this weekPass the Buck

November 25, 2004

Affiliate Programs

The benign internet marketing virus?

In early 1996 when my first book was published, I was talking to another author at a technology convention about the then-novel idea of online book sales. “Have you heard about Amazon.com?” she asked. I hadn’t. She told me that it was an online bookstore, and that I could get a commission for selling my book there. I didn’t understand. I was already getting royalties, and if this bookstore were doing the selling, why would they give me any money? I thanked her for the advice even though I didn’t quite comprehend it; then I went home and read about the Amazon.com Associates program on the Web.

It was a simple formula, based on the age-old idea of commissions (or “referral fees”): if you use a special link on your own Web site to refer a visitor to Amazon.com and that visitor buys a book, you get a percentage of that sale. This meant that if someone bought the book I had written after I referred them to Amazon.com, I would effectively double my royalties on that copy. It sounded too good to be true. I was sure a program like this would lose money and couldn’t possibly last, but I signed up anyway, eventually including links not just to books I had written, but to dozens of my other favorite books. It didn’t make me rich, but for several years I received checks averaging about US$50 annually, which is not bad for something that required virtually no work.

Today, of course, affiliate (or “associate”) programs are commonplace. There are many variations on the theme that Amazon.com created, with thousands of companies offering some form of affiliate program and hundreds of thousands—if not millions—of Web sites providing advertising links to those companies in the hope of raking in big commissions. Affiliate programs are interesting in the sense of being a simple yet useful idea, but what I find even more interesting is the way in which they have spread and altered the very nature of the Web.

Like a Virus, Clicked for the Very First Time
Affiliate Web links seem to spread in a vaguely virus-like way—which is to say they are almost, but not quite, self-replicating and that they vigorously attach themselves to any suitable host. Let’s say you see an ad for some product you’re interested in and click the link. When you arrive at the merchant’s site, you not only have the opportunity to purchase the product, but also see an enticing offer along the lines of “Earn money by referring others to buy what you just bought!” You then make the purchase, but also put the merchant’s ad on your own Web site. Future visitors to your site are encouraged to buy the product—and also become affiliates themselves. And so on.

The ease with which one can join an affiliate program and add links that advertise someone else’s product has meant that it’s increasingly rare to find a link to any merchant’s site that doesn’t generate a referral fee in the event of a sale. In other words, even if I have a completely noncommercial (or even nonprofit) Web site, if I want to recommend a book, CD, or other product that’s relevant to my audience, I would be foolish not to make it an affiliate link. I’d simply be throwing away an opportunity to make a small amount of money passively. As a result, not only do affiliate links appear in the unlikeliest places, but there are also many sites composed exclusively of affiliate links, with little or no relevant content of their own to give a context or motivation to the referral.

Affiliate programs make it sound as though anyone with a Web site can earn an unlimited passive income simply by providing the special links and encouraging visitors to follow them. And certainly, there are a few very extensive Web sites that do earn a significant amount of money with huge numbers of affiliate links. But for most affiliates the picture is less rosy. Affiliate programs, after all, are subject to mathematical constraints. If your site is the only one recommending a certain product, chances are fairly good that a lot of people looking for information on that product will visit your site and then follow the link to make the purchase. But if 100,000 sites all include the same affiliate link, your chances of being the one to generate the sale become very slim—unless, of course, your site is vastly more popular than the rest. Also, affiliates must have accumulated a certain total of referral fees (usually $10 or $25) in order to receive a check—and the vast majority of affiliates fall below that threshold in any given pay period.

Ad nauseum
To compensate for the dilution of profits that comes from massive participation in affiliate programs, a lot of Web sites have turned to increasingly obnoxious tactics—with the hearty encouragement of the merchants, who simply see an opportunity for more sales. Text links increasingly give way to banner ads, then to larger banner ads, then to huge, dynamically updated, animated banner ads, search boxes, and so on.

Then there are the affiliate networks. The idea behind the networks is that instead of each merchant setting up and administering its own affiliate program, a third party handles all the work of generating links, tracking responses, and sending out checks (for a healthy fee, naturally). The referral network performs this service for hundreds or thousands of merchants, which also means that someone can join lots of affiliate programs at the same time simply by joining the network. On paper, this sounds like an idea that benefits everyone: less work for the merchants, less work for the affiliates, and everybody makes money. However, the people who actually view the Web pages don’t necessarily benefit. In an effort to maximize their profits, the networks often use more annoying and intrusive techniques than individual merchants would, including pop-up or pop-under windows, JavaScript and Flash animations, and a variety of other tactics to attract and hold the attention of customers. And the fact that a webmaster can join 100 affiliate programs at once increases the likelihood that his or her Web site will be covered with distracting and irrelevant ads.

As a form of advertising, affiliate programs make a lot of sense for merchants, who pay for the ad only after a sale is made. And for people who run Web sites, affiliate programs are almost a no-brainer: you may not make a lot of money, but it’s an almost trivially easy way to earn a bit of pocket change—and if you’re lucky (or ruthless), you may do much better. But for all their benefits, the viral explosion of affiliate programs has drastically diminished the signal-to-noise ratio of the Web, with ads increasingly pushing out content. The programs are sometimes billed as a sort of “get-rich-quick-without-doing-any-work” scheme, and as such are prone to the defects all such plans share. I’m sure it’s only a matter of time until I receive a spam email inviting me to join an affiliate program for a company that sells ad-blocking software. —Joe Kissell

More Information about Affiliate Programs…

Interesting Thing of the Day participates in several affiliate programs (including, naturally, Amazon.com’s) but our policy is to keep the focus on the content of the site, using affiliate links only when they’re relevant and useful, and keeping graphical links to a tasteful minimum. If you’d like to support Interesting Thing of the Day, you can follow the links to purchase books, CDs, DVDs, posters, and other products mentioned in the “More Information” section of many of our articles.

Information on Amazon.com’s affiliate program can be found on their Associates page. You can also look at their patent for affiliate programs.

Two of the best-known affiliate networks are Commission Junction and LinkShare.

A detailed discussion of affiliate programs can be found on HowStuffWorks (which also offers its own affiliate program).

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And yes, I’d love for you to double my royalties by following these affiliate links to buy either of my latest books, Take Control of Apple Mail or Take Control of Tiger (Peachpit, 2005).