Wikipedia defines affiliate marketing as:
A type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts.
In my own words, affiliate marketing is when you pay someone else a bounty to get you a conversion. You set the rules for what the conversion is but most of the time it is a sale of your product or service. Most affiliates tap into a large network of prospective clients in order to get your more conversions at a faster rate.
Pros & Cons of Affiliate Marketing
I’ve seen the good, the bad, and the downright ugly of affiliate marketing. This industry is vastly different depending on what niche you happen to be in. Some of the pros of using affiliate marketing as a part of your online marketing efforts are:
- Other People Do Your Marketing
- If you weren’t lucky enough to be born a marketing wiz, or study it in school, the idea of creating a marketing plan may seem overwhelming. You can leave the details of ad placements and email cadences to someone else and pay them only when they make you money. That can be a huge relief of time and stress.
- You Can Tap Networks You Normally Couldn’t Access
- Whether you are a seasoned pro or new to your business, getting new customers may be one of the hardest parts of getting your business off the ground. With affiliate marketing, you get to leverage other peoples networks of customers. That lets you focus on delivering a high quality product while others spend their time and money getting you new sales.
- You Only Spend Money if You Get Conversions
- With some other forms of marketing, like PPC, you have to pay each time someone wants to learn more about your product or service. That person may not convert, but the action of them clicking on your ad means you have to come out of pocket. With affiliate marketing, your affiliate partners have a goal of getting you conversions. If they don’t get you conversions you don’t have to pay them which is often a better ROI.
Now that you know why affiliate marketing is a good idea I’m going to share with you a few cons. The reasons below highlight why it is a good channel to supplement other marketing efforts you already having rolling.
- OTHER PEOPLE DO YOUR MARKETING
- Yes, I know that this was posted as a pro but the coin flips both ways. Some affiliates are all about the quick buck and don’t care much about quality. That can lead them to promote your product or service in an untruthful way. A few years ago it was popular for affiliates promoting credit score offers to post fake apartment rentals on Craigslist. In order to apply for the supposedly available unit you would have to provide your credit score AFTER checking your credit with the link they sent you… which just happened to be an affiliate link where they got paid once you filled out your information. This type of bad behavior can be avoided, but you must set strict rules around your affiliate program and quickly act on any business that seems fishy.
- You Have Less Connection With Your New Customers
- When you generate your own leads or sales you typically have some level of communication with customers prior to their purchase. That gives you a chance to really sell them on why you product or service is awesome and worth their money. By the time they close, they are pretty confident in doing business with you. Affiliates care less about that warm fuzzy relationship and want to cut straight to the chase. The result is that you have new customers who may not fully understand your value. The process of nurturing that relationship starts much later and you may have to work harder to keep that business.
- Your Affiliate Partners Can Control Your Revenue
- I previously worked for a company that relied heavily on affiliate marketing. They would find a great partner who would bring them lots of new customers. Then one day all of a sudden the affiliate would stop sending new customers and start pushing sales to a competitor. Sometimes to the tune of millions of dollars. It created a real feast or famine environment that was not pleasant. Ask yourself… “What if my affiliate partner got hit by bus? Would my business instantly die or could I find other ways to fill the gap?” If you are living with the first answer it is time to rethink your affiliate strategy.
Have you had your own successes or struggles with affiliate marketing? Have questions about affiliate marketing? Drop a note in the comments below!
