Traditional Affiliate Marketing Programs
The last few years have witnessed the sad demise of traditional affiliate marketing programs with the rise of Google Adsense. In the traditional website revenue model website owners would search the Internet for sponsors relating to their website topics. For instance, a site announcing developments in medicine would find a good online pharmacy sponsor. The webmaster of the drug announcement site would sign-up to be an affiliate of the online pharmacy. The webmaster would then be given text and banner links to place on his website containing URLs containing his unique affiliate id. Each time the content website makes referrals to the pharmacy website which result in sales the referring affiliate is paid a commission.
Revenue - sharing commission schemes have been around for as long as the Internet has existed. This has traditionally been a good arrangement between the retailer and the webmaster. This arrangement left the retailer free to concentrate on his product offerings. Those webmasters skilled at marketing could be recruited to help push sales of almost any product. There was little risk to either the webmaster or the sponsor in this arrangement as the webmaster was free to sign-up for any affiliate programs. The sponsor did not have to pay for any direct marketing and only paid commission to webmasters. For sponsors this was far superior to paying for advertising impressions as they did not need to worry about the trustworthiness of the affiliate webmaster.
The short-comings of this revenue sharing model was that webmasters only received a commission for product sales, not a flat fee for placing advertisements on their website. This means that the advertiser was at the mercy of the sponsor to make sure that the sponsor's website was online 100% of the time, the product mix and pricing were correct, the site layout and sales pitch were ideal, etc. In short the webmaster had no say in how the product was sold and delivered.
The Rise of Google Adsense and Adwords
This long running revenue sharing model was significantly impacted by the launch of Google Adsense and Adwords. For those unfamiliar with Google Adsense this is a service used by website owners, or webmasters, to place relevant text or banner links on their websites. Google Adwords is a pay-per-click program used by sponsors to have their text or banner links listed throughout Google and Google's 'content sites'. Google's 'content sites' include all websites registered under the Google Adsense program.
How has Google virtually rendered webmaster affiliate marketing programs obsolete? Google shares commission with webmasters who display text and banner ads on their pages. Google collects revenue through Google Adwords to display ads on sites within the Google Adsense program. It is unknown how much money Google keeps from each advertising click and how much is paid to Adsense members.
For the affiliate webmaster this new arrangement is much better in that he is paid for each 'click' generated to ads on his webpages. He no longer needs to worry about sharing commission with the sponsor. He is paid regardless of whether or not a sale is generated by clicks from his website to the sponsor's site. The affiliate webmaster no longer needs to hunt the Internet to find the best sponsor programs as Google Adsense shows highly targeted ads to match any niche.
For the advertiser this has meant that webmasters are generally unwilling to become an affiliate of their website and earn a percentage commission. This forces advertisers to join Google Adwords and pay Google for advertising. Google becomes a 'middle-man' or broker of advertising space. This situation is worse in some regards for advertisers than the commission sharing arrangements as the sponsor has to pay regardless of whether or not a sale is generated.
The true winner in all this is obviously Google. For example, Google might be charging an advertiser $1.00 per-click of which it pays only $0.10 per-click to it's Adsense affiliate webmaster. In this example Google would be earning $0.90 per-click for selling advertising space on a website that it doesn't even own.
Conclusion
The attraction of Google Adsense to webmasters trying to earn money from operating their content websites will continue to lead to less and less users of commission sharing programs. Inevitably this will lead to the death of commission-sharing webmaster programs. Google will dominate the entire Internet as being the only place to buy or sell ad space.
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