Affiliate advertising is a novel form of Internet advertising that enables bloggers to insert advertising for any product in their blog articles and to gain rewards based on consumers’ actual responses. To understand how this form of advertising works, we conducted Web-based questionnaire surveys among bloggers, including affiliates, and readers, including buyers. Moreover, we constructed an agent-based model that is empirically validated by the above data. The results of the simulation using this model showed that (1) link structures between affiliates and readers have a remarkable impact on the average revenues of all affiliates, and (2) the presence of random walkers in searching for a better ad mix may increase total revenues for all affiliates compared to the presence of local imitators. Based on these results, we discuss the managerial implications and suggest future avenues for research.
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