With the introduction of the internet, advertisers realised that they could increase their revenue by rewarding websites who refer customers to your site that go on to buy something from you. In essence, this is affiliate marketing or performance-based marketing. An advertiser rewards a website a set amount of commission for each customer that the site refers who goes on to make a purchase.
2) Customer Acquisition Cost – What are you currently spending to acquire new customers? Whatever that amount is, assuming you're profitable, you could technically offer up to that amount to your affiliates for generating new customers. If you can safely spend 10% to acquire new customers through your ad channels, you could afford to offer that rate to your affiliates. (But it doesn't mean you have to. It might just mean you need to optimize your ad spend because you're leaving money on the table.)
In addition to the foregoing Product Advertising Content and access to PA API, we may make available from time to time for use in connection with PA API sample source code and libraries, each of which will be made available to you under a separate license that accompanies each sample source code or library, as applicable. In connection with PA API, we may also make available specifications, user manuals, guides, supporting materials, and other information, regardless of format, describing the operational and functional capabilities, use limitations, technical and engineering requirements, and testing and performance criteria relevant to the proper use of PA API (collectively, “Specifications”). “Product Advertising Content,” as used in this License Agreement, specifically excludes any sample source code or libraries we make available to you under a separate license and any Specifications that we make available. It also specifically excludes any data, images, text, or other information or content relating to products offered on any site other than an Amazon Site.
A sound product strategy is a must for new affiliate marketers. Ideally, you should choose a niche that you can make money online with and has a lot of product vendors. This will give you a wide selection of products to offer your online community. However, limit yourself to two or three products at a time, so that you become the expert others turn to and trust when reaching for their wallet.
The concept of affiliate marketing on the Internet was conceived of, put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Launched on the Prodigy Network in 1989, PC Flowers & Gifts remained on the service until 1996. By 1993, PC Flowers & Gifts generated sales in excess of $6 million per year on the Prodigy service. In 1998, PC Flowers and Gifts developed the business model of paying a commission on sales to the Prodigy Network.