Four years after the Internet was born, an online company called CDNOW started the online transaction called “BuyWeb”. Purchases are done by clicking the item on their website, that you are interested with. Also, it functions independently from a 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.

Commonly, affiliate marketing functions on cost-per-click or CPC systems, wherein the affiliate earns for every redirected visitor to the merchant’s website. The readers are sent to the merchant by clicking a link or an advertisement posted on the affiliate’s site. This kind of system is very vulnerable to fraud, which is very disadvantageous for the merchants. There are a lot of fraudster who take advantage of this system through the following tactics: spamming, making false ads or bait (that are not even related to the product), formulating ad-ware, utilizing forced click system, Search Engine Optimization or SEO “keyword stuffing”, tracking cookies and other similar techniques. This cost-per-click scheme was not as popular as it once was.

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.

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.

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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Tags: Affiliate Marketing