Because affiliate programs are so convenient and work so well, they have become the industry's dominant method of online marketing.
There are currently four different compensation models for "affiliates" (or Publisher who promotes the Advertisers offers via its own website, newsletter, eZine or other marketing channels) that generate traffic to a merchant (Advertiser) website: pay-per-impression, pay-per-click, pay-per-lead and pay-per-sale or combination of models.
The CPM compensation model was, for a while, abandoned due to fraud and lack of results. Then, in 2005, Google revived the CPM model with its Google AdWords "site-targeting" feature. This new approach allows an Advertiser to display AdSense ads on websites that run AdSense ads. AdSense publisher websites that allow Advertisers to target their site directly show a small link labeled "Advertise on this site" in the AdSense ad which redirects to a page at Google AdWords that explains the feature.
Like the Pay-Per-Impression (CPM) model, the Pay-Per-Click (PPC) model was popular during the dot com boom at the end of the 1990s, but - due to rampant problems with click fraud - was mostly abandoned by merchants for advertisements on other websites.
The PPC model was kept alive by the PPC search engine Goto.com, which became Overture.com and is now owned by Yahoo! and renamed from "Yahoo! Sponsored Search" to "Yahoo! Search Marketing."
Google launched its PPC service AdWords in 2000. Ask Jeeves, now simply Ask.com, followed with its PPC service in 2005 called Ask Sponsored Listings, and MSN.com followed in 2006 with AdCenter. Other PPC services are Miva/findwhat.com, ah-ha (now Enhance Interactive) and 7Search.com
To best explain Google AdSense, here is a quote from Google's History at Google's corporate Website. Google AdSense:
"... Offering web sites of all sizes a way to easily generate revenue through placement of highly targeted ads adjacent to their content. Google AdSense technology analyzes the text on any given page and delivers ads that are appropriate and relevant, increasing the usefulness of the page and the likelihood that those viewing it will actually click on the advertising presented there."
Yahoo!'s version of AdSense called Yahoo! Publisher Network (YPN) was launched (beta) in 2005. Microsoft is also working on its own version of AdSense which is expected to be launched (beta) in 2006.
Contextual advertising introduced with Google AdSense is also not affiliate marketing since there is no direct partnership between the advertiser, who creates and pays for the ad, and the publisher who displays the ads on his website.
PPC and Contextual advertising are generally referred to as search engine marketing (SEM) and is often wrongly confused with search engine optimization (SEO). SEO is about improving the ranking of a site in the organic, free SERPs at major search engines via technical means and deep understanding of the complicated ranking algorithms used by modern search engines.
Pay-Per-Call advertising is neither search engine marketing (SEM) nor affiliate marketing. It is expected to become, within the next few years, the fourth major type of Internet marketing, next to affiliate marketing, search engine marketing and search engine optimization.
Now let's get back to affiliate marketing.
Affiliate marketing has shifted almost entirely to the Pay-Per-Lead (CPA or CPL) and Pay-Per-Sale model (CPS) also known as performance marketing. The paid commission is usually a percentage of the referred sales or a flat dollar amount.
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©2006 Carsten Cumbrowski
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