For decades—perhaps centuries—marketers have bemoaned
the effectiveness of their advertising campaigns. When paying
for advertising up front and receiving benefits later,
advertisers are vulnerable to low-performing or nonperforming
ad placements. Against this backdrop, affiliate marketing
seems to offer a refreshing change: in this performancebased
approach to online marketing, advertisers pay only
when a sale occurs. With robust online tracking that can
attribute sales to affiliates, advertisers often perceive an
unprecedented reduction in risk. The Economist (2005) captured
advertisers’ excitement for the apparent alignment of
incentives, calling affiliate marketing “the holy grail of
online advertising.”