It's not new at all, but it is more than affiliate marketing. It is automatic determination of context. I posted the following message about the history of this space over on the Google board.
Google and Overture are definitely not inventing anything new here.
In 1998 there are several references in the trade press about ideas such as "Transactive Content" and "Contextual Commerce".
C2B Technologies Riding the Next Online Shopping Wave?
By Dianne See
Issue Date: Jul 28 1998
"...transactive content, a term coined by Forrester Research (FORR). According to Greg Newman, cofounder and senior vice president of C2B Technologies, transactive content is the 'marriage of content with product and service recommendations.' ..."
A similar idea called "Contextual Commerce" is generally credited to Dr. Augustine Fou, go-Digital Internet Consulting Group, Inc. in this seminal article from Aug. 1998:
Indeed, many companies in this space have started and died in the last four and a half years:
The following companies had nationally advertised initiatives in Contextual Commerce, but gave up that business:
The company FizzyLab of Seattle is particularly notable for raising $9MM of Venture Capital and burning through it in 10 short months before going out of business.
This path is littered with the skeletons of failed efforts. In order for this to get any real traction with publishers and advertisers it has to be done very carefully.
I'm not convinced the recent entrants in this field, including Google, have the seasoned experience to carry it out properly: note the concerns in this thread of seasoned publishers and advertisers alike.