Affiliate marketing is one of the oldest forms of marketing in which one refers someone to any online product (Open Topic, n.d.). When the consumer buys this product on the basis of the given recommendation, then the person who has referred him receives a commission. This commission could vary from $1 to $10000, on the basis of the type of product which has been referred (Open Topic, n.d.). The rapid development of the term “Affiliate marketing” which is a performance based internet marketing practice, has made the online selling market even more competitive. Many companies are now venturing into the forming or improving their affiliate programs and giving higher incentives to keep the affiliates loyal. This study is a qualitative study about the Affiliate program presently run by Amazon Company.
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Different business has different business requirements. Affiliate marketing has many versions. A business selects an appropriate affiliate marketing method which is based on the objective of advertising and the targeted customers. The same must also be in synch with the marketing campaign.
Affiliate marketing has become a very profitable online marketing tool for many companies. As explained by Prussakov (2007), the affiliate programs are a new type of marketing strategy in which the partners or affiliates advertise products of the company. It has also been explained that this type of marketing is performance based, as the compensation is based on the amount of clicks.
Gallaugher et al. (2001) explains that these affiliate programs provide a site operator (who is the affiliate) with a commission which he would get if any of the products of the partner site (merchant) is bought by customers.The affiliate marketing program was seen to be more effective as compared to the traditional online ads.
Fiore & Collins (2001) have explained that simple banner ads, which just try and build a brand image, will turn out to be very expensive. Also their effectiveness was decreasing over the years. As per the Forrester Research (Fiore & Collins, 2001) the banner ads had a click-through rate of 40% in 1994. At present however the return rate has fallen to as low as 0.5% CTR (Pick, 2008). Thus banner ad now cannot be seen to bring in Assured sales.
Prussakov (2007) also has a view that an affiliate program could benefit e-commerce a lot more in increasing sales. This is because the affiliate program helps the n online business companies to sell products on its own website, and also provide links of products on other website thus creating a larger reach for the customers. Affiliate programs are also known as associate, revenue-sharing, or partnership programs. In an affiliate program, the merchant approves to pay the affiliate a commission (Prissakov, 2007). This form of selling becomes best for the partner as the commission is paid only of the costumers actually makes a purchase. Prussakov (2007) explains that a partner or merchant will allowed be in a winning situation as fraudulent or invalid sales will not count. Affiliate marketing and Referral Marketing are but two different type of marketing. Affiliate marketing is dependent on the financial motivations for increasing sales at the same time Referral marketing depends on trust and personal relationships to increase sales.
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Another pioneer in the field of Associate marketing is Amazon’s Associates Programs. This Affiliate program by far has over 1 million partners today (Prissakov, 2007).