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An Affiliate Marketing History Lesson

Russell Shaw
An Affiliate Marketing History Lesson Russell Shaw
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Mention "affiliate marketing" and many folks automatically will associate the term with Amazon.com's Associates Program. Around since July 1996, the program uses specially formatted links on affiliate sites that drive traffic to the section of Amazon most relevant to the merchandise being sold. For providing the link, merchants and other service providers can earn up to 10.5 percent commission.


Inarguably, the ever-swelling ranks of affiliates -- now more than 900,000 strong -- speak to Amazon's program's institutional status in the world of online affiliate marketing. Institutional, yes. The highest profile, yes. An innovator? Of course. But the inventor and founding pioneer of Internet affiliate programs? No, not by a long shot.


Affiliate pioneers


Sometimes, quantifying "the first" in anything can be a judgment call. Who discovered America? Christopher Columbus, Amerigo Vespucci, a nameless Viking warrior, the "one giant step for man" leader of a tribe of Bering Strait-crossing Siberian natives? Just as that fact is debated, so is the founding heritage of online affiliate marketing.


Internet marketing consultant Shawn Collins, author of "Successful Affiliate Marketing for Merchants," believes that the first true Internet affiliate marketing program was offered by a site that might just make you just feel a little uncomfortable: Cybererotica, which first hit the then-nascent Web in 1994 and is still going strong with a diverse menu of adult consensual imagery.


Cybererotica's affiliate programs have morphed and broadened over the years. A "Webmasters" link on the photo-chocked home page leads to Follow Me Free, Cybererotica's leading affiliate plan. The main Follow Me Free page () contains the, ahem, bare essentials. These include $55 payment per active member, 40 percent payment of dialer revenue, plus the potential of link-driven extra revenue with a weekly payout.


Far less explicit -- but also driven by "eye candy"  -- is Danni's Hard Drive, which also made its debut in 1994. Its Webmaster program is called Danni's Cash, and has been in effect almost since the beginning.


The business model here is a steady supply of free photo and video content, supplied by Danni's Hard Drive and freely made available for posting on member sites. When subscribers click on these links they are routed to specific pages on Danni's Hard Drive.


The referral sites, in turn, get a per-click payout from Danni's Hard Drive. Dispersed every two weeks, the payout is based on a sliding scale "conversion rate" calculated on the number of new subscribers the referral site has delivered to the amusingly named Danni's HotBOX service. In order to be paid, the affiliate's conversion rate needs to add up to at least $100 for the most recent two-week period.


Not long after Cybererotica and Danni's Hard Drive made their debut in 1994, new Web sites with other types of material to sell were established with affiliate programs in tow. That year saw the emergence of PC Flowers & Gifts.com, a site that while defunct, leads visitors to diversified gift retailer Fiji's.


The Secret Sauce… a patent application?


PC Flowers and Gifts' most lasting legacy aren't bouquets of roses but a bouquet of innovation that served as mileposts for subsequent Internet affiliate marketing efforts. Sometimes, the influence was even seen in U.S. Patent applications. For example, patent 6,141,666 (applied for in January, 1997) was for a "method and system for customizing marketing services on networks communicating with hypertext tagging conventions." The secret sauce was, in part, "a dynamic token scheme to pass the identity of the referring network site from document to document to eventual purchase document accessed by the client through the hypertext tags."


This patent application contained more than a dozen screen shots from PC Flowers & Gifts' Web site. Various steps in the click-through process between affiliate sites and PC Flowers & Gifts site were depicted, along with an explanation of how the proposed advances would improve click-through functionality.


A description of the Order Page cut to the heart of the process -- one which many affiliate marketing sites still use today:


"The present invention employs a dynamic tokening scheme whereby a token, indicative of the identity of the referring network site, is passed between successive HTML documents so as to track the necessary customization requirements for all HTML documents presented to the client. This dynamic tokening scheme relies on software executables including tokening.cgi and track.cgi, and markup tags such as PORT#, URL, and IMAGEMAP."


The patent application then described the server-based communication system, which "provides a participating vendor with the ability to supply the system with HTML documents wherein the vendor has access into the system for control over the HTML documents supplied by the vendor. Moreover, the vendor has the ability to transfer HTML documents pertaining to product data, and receiving from the system encrypted files containing orders."


The patent literature then specified that the server-based communications system can be operated in any Internet or Intranet "environment where hypertext protocol and tagging conventions are utilized for communications between a client and server.


"The order is arrived at from any one of the product detail pages," the application added. "The site ID, product ID, and any product options are encoded in the hypertext access. The order page prompts the user for sender, recipient, personalization, and payment information. In addition, if any custom offerings are currently in place for this partner site, they are presented at this time."


Still blazing the trail


While PC Flowers & Gifts' technical innovativeness did not ensure its survival, some other companies from that formative era are still around, with affiliate marketing programs intact.


Survivors from those early days include Autoweb.com, which dates from 1995, as well as 1996 births including KBkids.com (now KBToys.com), and EPage.


Of these long-standing affiliate programs, Autoweb's is arguably the most straightforward. Affiliates place a graphic link to Autoweb on their site. Autoweb, in turn, pays affiliates $3 for each customer who lists a vehicle to sell or completes a purchase request for a new vehicle. Customers that complete a purchase request for a pre-owned vehicle earn the referral site $1.50.


For most of its history, KBKids/KB Toys' affiliate program has been similar to Amazon.com's Associates Program. Affiliates feature text and banner ad links to KBToys. Links contain a tracking code which can identify the source of the click-through -- such as affiliate Web sites. These sites, in turn, are paid between 2 to 10 percent commission on the sale.


Since 1996, EPage has offered a significantly different affiliate program -- essentially a classified ad service. The site hosts a rich variety of classified ads, which visitors to affiliate sites are directed to by means of banners, buttons or text links. EPage pays affiliate sites 10 percent of earnings from fees collected from referred users, plus a share of collective, pooled earnings.


Since Internet-based affiliate marketing has now been around for more than a decade, it stands to reason that advertisers and Web site publishers have lots of stories to tell. The next piece in this series will be devoted to these road tales from the front lines.

In-text ads


Are they links, or are they ads? Actually, they're both. For a brief moment in 2009 it looked like in-text ads might gain some serious traction. In-text ads, to be sure, had been around for a while -- long enough to even spark some serious controversy. But in 2009, with marketers looking for greater accountability in the face of shrinking budgets, some advertisers thought in-text was the way to go. In fact, the platform even drew a favorable comparison to search -- the granddaddy of all marketing platforms.


"It is the similarity to search that gained Sequoia's attention," AdWeek reported when Kontera, one of the largest providers of in-text ad inventory, secured more than $15 million venture funding, at a time when that kind of capital wasn't easy to find. "While search has proven a tremendous system for harvesting demand, most of the Web consists of pages where users are not declaring their intent. In-text advertising serves as an additional way to show contextual ads that could be relevant to user interests."


At about the same time, Vibrant, another big provider of in text-ads, heaped praise on brands like Volkswagen and IBM for "fully [leveraging] the power of hyperlinks to deliver user-controlled and relevant advertising."


These days, in-text ads are still with us. And believe it or not, in-text ad providers like Vibrant are still innovating (and trying to solve the problem of errant clicks and mouse-overs). But while the technology remains, and some publishers see it as a solid way to squeeze a few more dollars out of their content, there isn't much of a push to get marketers on the in-text bandwagon. And that's probably a good thing.

Widgets


Some people called them desktop apps, but back in 2008 you couldn't talk about online marketing without hearing about widgets. The idea was that the web had become so vast that the best way to break through the clutter and cement your brand's relationship with the customer was to live on their desktop in a small app that provided either a branded message or some utility -- hopefully both.


But while marketers were pointing out the untapped opportunity presented by widgets, and how to succeed with these tiny pieces of software, some in the industry were boldly claiming that widgets were the future of marketing. We all bought into the hype, but we should have been following the money -- and I don't mean the venture capital. As GigaOm pointed out in the middle of the widget hype, venture capital was pouring into the space, despite the fact that most widget makers really hadn't seen much revenue.


So what happened to widgets? Well, for one thing it's not clear that advertisers jumped on the widget train as hard as the widget makers would've liked. I know I downloaded an ESPN widget and then kind of gave up on the whole thing. But at the same time we also moved away from a desktop-centric view of marketing as other platforms came online. Still, there's value in the widget story. Just ask anyone who believes in permission-based marketing. Brands that experimented with getting users to download an app and interact around content and utility were probably better positioned to take advantage of the social web than those that didn't.

Virtual worlds


It's always been easy to raise an eyebrow -- or suppress a giggle -- when marketers talk about engaging in virtual worlds like Second Life. That's probably because virtual reality marketing never really got beyond the evangelist phase to become a full-blown buzzword. But one brand did go all in. That brand was IBM, which seemed keen to use Second Life every which way it could. IBM opened its virtual doors back in 2006, and over the years there were numerous virtual initiatives from the company.


At times, marketers took notice of IBM and talked about best practices and even metrics for working in virtual worlds. But virtual reality marketing never really got over the skepticism, even if those skeptics were the same ones who turned around a year later to offer tips for breathing life into your brand's "Second Life."


But last year, Joseph Jaffe, one of the early proponents of Second Life, wrote about the value of helping Coke experiment with Second Life, and what that experience can teach us today about the current trend of brands working with startups.


"These days, brands have become enamored with the next bright and shiny object, namely conducting tests or experiments with startups," he wrote. "Collectively, they represent value propositions or utilities that disrupt norms, challenge conventions, and move markets. Only they won't get to realize their vision -- their proof of concept -- if brands continue to hold them at arm's length, dispatching their agency minions to negotiate the impossible: Big ideas at scale."


But as Jaffe explained, brands shouldn't be put off by a startups' inability to achieve reach. That is, after all, why you're still in the experimental phase.


"My message to brands is very simple: Don't be turned off by a startup's lack of reach," Jaffe wrote. "In fact, this should turn you on! You're dealing with the most fertile real estate, untouched, and unspoiled by the masses (even your competitors). You have the incredible opportunity to help them achieve their path to reach with your brand dollars, talent, resources, and media. You have the unique chance to join forces with them at the earliest possible stage to co-create and own that big idea."

QR codes


Have you ever used your smartphone to take a picture of a QR code? I haven't. In fact, I've never even had a friend mention QR codes, either by name or description. What is that weird image on that poster that looks like a Rorschach test?


QR codes are dead, replaced by easier to use technologies that aren't so damn clunky. But for a while, QR codes were a big deal. Fast Company gave you 13 creative ways to use QR codes for marketing. Not to be outdone, we gave you 20 -- count 'em, 20! -- ways to use QR codes correctly. And we even went so far as to ask: Why isn't everyone using QR codes? But even at their height, QR codes were being misused -- if they were being used at all. In fact, Business Insider found no less than 15 QR code fails.

SoLoMo


As a concept, the combination of social, mobile, and local is totally valid. But it's also something of a buzzword, which means there was a time when it was on everyone's lips, and there's now a time when using it will mark you as out of touch.  


Still, SoLoMo hasn't completely gone bye-bye.


As Seth Fiegerman put it in Mashable, SoLoMo isn't going anywhere. He's probably right. Recently, eMarketer used the term to describe a 2012 Samsung marketing campaign for the company's Smart TV product. Meanwhile, Wired went as far as to describe it as a SoLoMo movement that's changing how we think of neighborhoods. But despite its continued use, SoLoMo is no longer hot, as in, so hot I gotta have it now!


Can you use it? Sure. But if you're planning on a SoLoMo slide in your next PowerPoint, you may want to spell it out as social, mobile, and local. Otherwise, your audience might just start singing "Kokomo."


Snapchat


Here's a hot marketing platform that could very well be in the process of self-destructing even as you read this. Snapchat, for the uninformed, is an app that lets users send photos to their friends. But unlike with Twitter or Facebook, where photos -- especially the embarrassing ones -- live forever, Snapchat's default is to delete content. With a proliferation of stories out there about the wrong photo somehow going viral, it's easy to see why Wall Street is in love with Snapchat. After all, Snapchat solves a real problem for today's internet users, particularly the young and the foolish -- who tend to post first and think never. But how could Snapchat possibly be of value to brands?


Well, it turns out that advertising isn't a hypothetical question. Recently, Mashable asked if Snapchat was the next frontier for marketers when a New York frozen yogurt chain began offering virtual coupons that had to be redeemed in 10 seconds or less. Meanwhile over at Snapchat, they're rolling in venture capital. But the real story is that Snapchat is using some of that dough to build a massive sales force. That's right. Snapchat wants to pitch your brand on the next big thing -- disappearing marketing. Better hurry up and leverage this opportunity before the whole platform vanishes.


Michael Estrin is a freelance writer.


On Twitter? Follow Estrin at @mestrin. Follow iMedia Connection at @iMediaTweet.


"Row of burned-out matched over he white background" image via Shutterstock.

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