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Originally Posted On: https://hopeforfinance.com/the-pros-and-cons-of-affiliate-marketing/

 

Whether you’re starting a blog, a YouTube channel, a full-time online business, or a side-hustle to pay off a bit of sneaky credit card debt, affiliate marketing is one the most powerful strategies for making money online.

Like most genuinely lucrative online opportunities, affiliate marketing isn’t an easy way to become a millionaire overnight. Despite what other bloggers might claim, it takes time, research, skill development, and a lot of trial and error to really get up and running with this marketing strategy.

If you’d like to discover exactly how affiliate marketing works before plunging into the pros and cons, please check out our complete guide to earning a full-time income from affiliate marketing. Otherwise, let’s take a deep dive into the benefits and drawbacks of adding it to your online income strategy.

The pros of affiliate marketing

We’ll kick off on a positive note with all the benefits you can look forward to.

1. The affiliate marketing statistics are about as promising as you can get

Just to set the scene for you, let’s take a look at the stats surrounding the affiliate marketing industry.

• You’re entering a $12 billion dollar industry that’s growing by 10% each year. (stat sources: IAB and Business Insider)
• 15% of all ad revenue is currently attributed to affiliate marketing, meaning the scope for income generation is huge. (stat source: Business Insider)
• 81% of brands offer an affiliate program, meaning you’re able to be picky with who you represent and keep your quality high. (stat source: Mediakix)
• 84% of bloggers use affiliate marketing as part of their profit generation strategy, meaning most readers are accustomed to affiliate marketing and happy to help out content makers they appreciate by using the links provided. (stat source: Web Market Support)
• Merchants are seeing 15-30% of their sales coming from affiliate marketing (and this figure continues to grow each year). With affiliate sales on par with SEO and PPC marketing, advertisers are more and more willing to offer great deals and discounts through affiliate links, making for a better experience for you and your audience. (stat source: Authority Hacker)
• One Instagram influencer, Jason Stone, made $7 million in one year from affiliate marketing alone (note our use of the word “one.” Though this is exciting news for budding affiliate marketers, and though it does represent what’s possible, it’s important to be realistic with your expectations when starting out). (source: Entrepreneur)

2. You can start earning money with zero investment

It costs nothing to sign up for the biggest affiliate networks, meaning you have access to hundreds of quality brands and a variety of earning opportunities; all without having to part with a single dollar.

Some networks, like Wealthy Affiliate, do offer a paid premium service. However, their free subscription is ideal for newbies and there’s no need to upgrade until you’re earning enough money through affiliate marketing to warrant the expense.

3. Sign up with as many advertisers as you want

There are no rules limiting the number of affiliate networks and individual brands you can strike deals with. Indeed, 71% of your fellow content producers are working with three or more affiliate networks (stat source: Forrester Research).

This lack of limitation gives you more scope for creating revenue streams while simultaneously ensuring that you’re not stuck with a small number of products and services to work with. As an affiliate marketer, you’re easily able to be scrupulous in your offerings and only provide links to genuinely good brands and deals.

4. Affiliate marketing offers flexible earning options

Different brands offer different earning opportunities. So, if you’re signed up with a few, you’ll likely find you can develop income streams from a mix of the following:

• Pay per click ‒ With these, you’ll get a small commission for every clickthrough, regardless of whether it led to a sale.
• Pay per lead ‒ The brand will pay you for every referred visitor who fills out a contact form.
• Pay per sale ‒ These tend to pay the best (for obvious reasons). You receive a percentage of the sale from every customer who purchases through your link.

5. Work from anywhere in the world

Whether you’re stuck at home with nothing to do or dreaming of being able to operate a business from a beachside resort in Thailand, affiliate marketing is a viable pathway to the life of a digital nomad.

With a laptop, wi-fi, and a strong desire to learn, you can build a reliable income stream through affiliate marketing. Put in the hard work in the early days, and you can set yourself up for a life of flexibility and financial freedom.

The cons of affiliate marketing

If you’re feeling enthused after reading through all those powerful positives about affiliate marketing, we’re about to burst your bubble with a dose of harsh reality.

1. Remember those affiliate marketing statistics? They’re not all sunshine and roses

Since we started our exposition of the pros of affiliate marketing with some lovely stats, it only makes sense that we kick off the cons with some not-so-lovely data.

• About 50% of the world’s affiliate marketers make less than $20,000 a year. (stat source: Ink Well Editorial)
• Only 3.2% of affiliate marketers earn $150,000 or more per year. 35% make between $20,000 a year and 12% make between $75,000 and $150,000 a year, so it’s not all bad. However, as a beginner, you can guess where your income stream is likely to be sitting, at least until you master the art of successful affiliate marketing. (stat source: Ink Well Editorial)
• The affiliate marketing conversion rate (aka the percentage of people who click through and purchase from an affiliate link) is only 1%. If you get your blog to a 2% or 3% conversion rate, you’ll be a golden god in the affiliate marketing world. (stat source: Cospot)

2. There are no guarantees

As you’ve probably gathered from the stats above, many people who enter into the affiliate marketing industry don’t make enough money to live on. Even if you do have a good month, there are no guarantees that you’ll get the same level of engagement next month or next year.

With affiliate marketing, your income is, in large part, dependent on the whims of your audience. Though there are plenty of strategies you can use to boost your conversions, there will always be a level of uncertainty.

This is why we recommend developing other home-based income streams. That way, if you have a slow month in one area, you’ll be able to pick up the slack elsewhere.

3. The competition is huge

There are more than 1.5 billion websites on the internet. Though not all of these are active, and not all of them are using affiliate marketing, that should still give you some idea of the magnitude of the competition that’s out there.

Even when you drill down to your specific niche and then the companies and products you choose to promote, you’ll still be up against a sizeable number of competitors. Of course, this shouldn’t put you off.

If you’ve got a solid content creation strategy in place, and you’re offering genuine value to your audience, then it’s well within your capabilities to shine amongst the competition.

To help boost your profile and expand your audience, you’d be wise to add the following to your plan:

• A vibrant social media presence
• A well-designed blog promotion strategy
• Search engine optimization across your website and social media channels
• Clever email marketing campaigns

4. Choosing products and services to promote is trickier than you think

There are so many companies offering affiliate programs that it can be overwhelming trying to sort out who you want to work with. Just to make the process even trickier, some people are experts at making things look shiny and wonderful in theory and then delivering sub-par results.

Imagine you’re a fitness or fashion blogger and you decide to include an affiliate link to a shoe store on Amazon that seems to have cool products at a good price. Then a customer leaves a furious public comment on your Facebook page because they received this after ordering through your link:

Though these “limited edition” Yeezys are hilarious, they’d be a lot less funny if you had to deal with the fallout from having recommended them. So, do your due diligence and don’t be in a hurry to add product links.

5. Some of your brand’s reputation will be out of your hands

Following on from the last point, when you partner with a company, your reputation becomes intertwined with theirs. If you choose your partners wisely, this can be a wonderful way to boost your status. However, you’re still creating a weak spot in your reputation.

Say you partner up with an online college and recommend them regularly in your articles. Then, six months down the track, it comes to light that they’re not actually accredited, so their qualifications are of no value.

It won’t just be the college’s reputation that will be ruined. Because you recommended them, people will assume that at best you didn’t do any real research, and at worst that you were in on the scheme. Either way, you come across as someone who can’t be trusted.

To ensure you’re putting your brand’s reputation in good hands, it’s essential that you research every company you recommend. At the very least, take a look at the following:

• Online reviews from customers
• Online reviews from employees (through sites like Glassdoor, you can get a glimpse into what the company culture is like – a toxic culture can be a red flag for unscrupulous business practices)
• Their website
• Their social media channels
• Their business registration details (In the US, this can be checked with the Better Business Bureau. For other countries, search “business registration + your country”)
• Any industry accreditations they’re required to have
• Their annual reports

So what’s the verdict on affiliate marketing?

The internet is brimming with articles telling you that you can get filthy rich through affiliate marketing, but there are just as many denouncing it as a waste of time. The truth lies somewhere in between.

Though most people never break the 20K a year mark, there are enough people earning a decent living from it to make it a worth addition to your content marketing strategy.

Use the pros and cons listed above to guide your decisions, and above all else, be ethical in every choice you make. As a general rule, if you wouldn’t feel confident recommending a product or service to someone you deeply respect and want to impress, then don’t add a link to it in your content.

Got a question about affiliate marketing? If so, we’d love to hear from you. Leave your query in the comments and we’ll get back to you with the answer you’re looking for.