The short history of making money from referrals

Affiliate Marketing is one of the many ways you can begin to build a passive income in 2020. Earning money for the successful promotion of someone else’s product or services is the essence of affiliate marketing — you don’t have to build anything new, or maintain the product or service, just successfully encourage others to buy it or use it, and you end up with a cut of the sales from those who take your advice. It seems simple, but affiliate marketing has changed quite a bit from its inception back in the late 1980s

The Beginnings of Affiliate Marketing

Most people credit Amazon with creating the concept for affiliate marketing in the mid-1990s. While Amazon attracted global interest with their affiliate program, they weren’t the first by a long shot.

Before the internet was even invented, affiliate marketing was around in the guise of recommend-a-friend schemes. The idea was that if you referred the people you knew in your social or business circles towards a business for a particular service, you’d get a kickback— either in the form of discounts or straightforward cash payment.

The friends were usually tracked with special business or discount cards, or small forms that client’s filled out and returned to the business with the names of the friends they’d made a recommendation to. I once made 100 bucks for recommending a friend to my employer with the very same kind of scheme. She was hired, we became colleagues as well as friends, and I was AU$100 richer for my trouble, at no expense to her.

When the internet came along, William J. Tobin took roughly the same idea and applied it to the internet for his business PC Flowers and Gifts. He launched it on the Prodigy Network and internet affiliate marketing was born.

For every sale that came via Prodigy, a commission was paid. In just four years, Tobin’s affiliate program was generating more than 6 million US dollars for the Prodigy Network. Tobin put in a patent request for his idea and was issued one at the turn of the century.

The internet has grown and changed remarkably since then, and with it, affiliate marketing programs have too.

The Growth of Affiliate Marketing

While Amazon wasn’t the first kid on the block when it comes to affiliate programs, it is their model of the Associates Program that most other affiliate programs base theirs on today.

There are so many different affiliate programs out there that affiliate directories have sprung up to support them. Affiliate program directories allow businesses that run these types of marketing initiatives to connect with people interested in becoming affiliate marketers. There are almost as many directories out there as there are programs, which can make finding the right affiliate program for your brand and content more difficult instead of less. Sector-specific affiliate directories can help cut through the noise and let you focus on niche sectors and products the match your needs.

In 2012, affiliate marketing represented 6% of the UK’s online economy, generating £9 billion in sales. The latest figures from the Internet Advisory Bureau (IAB) cut Ad spend from their figures and reported affiliate marketing alone generated £8.9 billion in sales in 2017, a figure they predicted will rise year on year by approximately 15%.

Three years on and affiliate marketing programs are still in good health. There’s no end in sight for the practice of generating sales for business via the practice. The UK’s CAP Code rules require the declaration of affiliate links on websites and online communications that aren’t obviously marketing materials. The most recent breach of these rules happened in October last year when Matalan Retail and the Liverpool Echo promoted their affiliate links without clearly identifying their content as a form of advertising.

Affiliate Marketing in 2020 and Beyond

In no way is affiliate marketing at death’s door. If anything it’s growing and evolving to become the kind of marketing that will generate more sales for businesses than many other traditional kinds.

One of the benefits of affiliate marketing for brands includes being able to trade on the relationships content creators, bloggers, vloggers, and other influencers have built with their audience. That benefit remains, no matter how much the internet changes. Savvy business owners can add affiliate marketing to their wider digital marketing strategy to generate more income and more sales.

Here are five predictions for the future of affiliate marketing this year and beyond.

1. Voice search is going to start to play more of a role. This means affiliate marketers are going to have to optimize their content for more than just text-based content. High-quality audio and video are on the rise and will need to become a firm part of the content mix rather than a nice to have or peripheral add-on.

2. As we do more and more on our smartphones, optimizing content of all kinds so that it’s mobile-friendly will become a necessary part of the affiliate marketers’ arsenal. Leave out mobile and kiss good-bye to large chunks of an affiliate income.

3. Quality over quantity is becoming more and more of a reality. Many top marketers are now advising affiliates to focus on the products and services that they have faith in. The businesses that create reliable and quality products are the ones that will deliver better conversions long-term and maintain the affiliate marketers’ reputation amongst their audience and followers.

4. Brands with affiliate programs will need to be able to tailor them to create individual partnerships with their affiliate marketers to remain relevant. Customized campaigns and packages that deliver better value for the business and the affiliate marketer will become more popular. Resources and advice to support this relationship will also need to be provided by the brands to remain attractive for affiliates.

5. As data privacy regulation and concern over the tracking of consumer data continues to grow, brands will need to develop new ways to engage with affiliate marketers and continue reaching customers alongside finding performance-based solutions for their marketing problems.

As with all things, the internet and how we use it will continue to evolve. Digital marketing of all kinds will grow and change with it. If you’ve been considering adding affiliate marketing to your business model to generate another income stream, it’s not too late. Research your brands, promote services and products you believe in, and don’t be afraid to keep learning and growing. It’s the only way to ensure this kind of passive income doesn’t dry up beyond 2020.