“Buddy, let me take you to nice strip club. The girls are clean, you will have good time, no joke. Trust me. Free ride.”

This shady and slightly aggressive offer from my cab driver was the first thing I heard after arriving in Vegas for Affiliate Summit West last week. I declined, but I heard the offer again – multiple times from multiple drivers. Fed up, I finally asked a driver why this was so common. He kept his mouth shut at first, but a $10 “donation” was enough to get him talking. I came to a vivid conclusion after our conversation: These guys are affiliate marketers!

Let me explain. The drivers (affiliates) all work for larger taxi companies (CPA networks) who have long running deals with Vegas gentlemen’s clubs (merchants). Every time a a tourist (customer) is brought to a club (conversion), an attendant (tracking link) marks down the driver’s license plate (referral code). The driver is awarded a certain number of points (commission) based on how much money the tourist is worth (eCPC). Once the driver earns a certain amount of points, the taxi network and the driver both receive a kickback. Cab drivers who bring in a high volume of clients (super affiliates) are rewarded with all sorts of extra benefits, including cash bonuses and private dances (private dances).

This point system shares many qualities with CPA networks. The amount of money a driver earns is based on factors like distance from the hotel and quality of the strip club, traits that affect the conversion rate. The more difficult it is for a driver to convert a tourist into a degenerate club goer, the higher his payout is. A club that is further away from hotels is willing to pay more for a conversion, since these locations save money on real estate costs and have a harder time attracting average tourists. High end gentlemen’s clubs pay drivers more, since they attract a more lucrative client. However, if a cab driver continuously brings dead beat tourists or college kids to high end clubs for a higher payout, he may lose his job or his legs — this is the system’s method of preventing fraud.

Why does Vegas use this system? Gentlemen’s clubs recognize that their biggest hurdle is their distance from the highly populated Vegas Strip, so they created their own affiliate marketing system to overcome the issue. Online merchants who have trouble reaching their audience do the same thing when developing affiliate campaigns. While the online climate may not be as vice-ridden as Sin City, we can learn a thing about the evolution of online marketing by taking a quick look at the real world.

Now who ever said affiliate marketing was boring?