Affiliate Marketing: Advantages and Challenges

Thanks to the fast-paced and ever-growing world of the internet, there are plenty of ways you can earn some extra income and that is affiliate marketing!

Just imagine, you can use your computer, mobile phones, and tablets, and with just a few setups and clicks, you are ready to go and earn passive income.

Enter Affiliate Marketing. If you are familiar with the ins and outs of the internet and eCommerce businesses, you have probably heard of the term “Affiliate Marketing.”

Today, we discuss the advantages of running an affiliate marketing campaign and the challenges you will face along the way. 

What is affiliate marketing?

To put it simply, affiliate marketing lets you earn money through your affiliate networks. It is the process of advertising products and services on behalf of a merchant. In return, the said merchant will give you a commission for a sale and/or a lead.

Take a car salesman, for instance, he would advertise a product, and if he closes a deal or a sale, he will get a 10% commission or more. Another great example would be an advertiser.

For instance, you are advertising a hair care product on your website, social media pages, or just through word of mouth. You will get a commission from the hair care brand for every sale.

In the offline world, tracking your referrals and sales can be a little bit difficult. But online is a whole new world where you can track every referrals, sales and referral, you get rewarded and compensated for your efforts. 

It is a pretty simple process. You refer potential customers to a merchant’s website, let’s say around ten percent of those customers decide to purchase a product or a service from the merchant, and you will get rewarded by the affiliate.

However, as previously mentioned, there are still pros and cons to this simple process. Let’s discuss them below.

Advantages of Affiliate Marketing

There are different ways to earn in affiliate marketing. Depending on your agreement with the merchant, there are also different percentages per each earning commission.

Here are some examples:

• Cost per Action or CPA – this is a fixed commission for a particular action. For instance, you and the merchant agreed that if you get a potential customer to sign up to their newsletter, you will get a fixed commission.

• Cost per Lead or CPL – this is a fixed commission for every lead you get. Depending on your agreement with the merchant, you will get a fixed commission for every lead that can potentially convert to a sale offline. Most affiliates prefer this model for affiliate marketing. This is because they are not in control of the offline conversion process. After that, it is all up to the merchant to close a sale. 

• Revenue Share or CPS or Cost per Sale – this is an agreed-on percentage of the purchase amount of the customer. This means that you, as an affiliate, will get a percentage of the sale. For instance, a merchant might offer an affiliate a 10% commission for every 1-10 sales closed, 11% commission for every 11-25 sales and so on. So in the end, the better your affiliate performance, the higher the rewards you get. 

• Cost per Click or CPC – in this process, an affiliate will get a fixed amount for every clickthrough to the website. In this method, you will get a specific link which you will include in your website posts, social media posts, and even email newsletters. For every customer you can bring to the merchant’s website, you will get paid. 

Other advantages

Another advantage of affiliate marketing is that there are many different ways you can promote a merchant. You can use some of the platforms below to make money as an affiliate:

• Blogs and websites – if you are already running your own website or a blog, you can create new posts specifically related to the product or service you are promoting for the merchant you are working with. For instance, you are working with a merchant that sells cameras. It is a good idea to write content about photography and how the merchant’s products can help people improve their photography skills.

• Email lists and newsletters – you can also use your email list to market any merchant offers. Make sure to create good content so it doesn’t look like spam or too promotional.

• Coupons and promotions – this is a win-win for every side. The merchant gets a sale, the customers get a service or a product for a discounted price, and you will get a commission for every sale. 

If you are only starting out as an affiliate marketing, another great advantage is that you do not need a huge capital.

It is easy enough to do it from home, and all you need is your computer and basic ISP costs. 

Another advantage of setting up an affiliate marketing business is it is convenient and flexible. You can do it while running another business or working a 9-5 job.

There are a lot of merchant options and product choices to choose from so you can find something you’re passionate about.

Challenges of Affiliate Marketing

Just like everything in life, there are some challenges you will encounter on the path to affiliate marketing success.

Here are some challenges you will face along the way:

• Competition – when you get started in affiliate marketing, you will find that there is a lot of competition worldwide. The world is your market, and therefore, the world is also your competition. There are countless affiliate marketers with longer experiences in this field. But do not let that stop you from being the best affiliate marketer you can be.

• No guarantees – as an affiliate marketer, every pay-per-performance can present a significant risk. There is no guarantee that life as an affiliate marketer will be easy, and you can’t expect revenue right away. It’s a challenge, but if you’re up to it, you can definitely achieve success.

• Contracts between affiliates and merchants – most of the time, there are no contracts between an affiliate marketer and a merchant. This means that you can decide to stop promoting your merchant’s products or services without notice, and they can decide to terminate the program whenever they want. This can cause a loss of revenue for the affiliate marketer.

• It’s not as easy as 123 – Affiliate programs or campaigns are not that easy to scale. There is a lot of admin and technical setup that needs to be done. This will require a lot of time and effort to study a campaign to maximize your revenue.

These are only some of the pros and cons of running an affiliate marketing campaign.

While it may be a challenging process, as long as you are willing to take risks and up to the challenge, there is a lot of revenue to be made. 

© Image credits to Zaksheuskaya