It was in November 1994 when affiliate marketing is first utilized by the company called CDNOW, by then it was coined us “BuyWeb”. It is a click through purchasing system that works independently from the storefront.

This was the first profitable form of affiliate marketing, and many other online and e-commerce sites soon followed suite with similar programs (Amazon.com being an example.) Affiliate Marketing has now become a consistent method of advertising and selling, and now forms a large part of many company’s marketing strategies. It is cheap, effective, and has little to no risk for all involved.

The most common scheme used in affiliate marketing is CPC or Cost-Per-Click. In this system, the affiliate reels in commission for each redirected reader to the merchant’s website. Affiliates post ads or link on their website that readers click, and they are sent automatically to merchant’s page. CPC is rarely used by merchants as they are a number of fraudsters who take advantage of the scheme. These are the dirty tactics used in CPC: false advertisement that is similar to a bait, ad-ware that can infiltrate the visitor’s system, forced click technique, “keyword stuffing”, tracking cookies and many more. Cost-per-click system has been losing its spark because of the frauds.

Merchants would rather utilize Cost-Per Action / CPA or Cost-Per Sale / CPS. These schemes are similar because affiliates receive commission or revenue share when a website reader/visitor subscribes or avails of the merchant’s products being referred by the affiliate’s site.

For example, I am an affiliate, and you will be my merchant. In my site, I will promote your products or services by putting up some ad or link on my blog about your company. Visitors who are interested, would click the ad or link on my site, be redirected to your website, and avail of your product or service. That would earn me a commission or a share in you revenue.

The CPA and CPS schemes are almost free from risk. Thus, both merchants and affiliates use these systems. Today, CPS is made better by Google due to its Latent Semantic Indexing. This program can automatically detect website that are nonsensical in content, that has keyword stuffing , or advertising sites that are not comparison.

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