A Brief History of Affiliate Marketing! (5)
I thought I’d start a rather interesting thread all about the history of affiliate marketing, giving all of us who were “there when it happened” an opportunity to chime in and add to it. Why do this?
1) It will be FUN
2) Knowing the history of an industry gives you an insight into what will happen in the future (affiliate marketing
actually does follow boom and bust cycles)
3) Most importantly, this leads to old, forgotten strategies and tips that work just as well today as they did when they were first popular, and usually reminds you of strategies that “worked so well I stopped using them” (I seem to have several of these). An example is Adsense—it was all the rage in 2006, was temporarily forgotten when the “adsense cowboys” were smart priced out of existence, and has quietly made a comeback in recent years.
So, I’ll start with two historical episodes, and then I encourage everyone else to chime in, adding your “I was there when…” moments-- by the time this thread has run its course, we’ll have a hell of history to look back on. If you were around when GoTo sued Google for stealing their pay per click idea or you “underachieved” or watched Web 1.0 go to Web 2.0 or somehow ran MailLoop (it never worked) or did anything else that would be considered historical all the way up until today, why then post your thoughts and make them history.
As far as I know, affiliate marketing on the internet was popularized by the late Corey Rudl, circa 1996 (might be off by a year or two, but I do know Jonathan Mizel was holding his Internet Marketing Bootcamps in 1996) as the result of his failure with direct mail. Corey had a book all about fixing up cars that he tried to sell via direct mail and he got hammered.
I forget exactly how he discovered the internet (I do know he tells the story on a CD set he and Dan Kennedy put out circa 2004), but I do know he grabbed a domain called CarTips.com and started offering the book online. He started to profit, then got it into his head that other people might like to sell his book online too for a commission. So, he started the Internet Marketing Center, and came up with one of the first pieces of affiliate tracking software, AssocTrac, and his CarTips business really started to take off. He figured there would be a lot more money teaching people how to make money in internet marketing (IM) so he put his energies into IMC and started selling his internet marketing course on marketingtips.com for $197. It was huge, fat manual, and he’d ship it right to you. He also sold software, such as his ill-fated MailLoop, which never worked correctly, despite his devout personal belief that it did (if you ever wanted to see him turn red, you’d tell him “MailLoop sucks and it doesn’t work”).
Many, many people got their start in affiliate marketing and internet marketing because of Corey and he was the first to teach it on a wide scale, in addition to selling affiliate management software. 1Shoppingcart came along about that time, created by George Tranh, (who had the bizarre habit of showing up to events dressed in medieval clothes, carrying a cardboard sword) and also offered affiliate management software.
BUT, this is just affiliate marketing online. It’s been around way before Al Gore even dreamed up the concept of the internet, and was especially prevalent in the 1970’s, known back then as a “distributorship” or an “associate program.”
If you call Cory the “father of affiliate marketing” (and he was too damn young in my book to be a “father,” but he was brilliant) then the grandfather of affiliate marketing was a BizOpp operator by the moniker of Dean F. DuVall, and what a character he was.
If you bought into Dean’s how to make money with mail order products, you were anointed a “Dax Doer” and given a certain code of behavior to follow such as “thou shalt never, ever ask Dean for a refund.” Dean had nuts, I’ll tell you that much—if anyone asked for a refund, he would send them an invoice for a restocking fee and for wasting his time. Not my preferred way to operate, but Dean swung the hammer when it came to refunds and pain in the ass customers.
Anyways, Dean’s goal was to build a list of one million direct mail sold names so that he could get rich from the list rental, and I believe he accomplished this goal. He did it by recruiting an army of affiliates, known in the parlance of the time as “distributors.”
What you would do is buy a distributorship that gave you the rights to use Dean’s sales letter, and sell his products at an 80% commission. You would be issued a “distributor ID” which was printed on the order form Dean gave you the rights to use. You got “camera ready art” a list of preferred list brokers, and a list of printers and letter shops (the people who stuff all the envelopes, affix the postage and deliver it the post office). Of course Dean’s brother in law was the preferred printer and he got a kickback from all the list brokers.
It was classic affiliate marketing—you’d rent a mailing list or three, have all your letters printed up with your id on them, you’d have a letter shop stuff and fold them and take them to the post office, and then Dean’s staff would process all the orders, ship all the products and send you a check for 80% of the sales. Dean’s real goal was to get the buyer name for free, so he could rent it and make a profit.
Here’s the fly in the ointment, at least back then: it was impossible for the affiliate to make a profit, even with an 80% commission because direct mail costs were too expensive. So, they would lose money, but Dean would make money, and he was quite OK with that. You got to be a Dax Doer in return, for what that was worth. Dean would sell thousand of distributorships, a percentage of them would do one or two mailings before they quit, fronting the cost for Dean to acquire direct mail sold names for list rental.
(Note: technically sale of a distributorship such as this was illegal, because selling the right to resale is classified as a security, which requires a securities license…but it was rarely enforced or investigated. The charge would be “selling an unregistered security without a license” which Dean clearly did on a large scale.)
Some people did profit with Dean’s distributorship—guys who owned companies that shipped a lot of physical products would enclose the flyers with their distributor id in the box with the physical products and profit because the customer was paying for the shipping. But outside of that, there wasn’t a realistic way to profit, unless you had the order come to you, you got the name and sold them other products on the back end, and sent the order to Dean for processing. But most opportunity seekers didn’t understand that or want to—they just wanted to mail and get paid, the equivalent of running traffic as an arbitrage affiliate and getting paid.
The rise of the internet was really what led to affiliate marketing becoming a viable way for everyone to profit, from the affiliate, to the traffic/media owner to the product owner. But it got its start as the classic “distributorship,” popularized by Dean, although I’m sure plenty of other people pre-dated him.
I’m not sure if Dean is still alive, but I do know as recently as 2005 he’d taken his Dax Doers to the internet and was doing some online affiliate marketing. If you can find a photo of him, he was definitely larger than life—always wore aviator sunglasses, and looked the part of a mail order tycoon.
Those are my two historical episodes to start this thread with, so let’s hear what you guys have…I have several more to post, but I’m fascinated to hear what all you STM’ers, young and old have to contribute, especially the stories of what used to work back in the day.
Hell, by the time we’re done, we’ll have enough content to produce a printed manual as heavy as Corey’s Internet Marketing Course.
love this thread idea.
btw, I dont think you ever posted your story about working on the rigs 
Yah great thread idea your words are readable gold Mr Alanis! Been going deep into those books you sent me!
Cool~
Oh man I feel so young by not having heard of any of these before.
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