It was once said that you can't step twice in the same river. Although pre-Socratic philosopher Heraclitus uttered these words long ago, they still hold true in the landscape of affiliate programs on the Internet.

Since their inception in July 1996, the focus of affiliate programs has been concentrated on the business-to-consumer model. The revolutionary idea is rooted in a cocktail party where Jeff Bezos, CEO and founder of Amazon.com, was chatting with a party guest who wanted to sell books about divorce on her Web site.

After that exchange, Bezos pondered the idea and thought about having the woman link her site to Amazon.com and receive a commission on the book sales. Three years later, that cocktail party chatter has emerged as one of the hottest concepts in online marketing.

According to Forrester Research, the business-to-consumer market is projected to swell from $7.8 billion in 1998 to $108 billion in 2003. This nearly 1400% growth will be attributed, in large part, to affiliate sales.

But the real story, yet to unfold, in affiliate marketing is business-to-business eCommerce.

The Forrester Report: "Resizing On-line Business Trade" went on to forecast that US business trade on the Internet will explode from $43 billion in 1998 to $1.3 trillion in 2003 -- rising to 9.4% of business sales. That's almost a 3000% growth rate in just five years.

Bounty for Hot Leads
According to James Marciano, founder of Refer-it.com, the business-to-business affiliate model will continue to dominate the marketplace. "B-to-B affiliate programs have been an untapped resource in the eCommerce space so far. The bounty for hot leads model functions as an efficient method for customer acquisition."

With 3,000+ affiliate partners, DirectLeads, a free, dispute resolution service that mediates conflicts on the Internet.

Say ABC, Inc. placed an order for 500 T-shirts from an online T-shirt vendor. Although the specifications called for a yellow T-shirt with a blue logo, the T-shirt vendor printed a blue T-shirt with a yellow logo. The invoice was previously paid in full by credit card and the T-shirt vendor refused to make good on their mistake.

But that vendor belonged to the iLeveL affiliate program, which meant that they belonged to a community dedicated to using the Internet to promote good business practices and solve consumer and business problems. In this instance, iLeveL would mediate the dispute and attempt to reconcile the parties rather than resorting to legal action.

John Williams, CEO and Founder of iLeveL, said, "We created the free affiliate program as a support mechanism for B-to-B to aggregate the buyer and seller when a transaction breaks down. In essence, we're looking to provide a trusted solution. We want to put the customer and vendor back together."

The affiliate program directory, Refer-It.com has emerged as an industry indicator. There was no B-to-B category on Refer-it.com until August 1999, but the growing segment has blossomed to over thirty programs in the first month.

Service-oriented Market
According to a survey conducted by the Information Technology Association of America (ITAA), in conjunction with Ernst & Young, half of all revenues in online business-to-business transactions are derived from services.

The business-to-business services available span across white collar and blue-collar environments. Docent, Inc. provides comprehensive learning solutions via the Internet to companies, partners and business professionals.

"With Docent, we're getting courses out seven to eight times faster than before, and for about one-tenth the cost," said Eric Smith, Development Manager Wireless University, Lucent Technologies Inc.

"Content partners that already have vast direct marketing efforts, to support their customers, can supplement their own online offerings, powered by Docent, with complimentary offerings from other Docent content partners," according to Dave Ellett, President and CEO of Docent.

VerticalNet has established a unique model where they focus exclusively on the needs of industrial audiences by hosting specialized business-to-business portals such as machinetoolsonline.com, foodingredientsonline.com, and oilandgasonline.com.

In a recent interview in the Internet Analyst, VerticalNet President and CEO Mark Walsh stated, "I like to say that birds of a feather flock together. What I mean is that companies are part of an industry, not part of a group of other companies that are the same size. So we look at businesses that have a natural vertical orientation with their buyers, suppliers, distributors and value-added middlemen."

"If you're in the chemical processing business, for example, you have no concern for, say, pollution control or food processing. As a chemical processing engineer, you look at your world vertically. You care only about the products you need to buy for the process and the factory you're trying to build or operate," said Walsh.

The portals on VerticalNet include a career center, a marketplace with auctions to help vendors utilize the site to sell excess inventory, industry news, forums and a variety of resources. VerticalNet also runs storefronts for companies within the portals, and they collect bounties when they forward leads to those companies in the community.

The Future of B-to-B is So Bright
Business-to-Business affiliate programs have emerged in all facets of eCommerce, from baseball equipment to business machines, and the rapid growth of the industry dictates that B-to-B affiliates are here to stay, play and dominate.

The CPM (cost per thousand impressions) advertising model was once the benchmark for online advertising, but as Bill Lederer, Founder and President of art.com, stated at the Refer-it.com Affiliate Solutions '99 Conference in New York City, "Straight CPM is dead."

According to eMarketer, estimates for empty ad inventory run as high as 80%. In order to compensate for the unsold inventory, companies are utilizing affiliate program banners over house ads. The logic here is simple - companies leverage their unsold ad inventory by joining affiliate programs, so they at least have a chance to bring in revenue through affiliate sales. The market is ripe for an affiliate driven online ad network.

Another opportunity in the affiliate space is the development of niche affiliate solution software. While the current climate is dictated by the old "if it ain't broke, don't fix it" maxim, the explosive growth of the industry, combined with the varying needs of different affiliate programs has virtually beckoned for a new crop of niche affiliate solution software providers.

Not surprisingly, the US dominated affiliate market is catered to by the affiliate software solution industry with a certain degree of colonialism. But as affiliate programs further integrate into the international marketplace, the need for software solutions that meet the demands of the new markets (currencies, languages, etc.) will surface and niche solutions will no doubt flourish.

The business-to-consumer affiliate concept may have been the first to the market battle, but the business-to-business affiliate model has quietly won the war for market share with the projected US business trade on the Internet of $1.3 trillion in 2003. Why step twice in the same river when you can merely redirect and reinvent the marketplace?