Affiliate Marketing: From an Infant to a Billion Dollar Industry

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“The journey of a thousand miles begins with a single step.” – Lao Tzu

MS Dhoni, Suresh Raina, Usain Bolt, Scarlett Johansson, and Lionel Messi have one thing in common – they all took their first steps. All of these international stars were once infants.

No matter where we are in our lives, we have an uncanny similarity with each other – all of us start somewhere. You may be a novice in something or you may be the CEO of your organization, all of you took the first step.

Affiliate Marketing, which is now a multi-billion dollar industry, was once a “newborn” and in this blog post, I will walk you through the history of this industry which stood the test of time and continues to evolve.

As an Affiliate Marketer, you should be well-versed with its history to be able to predict the future. I will try to simplify things as much as possible, so please read on.

Table of Contents

(1) How Did it Start?

Affiliate Marketing on the Internet was started by William J. Tobin, Founder of PC Flowers and Gifts in 1989 for his online flower shop.
In 1993 – 4 years from launching his website – William J. Tobin’s PC Flowers and Gifts generated sales of more than $6 million per year.
His affiliate program had around 2.6k affiliates by 1995.
In 1996, Tobin applied for a patent on Affiliate Marketing and tracking and was issued the US patent number 614-1666 on October 31, 2000.

(2) CDNow’s BuyWeb Program

In November 1994, CDNow – founded in February 1994 by twin brothers Jason Olim and Matthew Olim – launched its BuyWeb program.
The BuyWeb program was launched to encourage music-oriented websites to review albums or list them on their platforms so that their visitors end up purchasing the albums.
The purchase links directed visitors from the music-oriented websites to CDNow where the interested people purchased the albums.

(3) Tracking Cookies Are Born

In 1994, cookies were invented by a programmer named Lou Montulli.
Cookies are data files that are stored on users’ browsers when they visit a website. The purpose of cookies is to store users’ data and their preferences.
Cookies are used by third parties to keep track of what people are doing on their websites. For example, if you visit a multilingual website and select Hindi as the content’s language, the browser will save this information in a data file called a cookie. So, when you visit the same website again, it would read the cookie which was saved in your previous visit and the content will be displayed in the language that you selected.
A cookie is able to store any kind of information and it is up to the website’s creator/owner to store wherever they want to.
Cookies changed the face of Affiliate Marketing by providing users’ demographics, acquisition channels, etc. Affiliate Marketers could draw insights about what works and what does not and they could optimize their strategy and approach.

(4) Amazon Enters the Picture

Amazon’s popular affiliate program, Amazon Associates, was born in July 1996. It was the first affiliate program that was available to the public.
Affiliates could place the banners or text links on their websites and visitors could go to the product page or Amazon’s home page, if they clicked the link. Secondly, if the visitors ended up purchasing the product, the affiliate from whose link the purchase was made, received a commission.
In 1997, Amazon applied for a patent on components of an affiliate program. It was granted the patent after 3 years, in 2000.
Initially, the Amazon Associates program covered only books. Now, it covers a myriad of products. It would be wise to thank Affiliate Marketers for the enormous success of Amazon.
The second reason – and the main reason in my opinion – why Amazon became a giant is people place trust in them.

(5) Affiliate Networks Roll Out to Rule

In 1998, ClickBank and Commission Junction (commonly known as CJ) opened their doors for the public and are still the topmost affiliate networks.
These affiliate networks helped businesses by enabling them to register on their platforms. Businesses paid a small fee to register and after registering as a seller, they could list their product(s) which the affiliates would promote.
The affiliate networks also provided link tracking and payment systems which helped small businesses, especially those without technical expertise to implement the affiliate system, to grow and scale.
The third benefit – and the biggest of them all – that businesses relished was that the affiliate networks saved marketing costs. Businesses saw a large number of sales even when they didn’t spend a single paisa on marketing (thanks to Affiliate Marketers! <3 ).

(6) Where Does Affiliate Marketing Stand Today?

In the mid-2000s (by 2006), affiliate networks were making £2.16 billion in the UK, and globally, they were making $6.5 billion.
According to a study by the Internet Advisory Bureau (IAB), by 2012, 6% of the UK’s economy was represented by affiliate marketing and it was generating £9 billion in sales.
As per a study by Easy Affiliate, this 20-year old industry generates over $12 billion globally each year. Affiliate Marketers drive more than 16% of e-commerce sales around the world. In simple words, 1 out of every 6 e-commerce sales is driven by an Affiliate Marketer.

(7) The Future of Affiliate Marketing

Affiliate Marketing is growing rapidly and I don’t think it will stop surging. Whether you are a small business or a large corporation, Affiliate Marketing will help you grow and scale.
Now, if I ask would you prefer shopping on Amazon (or any other e-commerce platform) or an offline store, what would you say? If I try to get into your head, I will get 2 answers
1. Amazon (or any other e-commerce platform)
2. Shubhamjeet, I will search online first and then buy offline
And as the number of online stores continues to grow and perform better than their offline counterparts, people will always research online before purchasing and that is why affiliate marketing will always have a market.