchased a book, the associate received a commission. Amazon was not the first merchant to offer an affiliate program, but its program was the first to become widely-known and serve as a model for subsequent programs.

Internet-based affiliate marketing is the practice in which a business rewards one or more affiliates for each visitor or customer brought about by their marketing efforts. It's the application of crowd sourcing. The Marketing industry core has four distinct area's: the Merchant (also known informally as 'Retailer' or 'Brand'), the Network, the Publisher (also known informally as 'the Affiliate') and the Customer. The market has grown sufficiently in complexity to warrant a secondary tier of players, including Affiliate Management Agencies, Super-Affiliates and Specialized Third Parties vendors.

Internet marketing methods do overlap at times, because affiliates will use regular advertising methods. Those methods include organic search optimization, paid search marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques, such as publishing reviews of products or services offered by a partner.

Using one website to drive traffic to another is a form of online marketing, and sometimes overlooked by advertisers. While search engines, e-mail, and website syndication capture much of the attention of online retailers, affiliate marketing carries a much lower profile. Still, affiliates continue to play a significant role in e-retailers' marketing strategies.

The case of cost per mille/click is that the publisher is not concerned about a visitor being a member of the audience that the advertiser tries to attract and is able to convert, because at this point the publisher has already earned his commission. This leaves the greater, and, in case of cost per mille, the full risk and loss if the visitor is not directed to the advertiser.Cost per action/sale methods require that referred visitors do more than visit the advertiser's website before the affiliate receives commission. The advertiser must convert that visitor first. It is in the best interest for the affiliate to send the most closely-targeted traffic to the advertiser as possible to increase the chance of a conversion. The risk and loss is shared between the affiliate and the advertiser.

"Performance marketing" also called affiliate marketing is in reference to how a sales employees would typically be compensated. They are typically paid a commission for each sale they close, and at times get payed performance incentives for exceeding baselines of the targeted amount. Affiliates are not employed by the advertiser of the products or services they promote, but the compensation models applied to affiliate marketing are very similar to the ones used for people in the advertisers' internal sales department.

"Affiliates are an extended sales force for your business", which is often used to explain affiliate marketing, and this is not completely accurate. The primary difference between the two is that affiliate marketers provide little if any influence on a possible prospect in the conversion process once that prospect is directed to the advertiser's website. The sales team of the advertiser, however, does have the control and influence up to the point where the prospect signs the contract or completes the purchase.

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