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What is affiliate marketing?

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Quick Answer

According to Entrepreneur magazine, affiliate marketing is a structured Internet referral program that rewards independent marketers for directing contacts or sales to an online business. The relationship between the business and the affiliate marketer is performance based, and the marketer gets paid a percentage of the sales directed to the business.

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Full Answer

Pay-for-referral marketing programs predate the Internet, but the concept was restructured for e-commerce in 1994 by William J. Tobin, the owner of PC Flowers & Gifts, as noted by Wikipedia. Affiliate marketing is a popular way for online retailers to increase Internet sales by engaging individuals and other businesses as promoters. The ideal affiliate has a strong relationship with a core audience that does not overlap the company's existing client base.

A simple example of affiliate marketing as of October 2014 is Amazon.com's associates program. An individual with a lifestyle website can display ads for Amazon.com merchandise on it. Anyone who clicks on an ad is redirected to Amazon.com's website. The retailer keeps track of that visitor using browser cookies, and if the visitor makes a purchase, the owner of the originating website gets a percentage of the sale.

According to Forbes magazine, affiliate adware can subvert a person's browser, attaching affiliate cookies to shopping sessions even when the shopper attempts to navigate directly to an online retailer. The retailer ends up paying out commissions on sales that the retailer would have acquired directly.

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