Affiliate Marketing, It’s Pros and Cons

In November 1994, just after the world wide web was born, a company called CDNOW came up with an online way of selling called “BuyWeb” – a click through purchasing set-up that functioned independently from the storefront.

CDNOW’s online system is the pioneer form of profitable affiliate marketing. After some time, many online businesses followed its steps to success (Amazon.com is an example). Affiliate Marketing has been an important tradition in the family of marketing strategies. The system has evolved into a consistent method of advertising and selling. Hence, it has become a staple amongst the large companies due to its effectiveness and economical characteristic. Moreover there is a little to no risk involved for both the merchant and affiliate.

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 now rather use CPA (Cost-per-action) or CPS (cost-per-sale) techniques – both being very similar in that an affiliate receives commission or a revenue share when a person subscribes to the merchant or buys a product from them from being referred by the affiliate’s site.

Let say, you are my merchant and I am affiliated with you. I will be blogging about your products and services, and I will also post a link or ad that would redirect my interested visitors to your site. If that visitor who was redirected to your site bought a product from you, I shall receive a commission or a share from your revenue.

CPA and CPS systems have little or no risk at all for both parties, merchant and affiliate. Hence, these are the preferred form of Affiliate Marketing. It is a good thing that Google’s Latent Semantic Indexing will put CPS to the next level, as it makes it risk-free. The Google’s new Indexing system, automatically finds websites with nonsensical content, or if it has “keyword stuffing”.

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