The Evolution of Internet Business Models

If I’ve learned anything from my years in affiliate marketing, it’s that affiliate marketing business models never remain static. It’s up to every affiliate to understand both the history of how the models have evolved over time, and more importantly, what to expect for the future. As part of your affiliate marketing business model, it’s also important to consider recent trends such as social networking and mobile applications as part of your overall strategy, or you’ll find yourself behind your competition.

Over the years, I’ve seen some of the following shifts in affiliate models used by Internet marketers:

• CPM to CPA: One of the first noticeable shifts was when the industry morphed from CPM (cost per thousand impressions) into Cost per Click (CPC) and Cost per Action (CPA) models.  These seem to represent a more balanced basis of compensation to the site owner.
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• Cost Per Sale: The CPA and CPC models soon gave way to a Cost per Sale (CPS) model, which has otherwise been known as performance marketing, since advertisers found this to be the most effective way of paying site owners.

Interestingly, while the rest of the industry found its way to a CPS model, ClickBank from its inception in 1998 has always worked on this model. The CPS model allows vendors to pay affiliates for traffic when the traffic results in a sale, creating a fully variable cost model that rewards successful affiliates and eliminates the click fraud so prevalent in the other models.

ClickBank combines recent trends with its exisiting CPS model enabling more revenue generating opportunities!

Looking ahead, we see affiliates leveraging traffic from diverse sources such as social networks, enabling affiliates to monetize their personal network of friends and business acquaintances. ClickBank is already helping affiliates realize the benefits of leveraging their social networks through the new ClickBank SocialPromote functionality that links the ClickBank Marketplace directly through to Facebook. Affiliates will now see a “Like” option next to products in the Marketplace. If they hit the “Like” button, their Facebook friends will see their newsfeed that they like the product. When their Facebook friends click through and buy the product, it directly links to the affiliate’s ID and results in commission. And that’s only the beginning – the larger your Twitter or Facebook following, the greater your potential customer base!

Along with social media, mobile platforms are becoming increasingly important as more people experience the web through their phones. In fact, of the 5 billion mobile phone users, 51 million have smart phones. This means they are walking around with mobile Internet access all the time. For both affiliates and vendors, this means real-time and relevant access to a growing number of consumers wanting access to digital products through their mobile devices. Mobile applications will represent significant sales opportunities, but affiliates need to be sure their sites and applications are palatable for these devices.

We are excited about the future of affiliate marketing and the tremendous opportunities that lie ahead. I encourage affiliates to stay current on industry trends and adjust their businesses accordingly to ensure maximum profits by taking advantage of this constantly evolving industry.