Who invented it? The Development of Affiliate Marketing!

Although it wasn't that long ago, nobody really remembers how affiliate marketing actually began. The following story is widely circulated: Amazon manager Jeff Bezos in 1996 made an agreement with the owner of a divorce-themed website to promote relevant books from the Amazon store on her site in exchange for a commission. This marketing strategy proved to be very successful. But is this story really true? Other sources suggest that affiliate marketing existed long before this, but the concept had not yet reached the public. So, which story is true?

What exactly is Affiliate Marketing?

In Affiliate (partner) Marketing, companies have the opportunity to advertise on relevant topic-based websites (publishers). This promotion occurs through partner programs, through which publishers are provided with advertising material from advertisers. If a user clicks through an advertisement to the online store and makes a purchase, the publisher is rewarded with a commission.

The foundation of affiliate marketing is tracking, which measures views, clicks, and sales. Tracking enables complete control over publisher activities. Typically, compensation is based on generated sales and leads, which can be as simple as a page view or, for example, a registration for an information portal.

The rapidly advancing technology development has made banner placement more targeted and thus more effective, leading to personalized delivery of ads – known as targeting.

ReTargeting

A very popular form is ReTargeting: Visitors who have abandoned a purchase in an online shop are led back to the shop. The selection of the ad takes into account the user's behavior online and especially the customer's journey in the shop, meaning the 'path' they took. The user is targeted precisely at the point where they previously lost interest in the product.

Here’s an example: If a user only visited the product overview page for coffee machines on an online shop, a wide selection of coffee machines will later be shown to them through retargeting. However, if they already viewed the product detail page of the WMF 10 coffee pod machine or even added this product to the cart, this exact WMF 10 coffee pod machine will be shown to them again online. You can take it a step further: Retargeting is particularly successful if the customer is given an additional purchase incentive in the ad – such as a coupon for this specific product! This makes sales generation even more successful!

Retargeting ads are compensated either on a cost-per-click, cost-per-order, or cost-per-thousand-impressions basis. CPO is very popular since the advertiser takes no risk: they only pay for an actual sale generated through the ad.

Nearly all of us have had the experience, especially in the early days of retargeting, with unlimited ads and felt 'chased' by a specific shoe or computer for months. Here, the skill of agencies is required to smartly implement frequency capping (a restriction on the number of displays per user) to avoid a negative association with the brand.

From a business perspective, retargeting is a proven, successful, and cost-effective way to persuade shop visitors to actually purchase the product they have already shown interest in.

We are curious to see what's next! Maybe someday the shop will know what we need before we even think about it?