The Rise of Affiliate Marketing
From Amazon Associates in 1996 to a full ecosystem of networks by 1999, the short history of how affiliate marketing became a standard way to sell online.
Affiliate marketing has a specific birthday most people don’t know: July 1996, when Amazon launched its Associates program after founder Jeff Bezos reportedly heard the idea from a woman at a cocktail party who wanted to sell books about divorce from her own website. Rather than build her a custom deal, Amazon built a system anyone could join, and that decision to make it self-serve is the reason the model spread as fast as it did.
From one program to an industry
For the first year or so, “affiliate marketing” mostly meant “Amazon’s program,” with a handful of other retailers running similar setups on their own tracking systems. That changed in 1998, when CDnow launched its own affiliate program and, more importantly, when the first dedicated affiliate networks appeared, companies whose entire business was sitting between merchants and affiliates, handling tracking and payment so neither side had to build it themselves.
That infrastructure is what turned a clever Amazon feature into a repeatable business model other companies could adopt without months of engineering work. By 1999, a small business can join a network, pick from hundreds of merchant programs and start earning commission within a day, something that would have required custom development just two years earlier.
Why it caught on with website owners specifically
The web in 1999 has an enormous number of small, hobbyist and semi-professional sites, personal pages, niche review sites, early web directories, run by people who had an audience but no obvious way to make money from it beyond banner ads, which paid poorly and required real traffic volume to matter.
Affiliate marketing offered something banner ads didn’t: a site with a small but interested audience could earn real money recommending products that audience wanted, without needing millions of pageviews. A site reviewing home espresso machines, run by one enthusiast in their spare time, could earn meaningful commission from a few hundred visitors a month if those visitors were the right few hundred.
What it did to online retail
For merchants, affiliate programs solved a problem that had no good answer before: how do you get in front of niche audiences you’d never find or afford to advertise to directly? An affiliate program effectively outsources that discovery to thousands of independent site owners, each finding their own small audience, and pays only when it results in an actual sale.
That performance-based structure is a large part of why it spread so quickly among businesses still nervous about advertising online. Banner advertising asks you to pay upfront and hope. Affiliate marketing only costs money when it works.
Where it stands now
By our count, several hundred merchants now run affiliate programs, most through the two or three major networks that have emerged, and the number keeps climbing month over month. What started as one retailer’s answer to a cocktail-party pitch has become, in under three years, a standard channel that any online business can set up in an afternoon.
More on Paid Advertising, or browse everything from 1999.
