Internet marketing- the Affiliate Marketing Model

Introduction

In my recent article The internet has Changed how we make money I explained why the internet has completely changed the way we do business and how we make money.

I also shared how using the power of the internet to reach and service a world-wide audience of potential customers is open to companies of all sizes, and that this change has opened up previously unimaginable opportunities for you and me.

In this article I will discuss the pros and cons of affiliate marketing

Affiliate marketing is one of the easiest ways to start your internet marketing career and is heavily promoted as such. So it is one of the most popular online business models. But in terms of building a long-term sustainable business it has serious flaws which I will explain in this article.

What is Affiliate Marketing?

Affiliate marketing involves you as an affiliate (really an authorised distributor) promoting a product owned by someone else – normally you would do this by advertising online, and when a customer buys through your advertisement (which contains your affiliate link), you become entitled to a commission from the product owner.

The way you (as an affiliate marketer) source products to sell is by joining one of the many affiliate product websites now online and having their product listed and displayed on that site. Three of the biggest and most popular examples are “Clickbank”, “JV Zoo”, and “Affiliate Junction”

On these websites, the owners of products get them listed, and in return Clickbank, JV Zoo and Affiliate Junction get a small commission when a copy of the product is sold by an affiliate (e.g. people like me and you).

When an online marketer looks on one of these sites for potential products to sell as an affiliate, the products are listed by category e.g. Health, Exercise, Internet Marketing (there are also sub-categories within each category), and within each category the products can be sorted by best-selling, number of affiliates currently promoting, highest commissions, title, etc.  This makes product selection easier and enables affiliates to specialise in one or more categories.

The advantages of affiliate marketing as a business model include:

• You don’t need to create your own products to get started earning money,

• The product owner handles all the administration, like product delivery (usual just a download) invoicing, customer support, and revenue collection from the customer, so you don’t need to set up your own payment gateway on your website.

• The owner will also supply all the promotional material for you to use, including the sales funnel (The page where your ad sends the customer to opt-in (i.e. to enter their email address and then click to be taken to the sales page).

• After you promote products a few times, it becomes relatively easy to set-up and start promoting and selling a product,

• Your ad can be shown 24 hours a day, seven days a week. The internet does the rest for you.

• Once you get some experience and some sales, you can ramp up your sales by either promoting your existing products more heavily or adding new products.

For the few internet marketers that stick with it and persevere, affiliate marketing can be a profitable model, but in reality the great majority of people that start will fail fairly quickly because they take a random/ad-hoc approach to what they promote and lose faith in themselves and the business model fairly quickly.

The disadvantages of affiliate marketing:

• The big disadvantage of this model is that you don’t have ongoing access to the customer who bought the affiliate product from your promotion because the ad they clicked on went straight to the product owner and would have added them to his or her email list.

• So you only get paid for the product you sell up-front. The product you promoted is usually a low value product designed by the owner to get people on his email list so he can promote his higher value products to them and keep the full 100% of the sale value. You get nothing from these ongoing sales.

• The only way you keep getting commissions is by continuing to spend money to get leads (traffic in I.M. Language). You have not got an ongoing business relationship with product owners and you do not have the opportunity to build your own email list using this model.

• As the products you are selling increase in popularity, more and more affiliates will promote them, causing the cost of advertising to increase if you want to stay on the front page of your chosen advertising medium (e.g. Google AdWords, Facebook, Yahoo, Bing etc.).

• You have to constantly hunt for new offers to promote as your current products start to tail-off in sales.

• The key issue is, with the affiliate model you never get to build a customer base – the foundation of all businesses that achieve long-term success.

This is the reason why the really successful affiliate marketers eventually end up creating their own products for other affiliates to sell, so they can build their own email lists and sell the higher value products direct to the customers on their list as a result of the up-front affiliate sales someone else brought in, and keep 100% of the sale value for those back-end sales

Please feel free to leave me a comment, which I will answer personally.

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