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. This was the first profitable form of affiliate marketing, and many other online and e-commerce sites soon followed suite with similar programs (Amazon.com being an example.) Affiliate Marketing has now become a consistent method of advertising and selling, and now forms a large part of many company’s marketing strategies. It is cheap, effective, and has little to no risk for all involved.

Traditionally, affiliate marketing functioned on cost-per-click systems, which means that the ‘affiliate’ was paid for every advert or email clicked on or from their website. However, due to many fraudsters taking advantage of this system by using spam techniques, doing false advertising, creating ad-ware, using forced click techniques, doing SEO ‘keyword stuffing’, using tracking cookies and many similar techniques, the cost-per click system is not as popular as it once was. 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. These methods present little to no risk for both the merchant and the affiliate, and are therefore preferred. However, Google’s new Latent Semantic Indexing could mean that CPS will become risk free as well (Latent Semantic Indexing will automatically fish out websites with nonsensical content, or that have keyword stuffing or are advertising sites that are not comparison or shopping sites.)