If you are thinking of making money online, the chances are you have heard of or have considered affiliate marketing. But, do the benefits outweigh the disadvantages?
According to Statista’s report released in December 2018, the U.S. affiliate marketing spend is due to reach 8.2 billion U.S. dollars by 2022, up from 5.4 billion recorded in 2017.
These numbers validate that affiliate marketing is in good health and growing steadily in the U.S.
However, is affiliate marketing still worth it?
Let’s go through the affiliate marketing pros and cons to make an informed assessment.
Affiliate Marketing Pros
A good starting point are these 2 questions:
- Why be an affiliate marketer?
- What are the benefits of affiliate marketing?
Let’s have a look at these 9 reasons to become an affiliate marketer:
1. Automatic Sales Commissions (Passive Income)
While any “regular” job requires you to be “working” in order to make money, with affiliate marketing you can make money while you sleep.
But even just saying that out loud sounds skeptical…
Let me explain.
You start by investing your time and money to set up your website and marketing campaigns for promoting a series of merchants’ products, which can then give you continuous returns in the form of “automatic” sales.
I am not saying that you set it up once, and you forget about it.
But, one marketing campaign or blog post can continue to perform and provide you with revenue without having to re-do the process. When you get it to work, you essentially only have to optimize from time to time.
That’s why it’s a business model where you can continue to receive money for your work long after it’s “done”.
2. Earn Recurring Commissions
In the same way that you can continue to earn money from one blog post that contains an affiliate link, you can also earn recurring commissions if the product you are promoting is subscription-based.
This is based on the terms of the affiliate agreement, but typical examples of these are software subscriptions.
3. No Inventory Required
The beauty of the affiliate marketing model is that there’s no product inventory required.
Forget about sourcing products, inspecting the manufacturing process, shipping the products to your warehouse and then providing shipping to your customers.
There’s nothing wrong with e-commerce or drop-shipping business models, but it does require extra capital and logistics to run.
4. No Customer Support Needed
Individual sellers and companies offering products (digital and physical) or services need a customer support system or team.
The affiliate marketing business model doesn’t necessarily require offering customer support. An affiliate marketer’s job is to link the merchant’s offer with a consumer while keeping the consumer’s best interest at heart.
The merchant that you are promoting takes care of the customer service for you… well, it’s in their best interest to provide for their customers’ satisfaction.
5. Cost-Effective (Low Investment)
I’m not talking about just inventory. Most businesses require startup fees as well as the cash flow to finance the products or services being sold.
Affiliate marketing is a low-cost business model.
You can start an affiliate marketing business with a low startup cost. There are some digital tools that you will need to invest in, but the costs of those are lower than the infrastructure needed to run other online or brick-and-mortar businesses.
6. Performance-Based Rewards
In a regular job, you could work extra hours every week and still earn the same salary.
As an affiliate marketer, your earnings are based on your performance. This is a benefit, but it could turn into a disadvantage when you spend your time and money in the wrong things.
That’s why it’s important to hone your skills in copywriting, marketing and business mindset to create engaging campaigns or write valuable content that will translate to more sales.
Then, you will get better returns on the outstanding work you do!
Read also: Affiliate Marketing for Beginners.
7. Work Flexibility
Work whenever you like, from wherever you like.
If you are looking to quit your 9 to 5 job, affiliate marketing can offer flexibility in hours.
Plus, the option of determining your own working hours and the convenience to work from home (or anywhere that has an internet connection).
8. High Income Potential
I already mentioned that affiliate marketing is a billion-dollar industry that continues to grow.
You can go from making money on the side to earning a full-time income.
Although affiliate marketers only earn a percentage of the total revenue from each sale (a.k.a. a commission), there is a potential to generate more sales and generate more revenue.
9. Professional Independence (Be Your Own Boss)
Since you are becoming your own boss, you have the independence to set up the goals that matter to you in order to achieve your life vision.
You can promote and talk about solutions that align with your values. And when you are ready to scale, you can work more closely with people and companies you value.
Affiliate Marketing Cons
Like any other business model, affiliate marketing also has its disadvantages.
Here are some reasons why affiliate marketing doesn’t work for most people:
1. No Fixed Income
Having no guarantee of fixed, monthly income can be a reason for financial uncertainty.
When you have a traditional 9 to 5 job, you get a fixed salary for your work. On the other hand, if you are an affiliate marketer, your earnings are not consistent.
Once you grow an audience and make consistent sales, you can predict what an average income will look like.
This is why most people start affiliate marketing as a side-hustle.
2. No Guarantee of Revenue
There are no opportunities without risks, and affiliate marketing is no exception.
There’s no guarantee that your marketing efforts will result in revenue (commissions).
You can work on various strategies to promote offers to your audience, but it’s difficult to predict how much money you will make at the end of the month.
It’s a challenge you have to face.
3. No Immediate Results
Another common misconception is that you can get great results instantly.
It can take anywhere from 6 months to several years to start making profits with affiliate marketing.
Affiliate marketing is a process, so you are going to take some time to build a reputation, earn enough traffic, engage with your audience and start generating the profit.
It takes some serious work (time, skills, mindset, money and consistency) to achieve your business goals and create a steady source of income.
4. Expertise Is Needed
Another misconception is that no expertise is needed.
There are many variables that will influence your success rate, and your skills are one of them.
Your results will depend on your ability to create quality content, optimize for SEO, drive traffic, and cultivate an engaged audience to whom you can promote to (which includes social media and email marketing).
5. Ability to Make Business Decisions
Affiliate marketing also poses a challenge when choosing the niche and products that you are going to promote.
Your expertise (market research skills) and previous experience play a key role in these decisions.
Also, not everyone is comfortable with making business decisions or with running a one-person business (solopreneur).
It takes an entrepeneurial mindset to be comfortable with such a working style. It’s easy to feel overwhelmed and lonely.
You can definitely work on your business mindset to overcome these challenges and get better at making decisions. But, you need to decide if this is the lifestyle you want.
6. Fierce Competition
Although competition varies depending on the industry, it’s a highly challenging task to promote any affiliate offer in a competitive marketplace.
When you choose a product to promote, there is a high chance that there are many others who are already doing the same thing.
Established marketers in your niche will pose a fierce competition.
7. Working As a Third-Party
As an affiliate, you form a bridge between merchants and consumers. This means that you work as a third-party, committed to drive new leads (prospective customers) again and again.
As a result, you are helping the merchants build their own customers list. Once a referral is made, a repeat customer won’t have a reason to purchase from you again.
Affiliates have no direct relationship with consumers unless they decide to also build their own email list and nurture their own audience.
8. No Control Over The Affiliate Terms
Affiliate marketers are entirely dependent on their merchant’s affiliate program rules, having to respect and comply with the conditions.
A program that may look appealing in the beginning, could, later on, become less and less profitable due to a decrease in their commission rate.
If a merchant that you are working with changes the terms of its affiliate program, your revenues could be directly affected.
9. Fraud and Scam Risks
Finally, other affiliate marketing risks include scams.
Even if you undertake security measures, you still need to be aware of online scammers and fraudulent activities.
Hackers and fake affiliates may be trying to steal your clicks or customers’ personal information, so it’s fundamental to pay attention to cybersecurity.
Also, to avoid affiliate marketing scams, work with established affiliate networks and merchants.
Starting an online business is easier now more than ever, but running a sustainable and profitable affiliate marketing business is still challenging.
Although affiliate marketing has its drawbacks, it also has the potential to provide you with an additional source of income.
So, before getting started as an affiliate marketer, consider the pros and cons of affiliate marketing.
Check out Affiliate Marketing for Beginners – How to Start in 7 Steps.
I hope this article helped you to gain some clarity on the subject. If you still have questions on affiliate marketing, you can let me know by leaving a comment below.